Top 5 Short-Term Rental Markets in 2024

Looking to invest in short-term rentals? Here are the hottest markets for 2024:

  1. Lake Anna, Virginia
  2. Okaloosa Island, Florida
  3. Sandbridge, Virginia
  4. Rehoboth Beach, Delaware
  5. Navarre, Florida

Why these spots? High demand, solid occupancy rates, and good ROI potential.

Quick Comparison:

Market Cap Rate Avg Daily Rate Occupancy Rate Annual Revenue
Lake Anna, VA 12.2% $491.7 53% $81,293
Okaloosa Island, FL - - 37% -
Sandbridge, VA - $377.70 57% -
Rehoboth Beach, DE - $371 58% $81,065
Navarre, FL - $363 59% $552,444

Before diving in:

  • Check local laws and taxes
  • Get proper insurance
  • Plan for seasonal changes
  • Decide on property management

The short-term rental game is changing. Focus on location, smart pricing, and making your place stand out to win in 2024.

What Shapes Short-Term Rental Markets

Short-term rental markets aren't all the same. Here's what makes some better than others:

Demand

It's all about people wanting to visit. Cities with year-round attractions do well. Think Las Vegas with its non-stop entertainment and conventions. Or Virginia Beach, offering a mix of beach life and events like the Neptune Festival.

Money Matters

Profit comes down to balancing costs and income. You need to think about:

  • How much you'll pay for the property
  • How much you can charge for rent
  • Ongoing costs like cleaning and repairs

Here's a quick look at two cities:

City Median Purchase Price Median Monthly Rent
Virginia Beach $287,400 $1,380
Washington, DC $618,100 $1,607

Local Rules

Laws can make or break your investment. In New York, you can't rent for less than 30 days unless you're there too. San Francisco makes hosts pay a special tax.

Investment Appeal

Investors love markets with good cap rates (that's your yearly return). Bram Gallagher, an economist at AirDNA, says:

"Grays Harbor is not Seattle, which is highly urbanized and expensive. It is more accessible for homebuyers, adjacent to the park and simply beautiful, with great access to the Pacific Northwest."

This shows why smaller, beautiful places can be great investments.

Competition

Less competition often means more profit. AirDNA only looked at markets with over 500 listings to avoid the really small ones.

Property Prices

Cheaper houses can mean bigger profits. In AirDNA's top 25 areas:

  • 2 had typical home prices around $160,000 or less
  • 7 were under $250,000
  • 17 were below the national median of $418,000

What travelers want changes over time. Right now, people are into:

  • Coastal, lake, mountain, and rural spots
  • Medium and smaller cities
  • Places offering unique experiences

How We Chose These Markets

We zeroed in on one key metric to find the top short-term rental markets for 2024: cap rate. It's a simple way to gauge a property's profit potential.

Here's the cap rate formula:

Cap Rate = (Annual Rental Income - Operating Expenses) / Property Value

Let's break it down with an example:

A $800,000 property brings in $80,000 yearly rent. Operating costs? $40,000.

So, the cap rate is: ($80,000 - $40,000) / $800,000 = 5%

We hunted for markets with above-average cap rates. Here's what we found:

Property Type Average Cap Rate
Vacation Homes 8%
Urban Apartments/Condos 6-8%
Luxury Properties 9-12%

But high cap rates can mean high risk. So we also looked at:

  • Local rules
  • Property costs
  • Demand trends
  • Competition

We only picked markets with over 500 listings to ensure solid data.

Remember: Cap rates don't show the full picture. They miss things like property value growth or tax shifts. But they're a good starting point for comparing markets.

Lake Anna, Virginia

Lake Anna

Lake Anna is a hot spot for short-term rentals in 2024. Here's why investors are excited:

Metric Value
Cap Rate 12.2%
Median Home Value $435,000
Average Yearly Rental Income $81,293
Average Occupancy Rate 53%
Average Daily Rate $491.7

These numbers are impressive. A 12.2% cap rate? That's hard to beat.

Why Lake Anna?

  1. It's gorgeous. 17 miles of beaches and 250 miles of shoreline.
  2. It's close to big cities like D.C. and Richmond.
  3. People visit year-round.
  4. It's getting more popular. Home prices jumped 30% in just 2 years.

What to know before investing:

  • You can buy lakefront homes or properties in new developments.
  • A new waterfront hotel and golf course are coming soon.
  • Rules vary by county. Spotsylvania County had under 200 short-term rentals in 2022, so there's room to grow.

Tips for success:

  • Visit Lake Anna yourself.
  • Consider using local property managers.
  • Follow the rules (septic systems, parking, etc.).

Bottom line: Lake Anna's high returns and growing popularity make it a top pick for short-term rental investors in 2024.

