Best States for Airbnb Investing in 2026: Top Short-Term Rental Markets

Short-term rental (STR) investing offers higher income potential than traditional rentals, but success depends heavily on location, regulations, and tourism dynamics. In 2026, certain states provide the perfect combination of strong visitor demand, reasonable regulations, and favorable economics.

Here's where Airbnb and vacation rental investing still works—and where regulations have made it nearly impossible.

What Makes a State Great for Airbnb Investing?

Favorable Regulations: States and municipalities that allow or lightly regulate short-term rentals

Tourism Infrastructure: Airports, attractions, events, and seasonal drivers creating consistent demand

Occupancy Potential: Markets supporting 50%+ annual occupancy (60-70%+ in top markets)

Pricing Power: Average daily rates (ADR) that exceed long-term monthly rent divided by 30

Seasonal Balance: Mix of peak and shoulder seasons preventing total revenue collapse in off-months

Operating Costs: Reasonable lodging taxes, cleaning costs, and management fees that don't erase margins

Top 10 States for Airbnb Investing

1. Tennessee

Best Cities: Gatlinburg, Pigeon Forge, Nashville, Chattanooga
Average Occupancy: 60-75%
Average Daily Rate: $180-350
Regulatory Environment: Generally permissive with some local licensing
Investment Range: $250,000-$600,000

Tennessee dominates short-term rental investing in 2026. The Smoky Mountains region (Gatlinburg/Pigeon Forge) is the most visited national park in America, driving year-round cabin rental demand.

Why Tennessee Works:

Smoky Mountains Cabins: Investors buying 2-4 bedroom cabins in Gatlinburg, Pigeon Forge, or Sevierville achieve 65-75% occupancy with $250-400 nightly rates. Annual gross revenue of $60,000-$100,000 on properties costing $350,000-$550,000 is common.

Nashville: Music City attracts bachelorette parties, conferences, and tourists year-round. Downtown properties near Broadway command $300-500/night. Regulations require permits but remain manageable compared to other major cities.

Chattanooga: Emerging market with outdoor recreation (Rock City, Lookout Mountain) and urban attractions. Less competitive than Nashville with favorable permit process.

No State Income Tax: Tennessee has no state income tax on earned income, improving overall returns for investors.

Property Costs: Smoky Mountain cabins start around $250,000 for 2BR, up to $600,000+ for luxury 4BR+ with views and amenities.

Challenges: Gatlinburg/Pigeon Forge market is saturated with STRs. Differentiation through amenities (hot tubs, game rooms, theaters) is essential. Nashville has tightened regulations requiring owner-occupant permits for new STRs in certain neighborhoods.

ROI Expectations: Well-positioned Smoky Mountain cabins can achieve 12-18% annual returns including appreciation. Nashville properties typically see 8-12% with higher appreciation potential.

2. Florida

Best Markets: Gulf Coast (Destin, Panama City Beach, Naples), Orlando, Tampa, Miami, Keys
Average Occupancy: 55-70%
Average Daily Rate: $200-450
Regulatory Environment: Generally permissive with county/city variations
Investment Range: $200,000-$1,000,000+

Florida is vacation rental royalty. Year-round tourism, beach destinations, theme parks, and cruise ports create diverse STR opportunities.

Why Florida Works:

Beach Markets: Gulf Coast properties in Destin, 30A, Panama City Beach, and Clearwater Beach achieve 60-70% occupancy during peak season (March-August) with rates of $300-600/night. Shoulder and winter seasons still generate bookings from snowbirds and events.

Orlando Theme Park Rentals: Properties near Disney/Universal rent to families seeking more space than hotels. 4-6 bedroom homes in Kissimmee/Davenport communities achieve 70%+ occupancy with $180-300/night rates.

Miami/South Florida: Urban STRs serving business travelers, convention attendees, and tourists. Higher property costs but also higher rates ($250-500/night).

Keys: Marathon, Islamorada, and Key West command premium rates for waterfront and access properties, though inventory is limited and expensive.

No State Income Tax: Like Tennessee, Florida has no state income tax, benefiting investors.

Regulatory Note: Regulations vary by county and city. HOAs in many communities prohibit or restrict STRs—verify before purchasing. Some cities require business licenses and collect tourist development taxes (typically 5-7%).

