The Best Places to Invest in Short-Term Rentals in 2021

For investors looking to earn the highest possible return on their short-term rentals, it's time to get creative with location.
Seth Kniep
Jun 29, 2021
Real Estate Investing
The Covid-19 pandemic has reshaped the short-term rental landscape. Tourism in big cities will rebound, but experts predict that the reduction in big city business trips will be long-lasting. Many workers now spend most of their week at home, the lines between work and personal lives becoming blurred. The social isolation and monotony of work-from-home life, combined with the flexibility it affords, have resulted in the surging popularity of weekend getaways and mini-vacations. Because of this, markets within driving distance of big cities that provide a means of escape for angsty work-from-homers have become prime targets for short-term rental investors. These markets have high average daily rates (ADR), soaring occupancy, and affordable opportunities for new investors. Here are our top picks for 2021:

Las Vegas

Las Vegas is famous for its entertainment, dining, gambling, and nightlife opportunities. Plus, it's within driving distance of several major cities, including LA, San Diego, and Phoenix.

While visitors to Las Vegas have traditionally been served well by a wide range of hotels and resorts, short-term rentals through Airbnb and VRBO have successfully carved out a niche for themselves in this market. For visitors who prefer to be slightly removed from the madness of Las Vegas, a nearby Airbnb could be the perfect option.

Las Vegas draws visitors from all over the world — 42 million in 2019. Many of these visitors, about one-fifth, come from Southern California. The drive takes about five hours if you're coming from LA.

Halfway through 2021, the median list price in Las Vegas was holding steady at $340k. Among 8,692 short-term rentals, the average daily rate is currently $190, and occupancy is hovering around 58%.

Joshua Tree

Joshua Tree's proximity to Los Angeles makes it a no-brainer for Angelenos looking for a quick getaway. Just over two hours outside Los Angeles, the combination of spindly Joshua Trees and Martian rock formations makes visitors feel like they've set foot on another planet (to complete the otherworldly vibe, check out this flying saucer for rent on Airbnb).

Joshua National Park draws nearly three million visitors to the area every year. The availability of land in the Joshua Tree area keeps prices moderate, so even in this crazy market, Joshua Tree real estate can be an excellent buy. Because Joshua Tree is unincorporated, it is unlikely that short-term rentals will ever be made illegal. The same cannot be said of Joshua Tree's desert neighbor, Palm Springs, which has strict Airbnb regulations.

Per realtor.com, the median sale price for homes in Joshua Tree is about $433k, and the market is balanced between buyers and sellers. With an average daily rate of $208, and a sky-high occupancy rate of 87%, owning an Airbnb in Joshua Tree can be an intelligent financial decision.

Gulf Shores

With 32 miles of coastline, there's enough beach for everyone in Gulf Shores. With endless opportunities for shopping, dining, and beach activities, it's no wonder the area draws 7 million visitors annually. The weather in Gulf Shores is warm and sunny year-round, making it a destination for every season.

By car, Gulf Shores is three hours from New Orleans, four hours from both Baton Rouge and Birmingham, and about five hours from Atlanta. It's also about one hour from Pensacola, where the Pensacola International Airport provides easy access for tourists.

With nearly 6000+ active properties, Gulf Shores is a hot location for short-term rentals. And, according to AirDNA, the annual revenue potential for Gulf Shores is almost $100,000


Short-term rentals in Gulf Shores provide an average daily rate of $258 and an occupancy rate of 68%. With healthy supply and a median list price of around $375k, now could be the perfect time to jump into this market poised for long-term growth.

Mammoth Lakes

About five hours from Los Angeles and San Francisco, Mammoth is a hugely popular vacation destination for Californians. It is also easily accessible to non-Californians via the Mammoth Yosemite Airport. At over 11,000 feet, Mammoth Mountain is the highest ski resort in California. Though it is perhaps best known as a mecca of winter sports, its summer offerings, like breathtaking hikes and extreme downhill mountain biking, mean that you can expect solid occupancy numbers year-round.

Real estate comes at a premium in this desirable getaway, with a median list price of $689k. However, Mammoth is currently oversupplied, i.e., the number of sellers exceeds the number of buyers. This gives buyers a greater variety of homes to choose from and simultaneously reduces the competition they will face from other buyers. For investors who want to take advantage of Mammoth’s strong Airbnb metrics — an average daily rate of $331 and an occupancy rate of 65% — now could be the perfect time to jump in.

Panama City Beach

Just 17 minutes from Northwest Florida Beaches International Airport and about a two-hour drive from either Pensacola or Tallahassee, Panama City Beach is a popular destination for tourists from throughout the southeastern U.S.

Like Gulf Shores to the west, Panama City Beach has year-round sunny weather. With a resident population of 12,500, Panama City Beach retains an intimate feel while drawing 17 million visitors per year.  A wide variety of shopping and dining opportunities add to the area's attractiveness.

Lisa Ward, the owner of a rental home in Panama City Beach, was flooded with bookings when beaches reopened following initial coronavirus lockdowns. Her only complaint is that her house is now rarely available for her own mini vacations.

The median sale price in Panama City Beach is about $350k as of June 2021. The market has a steady balance of supply and demand. With an average daily rate of $225 and an occupancy rate of 60%, buying in Panama City Beach seems like a wise choice. Occupancy is poised to surge as more of the country gets vaccinated and summer kicks into high gear.

Gatlinburg Tennessee

Nestled in the smoky mountains of eastern Tennessee, you'll find the resort city of Gatlinburg. Attractions including distilleries, the Gatlinburg Space Needle, and an adrenaline-pumping zip line park make Gatlinburg a favorite for families from Tennessee, Kentucky, Georgia, and the Carolinas.

Gatlinburg's average occupancy rate for short-term rentals is currently hovering around 76%, with an average daily rate of $232.

In nearby Pigeon Forge, you'll find Dolly Parton's amusement park, Dollywood. With 50 attractions, including nine intense rollercoasters, Dollywood draws nearly three million guests per year. Pigeon Forge boasts similarly high ADR and occupancy numbers when compared to Gatlinburg.

Prices in the Gatlinburg area have surged this year, and both Gatlinburg and Pigeon Forge currently have a median home listing price of around $650K. For investors looking for affordability, nearby Sevierville may be the perfect option. Popular in its own right, Sevierville is just 31 minutes away from Gatlinburg. The median list price in Sevierville is currently around $360K.

Turn Your Vacation Home into an Investment for Maximum Fun, Returns, and Efficiency

The locations mentioned above aren’t just good for short-term rental investing; they're also great places to treat yourself to a vacation. Why not get yourself an investment that doubles as a vacation home? With this strategy, you’ll gain useful market knowledge and learn to think like a local in your chosen market. For more on how you can turn your vacation getaway into an investment opportunity, check out our primer on investing with little money.

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Seth Kniep

Married a pearl. Fathered 4 miracles. Fired his boss. Turned a single dime into $104,857. Today, a self-made millionaire, Seth and his team of 8 badass coaches teach entrepreneurs how to build passive income on Amazon.

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