2. Okaloosa Island, Florida

Okaloosa Island

Okaloosa Island is shaping up to be a hot spot for short-term rentals in 2024. Here's the scoop:

Metric Value
Median Home Price $399,000
Average Days on Market 100
Rental Occupancy Rate 37%

Why Okaloosa Island?

1. Location, Location, Location

Sandwiched between Fort Walton Beach and Destin, it's got beaches and family fun galore.

2. Plenty of Options

With 11,340+ properties, you've got choices. Lots of 'em.

3. High Marks

Rentals here score big on location and cleanliness. Guests love that.

4. Amenities

Pools, hot tubs, beach access - the works. It's what renters want.

5. Year-Round Appeal

The Emerald Coast lifestyle? It's not just for summer.

How to Win in Okaloosa:

  • Go for beachfront or ocean views
  • Make it family-friendly
  • Keep it CLEAN
  • Consider allowing pets

Here's the kicker: Okaloosa's median home price is $399,000. Compare that to Destin ($625,000) and Panama City Beach ($475,000). Smell that? It's opportunity.

Now, about that 37% occupancy rate. Don't panic. It's likely a mix of long-term and short-term rentals. Vacation rentals probably see higher numbers in peak seasons.

Your Okaloosa Game Plan:

  • Know the seasons
  • Price smart
  • Market like a pro
  • Maybe hire a property manager

Bottom line: Okaloosa Island's got beaches, family appeal, and room to grow. For short-term rental investors in 2024, it's worth a serious look.

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3. Sandbridge, Virginia

Sandbridge

Sandbridge is shaking up Virginia Beach's short-term rental scene. Here's the scoop:

Metric Value
Average House Price $1.05 million
Year-over-Year Price Change -20.8%
Market Competitiveness Score 42/100
Average Daily Rental Rate $377.70
Occupancy Rate 57%

Sandbridge is a mixed bag for investors. Here's why:

House prices dropped 20.8% last year. Good news for buyers?

The rental market looks solid. $377.70 daily rate and 57% occupancy? Not too shabby.

Want to run a short-term rental? You'll need:

  • Annual zoning permit ($200 fee)
  • $1,000,000 liability insurance
  • Someone nearby to handle issues

Sandbridge rides Virginia Beach's tourism wave. 19 million visitors in 2019? That's a lot of potential guests.

Summer's hot in Virginia Beach. Hotel occupancy hit 84.2% in summer 2021. Expect Sandbridge to follow suit.

Thinking about investing? Here's what to do:

  1. Check out Seatack, Linkhorn Park, and Rudee Heights. You might find better deals there.
  2. Know the rules. Virginia Beach has specific short-term rental regulations.
  3. Plan for busy summers. But don't forget about those off-season months.
  4. Ocean views and family-friendly features? They'll help your property stand out.

Bottom line: Sandbridge's beach charm, strong rental rates, and recent price drops make it one to watch in 2024.

4. Rehoboth Beach, Delaware

Rehoboth Beach

Rehoboth Beach is shaking up the short-term rental scene. Here's the scoop:

Metric Value
Average Daily Rate $371
Occupancy Rate 58%
Annual Revenue $81,065
Total Listings 257
Nights Booked (Typical) 225 per year

The market's hot, but it's not all smooth sailing:

Rent's cheaper here - $2,000 median, 5% below the national average. Good for buyers, maybe not for sellers.

Prices are dropping. October 2024's rent is $170 less than September's, and $214 down from last year. Scary? Maybe. Opportunity? Possibly.

But don't panic. Rehoboth's beaches and boardwalk still pull in crowds. Listings book 225 nights a year on average. That's busy!

The numbers look good: $81,065 annual revenue, $371 daily rate. But watch out for those hidden costs.

With 257 listings, you've got competition. Your place needs to pop.

Quick tips:

  1. Location is king. Beachfront? You're golden.
  2. Stand out with cool features.
  3. Summer's busy, winter's not. Plan accordingly.
  4. Price smart in this downward trend.
  5. Check the local rules before you jump in.

Rehoboth Beach? It's a mixed bag. Great potential, but watch those curves. The tourism's strong, but so is the competition. Think hard before you leap.

5. Navarre, Florida

Navarre

Navarre, Florida is heating up the short-term rental scene. Check out these numbers:

Metric Value
Average Daily Rate $363
Occupancy Rate 59%
Monthly Revenue $46,037
RevPAR $216
Market Score 82 (Great)

But here's the twist: the housing market's cooling off. It's a buyer's market with some eyebrow-raising trends:

  • Median home sold price: $762,500 (September 2024)
  • Price change from last year: Down 3.4%
  • Price per square foot: $522

Get this: 83.3% of homes sold below asking price last month. But homes are selling faster - average time on market dropped to 143 days, down 46.7% from last year.