ROI Expectations: Beach properties typically return 8-14% annually. Orlando theme park homes can hit 10-15% with proper management and marketing.

3. North Carolina

Best Markets: Outer Banks, Asheville, Charlotte (Lake Norman)
Average Occupancy: 55-65%
Average Daily Rate: $200-400
Regulatory Environment: Varies by county; generally permissive
Investment Range: $300,000-$800,000

North Carolina offers mountain and beach vacation rental opportunities with established tourism infrastructure.

Why North Carolina Works:

Outer Banks: Classic beach vacation destination with generational repeat visitors. Properties on Hatteras Island, Nags Head, and Duck command strong summer rates ($2,500-6,000/week for larger homes). Season is concentrated May-September but intense.

Asheville Mountains: Blue Ridge Mountain cabins near Asheville attract year-round visitors for fall foliage, spring flowers, winter coziness, and summer coolness. Market has grown competitive but still offers opportunities.

Lake Norman (Charlotte): Lake properties serve weekend getaways from Charlotte and regional visitors. Less seasonal than beach/mountain markets.

Established Market: NC has decades of vacation rental history, creating professional management companies, clear regulations (in most areas), and investor infrastructure.

Challenges: Outer Banks season is concentrated, creating cashflow gaps in winter months. Hurricane risk requires proper insurance (expensive). Asheville has become saturated in some submarkets.

ROI Expectations: Outer Banks properties average 10-14% annual returns. Asheville cabins range 8-12% depending on location and amenities.

4. Arizona

Best Markets: Scottsdale, Sedona, Flagstaff, Lake Havasu
Average Occupancy: 60-75%
Average Daily Rate: $180-350
Regulatory Environment: Generally favorable; Scottsdale requires licensing
Investment Range: $250,000-$700,000

Arizona's desert climate creates inverse seasonality—peak demand occurs October-April when snowbirds and tourists escape cold weather.

Why Arizona Works:

Scottsdale: Luxury vacation rental market serving golf trips, spa retreats, and spring training visitors. Properties with pools achieve 70%+ occupancy November-May with rates of $250-500/night.

Sedona: Red rock vistas attract tourists year-round. Limited inventory due to geographic constraints keeps occupancy high (65-75%) with premium pricing ($280-450/night).

Flagstaff: Northern Arizona mountains offer summer escape from Phoenix heat and winter snow activities. College town (NAU) provides additional demand during academic year.

Lake Havasu: River recreation and spring break destination. More affordable entry point ($250,000-400,000) than Scottsdale/Sedona.

Seasonality Advantage: Peak season (October-April) aligns with when many other markets are slow, allowing investors to balance portfolios across different seasonal patterns.

Challenges: Summer (June-August) is slow in Phoenix metro, though Flagstaff remains busy. HOAs commonly restrict STRs—critical due diligence item.

ROI Expectations: Scottsdale properties with pools and desert views return 9-13%. Sedona can hit 12-16% but entry costs are high ($500,000+).

5. South Carolina

Best Markets: Myrtle Beach, Charleston, Hilton Head, Greenville
Average Occupancy: 55-68%
Average Daily Rate: $175-350
Regulatory Environment: Varies by locality; generally permissive
Investment Range: $200,000-$650,000

South Carolina offers diverse vacation rental opportunities from beach resorts to historic cities to mountain foothills.

Why South Carolina Works:

Myrtle Beach: The "Grand Strand" is one of America's most visited beach destinations. Condo and house rentals serve families seeking affordable beach vacations. High season (May-August) drives 70-80% occupancy with shoulder seasons still producing bookings.

Charleston: Historic charm attracts tourists, weddings, and food enthusiasts year-round. Downtown properties command $250-400/night with 60-70% annual occupancy.

Hilton Head: Upscale beach and golf destination. Villas and homes in plantation communities rent well to higher-income visitors. More sedate than Myrtle Beach with less seasonality.

Lower Entry Costs: Compared to Florida, South Carolina beach properties cost 20-30% less for similar amenities and proximity.

Regulatory Advantage: Most markets require business licenses and collect accommodations taxes but don't restrict STR operations significantly.

