Where the Money Flows: Top Cities for Short-Term Rental Investment

In this article, we'll explore the top cities for short-term rental investment using data-driven insights. We'll examine the ADR, occupancy rates, and ROI of various cities to determine which ones are most attractive to investors.

According to data, the top 3 cities for short-term rental investment are Phoenix, AZ with an ADR of $510.34, Chicago, IL with an ADR of $245.61, and Los Angeles, CA with an ADR of $492.36.

Phoenix, AZ has an average occupancy rate of 69.85% and an estimated annual profit of $97,058.26. On the other hand, Chicago, IL has an average occupancy rate of 45.98% and an estimated annual profit of $24,647.83. Los Angeles, CA has an average occupancy rate of 47% and an estimated annual profit of $30,692.41.

Another city worth mentioning is Houston, TX with an ADR of $145.49 and an average occupancy rate of 39.88%. While the ADR is lower compared to the top 3 cities, Houston's occupancy rate is still relatively high, indicating potential for growth.

When it comes to ROI, Phoenix, AZ stands out with a 21.57% ROI, followed by Chicago, IL with a 7.58% ROI, and Los Angeles, CA with a 3.07% ROI. Houston, TX has a lower ROI of 2.36%, but its occupancy rate suggests potential for growth.

In terms of amenities, Phoenix, AZ offers a range of options, including Backyard, BBQ Grill, and Beach Access, with an average occupancy rate of 62% and an average ADR of $18464.

On the other hand, Chicago, IL has a more limited range of amenities, with an average occupancy rate of 42% and an average ADR of $15721.

In terms of bedrooms, Phoenix, AZ has a mix of options, including 2-bedroom, 3-bedroom, and 4-bedroom rentals, with an average occupancy rate of 66% and an average ADR of $24100.

Finally, when it comes to seasonality, Los Angeles, CA has a high occupancy rate of 50% in the summer months and a lower occupancy rate of 40% in the winter months, indicating a strong seasonal demand.

Based on these data-driven insights, we can conclude that Phoenix, AZ is the top city for short-term rental investment, followed closely by Chicago, IL and Los Angeles, CA. Houston, TX is also worth considering due to its high occupancy rate and potential for growth.

For a more comprehensive analysis, check out our article on top short-term rental markets in Virginia and our short-term rental market in Utah to see which cities are poised for growth in 2025.

Additionally, our latest article on top 10 booming U.S. cities highlights which cities are experiencing rapid growth in median list prices, making them attractive for investment.

Finally, for a deeper dive into short-term rental regulations and hotel licensing, read our article on short-term rental regulations vs. hotel licensing to ensure you're up-to-date on the latest industry developments.