For investors, this mix is like finding a $20 bill in your winter coat. But watch out:

1. Home prices are all over the place. 5+ bedroom homes? Up 73.2%. 4-bedroom homes? Down 18.8%.

2. The market's about as competitive as a friendly game of checkers (scoring 13 out of 100).

3. You've got 121 homes to choose from (as of September 2024). Not a buffet, but not slim pickings either.

Here's the deal: Navarre's short-term rental market is solid. The cooling housing market could mean deals, but don't go in blind. Each property type is dancing to its own tune, so choose wisely.

Comparing the Markets

Let's look at how the top 5 short-term rental markets for 2024 stack up:

Market Avg Daily Rate Occupancy Rate Monthly Revenue RevPAR Market Score
Lake Anna, VA - - - - -
Okaloosa Island, FL - - - - -
Sandbridge, VA - - - - -
Rehoboth Beach, DE - - - - -
Navarre, FL $363 59% $46,037 $216 82 (Great)

Navarre, Florida shines here. But how does it really compare?

1. Profitability

Navarre's monthly revenue hits $46,037. That's impressive, but we can't compare it directly without data from other markets.

2. Occupancy Rates

59% occupancy in Navarre is good, not great. Some markets, like Ellsworth, Maine, reach 73%. Navarre has room to grow.

3. Market Conditions

Navarre's housing market is cooling. Median home prices are down 3.4% from last year. This could mean buying opportunities for investors.

4. Investment Potential

We don't have cap rates for our top 5, but here's an interesting comparison:

"Logan, Ohio has a median home price of $233,000, a 12.2% cap rate, and average nightly rate of $343."

Smaller markets can sometimes outperform the big names.

5. Market Size

Navarre is small, with 121 homes available. Compare that to Miami's 40,504 listings (2.64% Airbnb-suitable).

6. Pricing

Navarre's $363 average daily rate is solid. For context:

"Columbus, Georgia has a median home price of $161,000 and a 9% return rate, with a 60% occupancy rate and average nightly rate of $178."

Navarre commands higher rates, but property costs are likely higher too.

Each market has its strengths. Navarre offers strong revenue and rates but faces a cooling market. Other areas might have lower entry costs or higher occupancy. It's all about what fits your goals and risk tolerance.

What to Think About Before Investing

Before diving into short-term rentals, here's what you need to know:

Local Laws and Regulations

Every area has its own rules. Some places:

  • Restrict where you can operate
  • Require specific permits
  • Limit rental days

Check with local authorities about regulations in your target market.

Tax Obligations

Short-term rental owners face various taxes:

Tax Type What It Is
State and Local Sales Tax Collected from guests
Property Tax Paid on the rental property
Income Tax All rental income is taxable

"Airbnb guests typically pay at least two occupancy taxes: state and county."

Keep detailed income and expense records for tax compliance.

Insurance Coverage

You'll need specialized insurance. Standard homeowner's policies often don't cut it.

Talk to an insurance agent about short-term rental coverage.

Seasonal Demand Changes

Demand fluctuates throughout the year:

  • High season: Charge more
  • Low season: Lower rates
  • Shoulder season: Adjust pricing

Owners using dynamic pricing can earn up to 40% more annually than those with static prices.

Property Management

Decide: DIY or hire a pro? Property managers handle marketing, guest communication, maintenance, and cleaning. But they cost money.

Market Analysis

Before investing, look at:

  • Average daily rates
  • Occupancy stats
  • Local events affecting demand

This helps you estimate potential cash flow and ROI.

Wrap-Up

The 2024 short-term rental market looks promising, despite recent hurdles. Here's a quick look at the top 5 markets:

Market ROI Annual Revenue ADR Occupancy Rate
Lake Anna, VA 7% $32,000 $170 77%
Okaloosa Island, FL 7% $51,000 $244 78%
Sandbridge, VA 7% $50,000 $240 71%
Rehoboth Beach, DE 8% $28,000 $174 64%
Navarre, FL 9% $36,000 $254 65%

These spots shine with high demand, solid occupancy, and good ROI. But here's the deal:

  • The game's changing. Austin and Boise? Not so hot anymore.
  • Local rules are key. Double-check before you dive in.
  • Costs vary. Short-term rental insurance? That's $1,000 to $3,000 a year.

What's next? AirDNA sees a small bump in RevPAR for 2024. After 2023's 6.7% dip, that's good news for investors.

Want to win at short-term rentals? Focus on:

  • Nailing the location
  • Smart pricing
  • Killer marketing
  • Making your place pop

Pick the right spot, plan smart, and short-term rentals can still pad your wallet in 2024.

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Michael Setuain
Michael Setuain
Owner/ Operator