Challenges: Beach season is concentrated, though Charleston and Greenville offer year-round potential. Hurricane risk requires insurance considerations.

ROI Expectations: Myrtle Beach condos can return 10-15% with proper management. Charleston averages 9-12%.

6. Georgia

Best Markets: Blue Ridge, Helen, Savannah, Atlanta
Average Occupancy: 55-70%
Average Daily Rate: $175-300
Regulatory Environment: Varies; metro Atlanta has local restrictions
Investment Range: $200,000-$550,000

Georgia offers mountain cabin markets in north Georgia and urban vacation rentals in Savannah and Atlanta.

Why Georgia Works:

Blue Ridge Mountains: North Georgia cabin market competes with Tennessee Smokies at lower prices. Blue Ridge, Ellijay, and Dahlonega offer cabins with mountain views, rivers, and waterfalls. Properties run $250,000-$450,000 and can achieve 60-70% occupancy with $200-300/night rates.

Helen: Alpine-themed tourist town attracts visitors year-round for tubing, Oktoberfest, and Christmas events. Small market but consistent demand.

Savannah: Historic downtown properties serve tourists exploring squares, riverfront, and southern charm. Regulations require permitting but remain manageable.

Atlanta: Urban STR market for conventions, events, and tourism. Regulations have tightened significantly—owner-occupant requirements now limit inventory in many neighborhoods.

Proximity Advantage: Georgia mountains are closer to Atlanta, Charlotte, and southeastern population centers than Tennessee Smokies, creating weekend rental demand.

Challenges: Atlanta has adopted strict owner-occupant STR regulations limiting non-resident investors. North Georgia mountain market has grown very competitive.

ROI Expectations: Blue Ridge cabins return 10-14% annually. Savannah properties average 8-11%.

7. Colorado

Best Markets: Breckenridge, Vail, Aspen, Colorado Springs, Denver
Average Occupancy: 55-70%
Average Daily Rate: $250-600+
Regulatory Environment: Varies significantly; some mountain towns restrict heavily
Investment Range: $400,000-$2,000,000+

Colorado's ski resorts and outdoor recreation create year-round vacation rental demand, though entry costs are high.

Why Colorado Works:

Ski Town Rentals: Breckenridge, Vail, Aspen, Keystone, and other ski resorts drive winter STR demand. Properties near lifts achieve 70-80% occupancy December-March with rates of $400-800/night.

Summer Season: Hiking, biking, and mountain recreation create June-September demand, extending annual occupancy to 60-70% in top locations.

Denver Urban Market: Business travel, conventions, and city tourism support urban STRs, though regulations have tightened.

High ADR: Colorado commands among the highest rates in the nation due to ski resort premiums.

Challenges: Entry costs are prohibitive for many investors ($500,000+ minimum in desirable ski areas). Regulations vary dramatically—Breckenridge limits STR days, Denver requires owner-occupancy, some HOAs prohibit entirely.

ROI Expectations: Ski properties return 6-10% cash-on-cash but offer strong appreciation. Urban Denver properties achieve 7-12% where allowed.

8. Texas

Best Markets: Austin, San Antonio (Hill Country), Houston, Dallas, South Padre
Average Occupancy: 55-70%
Average Daily Rate: $150-300
Regulatory Environment: Type B registration required; some cities restrict
Investment Range: $200,000-$600,000

Texas offers diverse STR opportunities from urban markets to Hill Country retreats to beach destinations.

Why Texas Works:

Austin: Music, tech, and festival city attracts year-round visitors. Properties near downtown achieve 65-75% occupancy with $200-350/night rates. SXSW, ACL, and F1 create premium pricing windows.

Hill Country: Fredericksburg, Wimberley, and Dripping Springs offer weekend getaways from Austin/San Antonio. Wineries, state parks, and small-town charm drive demand.

San Antonio: River Walk tourism, conventions, and family attractions (Sea World, Six Flags) create consistent demand.

Houston/Dallas: Urban markets serving business travel and events, though regulations are tightening.

South Padre Island: Beach destination on Gulf Coast with spring break, fishing, and winter Texan (RV) crowds.

Type B Registration: Texas requires STR operators to register and collect hotel occupancy taxes. Process is straightforward and doesn't restrict operations significantly.

Challenges: Austin and other cities have debated Type 1 (owner-occupant) and Type 2 (non-owner) distinctions, sometimes limiting Type 2 permits. HOA restrictions are common in newer developments.

ROI Expectations: Hill Country properties return 9-14%. Austin urban STRs achieve 8-12% where permitted.

9. Utah

Best Markets: Park City, Moab, St. George, Salt Lake City
Average Occupancy: 60-75%
Average Daily Rate: $200-450
Regulatory Environment: Generally permissive with licensing requirements
Investment Range: $300,000-$1,200,000+

Utah's "Mighty Five" national parks and ski resorts create powerful tourism drivers for STR investing.

Why Utah Works:

Park City: Ski resort town offering winter sports and Sundance Film Festival. Summer activities (hiking, biking, golf) create second season. Properties achieve 65-75% annual occupancy with $300-500/night rates.

Moab: Gateway to Arches and Canyonlands National Parks. Year-round outdoor recreation (though summer is scorching). Properties stay booked 70-80% annually in top locations.

St. George: Southern Utah warmth attracts winter visitors and provides access to Zion National Park. Growing market with less competition than Park City or Moab.

Salt Lake City: Urban market for ski resort visitors (Alta, Snowbird, Brighton nearby) and business travel.

Year-Round Demand: Ski season + national park tourism + outdoor recreation create consistent occupancy across seasons.

Challenges: Park City entry costs are extreme ($600,000-$2,000,000+). HOAs in some developments restrict STRs. Moab is isolated—management can be challenging.

ROI Expectations: Park City condos return 6-9% cash-on-cash with appreciation upside. Moab properties achieve 10-15%.

10. Michigan

Best Markets: Traverse City, Saugatuck, Mackinac Island, Detroit
Average Occupancy: 50-65%
Average Daily Rate: $175-350
Regulatory Environment: Varies by locality; generally permissive
Investment Range: $200,000-$600,000

Michigan's Great Lakes waterfront creates summer vacation rental opportunities, though seasonality is extreme.

Why Michigan Works:

Traverse City: Northern Michigan wine country and Lake Michigan beaches attract summer crowds and fall color tours. Properties achieve 70-80% occupancy May-October but struggle November-April.

Saugatuck: Artsy beach town near Chicago draws weekend visitors and week-long vacationers. LGBTQ-friendly community hosts events and festivals.

Mackinac Island: Unique car-free island with historic charm. Limited inventory creates strong demand but also high costs and logistical challenges.

Detroit: Urban market has emerged for events, sports, and casino visitors. Properties near downtown achieve 60-70% occupancy year-round.

Entry Point: Michigan waterfront properties cost 30-50% less than comparable Wisconsin or Minnesota lakes.

Challenges: Extreme seasonality in lake markets—October-April is nearly dead. Properties must generate 80%+ of annual revenue in 5-6 months. Winter carrying costs (heating, maintenance, taxes, insurance) eat cash flow.

ROI Expectations: Summer lake properties return 8-14% in good locations. Detroit urban STRs achieve 9-13%.

States with Heavy STR Restrictions

California

Regulation Level: Severe in most desirable markets
Impact: Many cities ban or heavily restrict non-owner-occupied STRs

California cities have aggressively regulated STRs:

• San Francisco: Owner-occupancy required; max 90 days/year for non-primary
• Los Angeles: Host must reside on property; 120-day annual cap for entire home
• San Diego: Whole-home STRs prohibited in residential zones (Mission Beach exception)
• Santa Monica: Effectively banned through regulations
• Palm Springs/Coachella Valley: Many cities prohibit or cap permits

Verdict: California STR investing is nearly impossible in desirable markets unless owner-occupant or in less-regulated mountain/rural areas.

New York

Regulation Level: Severe statewide
Impact: Most short-term rentals under 30 days are illegal

New York's Multiple Dwelling Law prohibits rentals under 30 days in buildings with 3+ units unless owner is present. NYC aggressively enforces with fines up to $7,500.

Exceptions: Single-family homes in some upstate markets (Finger Lakes, Adirondacks) remain viable.

Verdict: Avoid NYC entirely. Upstate rural markets work but are limited.

Hawaii

Regulation Level: Severe on most islands
Impact: Permit moratoriums and restrictions across major islands

Hawaii has cracked down on STRs to protect long-term housing:

• Oahu: No new permits issued since 1989 except resort zones
• Maui: 90-day minimum rental law proposed/passed in some areas
• Kauai: Limited permits with caps

Existing Permits: Grandfathered permits sell for $100,000-300,000 separate from property value.

Verdict: Only invest if purchasing property with existing legal permit. New investors face near-impossible regulatory environment.

Oregon (Portland)

Regulation Level: Heavy in Portland; moderate elsewhere
Impact: Owner-occupancy requirements and permit caps

Portland requires owner-occupancy for Type A (entire home) STRs and has capped permits. Type B (rooms in owner-occupied home) remains viable.

Coastal Markets: Oregon coast towns have varying regulations. Some allow STRs with registration; others restrict.

Verdict: Portland is difficult. Coastal markets vary—research specific city ordinances.

STR Success Factors Beyond State Selection

Property Selection

Amenities Drive Bookings: Hot tubs, pools, game rooms, theaters, fire pits, views, and unique features differentiate properties in competitive markets.

Location Within Markets: Proximity to attractions matters enormously. Being 2 miles closer to beach/slopes/downtown can double occupancy and rates.

Bedroom Count: 3-4 bedrooms often hit sweet spot for group travel (families, friend groups). 1-2 bedroom properties compete with hotels. 5+ bedroom properties target extended families and large groups—smaller audience but higher rates.

Property Condition: STRs must be immaculate. Dated properties get destroyed in reviews. Budget for professional furnishing and regular updates.

Management Strategy

Self-Management vs. Professional: Self-managing saves 15-25% in fees but requires time, responsiveness, and systems. Professional management scales better for multiple properties or distant investments.

Dynamic Pricing: Tools like PriceLabs, Wheelhouse, and Beyond analyze comps and demand to optimize nightly rates. Can increase revenue 10-25% over static pricing.

Channel Management: Listing on Airbnb, VRBO, Booking.com, and direct booking sites maximizes exposure. Channel managers sync calendars to prevent double bookings.

Guest Communication: Fast responses (under 1 hour) improve conversion and reviews. Templates and automation help but must feel personal.

Financial Modeling

Occupancy Assumptions: Use 50-60% as conservative estimate for new properties. Established listings in strong markets can hit 70-80%.

ADR Expectations: Research AirDNA, Rabbu, or AllTheRooms for market data. Your ADR will likely be 10-15% below top performers initially.

Operating Costs:

• Cleaning: $75-200 per turnover (charge guests but it's your cost)
• Linens/supplies: $1,500-3,000 annually
• Management: 15-25% of revenue if professional
• Maintenance: 1.5-2% of property value annually (higher than long-term)
• Utilities: Your responsibility unlike long-term rentals
• HOA: $200-500/month in many complexes
• Taxes: Property tax + lodging/tourism taxes (4-12% of revenue)
• Insurance: STR insurance runs 15-25% more than standard landlord policies

Seasonal Cash Flow: Model monthly revenue distribution. Many markets earn 60-70% of annual income in 3-4 peak months. Ensure you can cover 8-9 months of expenses with 3-4 months of peak income.

Bottom Line: Location and Regulation Trump Everything

The best states for Airbnb investing combine:

1. Strong tourism fundamentals (attractions, events, natural beauty)
2. Reasonable regulations allowing non-owner-occupied STRs
3. Professional property management infrastructure
4. Favorable economics (purchase prices supporting returns)

Tennessee, Florida, North Carolina, and Arizona currently offer the best combination of these factors for most investors. Colorado and Utah deliver higher rates but require larger capital. Texas and Georgia provide good value with growing tourism.

Avoid California, New York, Hawaii, and other heavily regulated states unless you're owner-occupying or have grandfathered permits.

STR investing offers higher income potential than traditional rentals but also higher operating complexity, seasonal volatility, and regulatory risk. Choose your state and specific market carefully, model conservatively, and prepare for hands-on management or professional fees. Done right, short-term rentals can significantly outperform long-term strategies.