In the quest to maximize returns on Airbnb and short-term rental investments, savvy investors often seek markets that combine the allure of high average gross yields with the benefit of low property tax rates. Identifying such markets is crucial for optimizing investment returns and minimizing overhead costs. With property taxes being a significant recurring expense for property owners, markets with lower rates (lower than 0.8%) stand out for their financial efficiency and appeal.
Moreover, when these markets also report high average gross yields, they represent not just savings on expenses but also robust income potential. This unique combination makes certain destinations particularly attractive for investment, offering a balanced approach to risk and reward. In this series, we’ll explore some of the best Airbnb rental markets that meet these criteria, highlighting why they’re worth considering for investors aiming to build a profitable and sustainable portfolio in the short-term rental space.
1. Birmingham, Alabama
Birmingham, AL, is rich in history and culture, with attractions like the Birmingham Civil Rights Institute and the Alabama Jazz Hall of Fame drawing numerous visitors each year.
Birmingham has experienced a slight decrease in home values by -6.30%, with the average home price now at $127,365. Despite this, the city maintains a competitive edge with an average daily rate (ADR) of $122.00 and an occupancy rate of 55%, leading to an annual revenue of $22,925 from 985 active listings. The average gross yield is an impressive 16.41%, complemented by a cap rate of 10.80%. The property tax rate is 0.65%.
For further details on this market, explore the free Birmingham Airbnb Investor Guide and Birmingham Rental Regulations.
2. New Orleans, LO
New Orleans, LA, offers a unique blend of music, cuisine, and vibrant festivals, such as Mardi Gras, making it a perennial favorite among tourists.
New Orleans has seen a notable decrease in home values by -6.97%, with the average price reaching $237,512. With an ADR of $315.00 and an occupancy rate of 53%, the annual revenue is $32,460 from 5,558 active rentals. The gross yield is 8.20%, and the cap rate is 10.91%. The property tax rate is 0.76%.
To delve deeper into New Orleans investment potential, check out Chalet Intel.
3. Broken Bow, OK
Broken Bow, Oklahoma, is a small city located in the southeastern part of the state. It serves as the county seat of McCurtain County and is known for its beautiful natural surroundings.
Broken Bow has seen a significant decrease in home values by -8.44%, with the average price at $308,683. The market shows promise with an ADR of $207.00 and an occupancy rate of 42%, generating annual revenues of $41,744 from 168 active rentals. The gross yield stands at 13.52%, with a cap rate of 8.11%. The property tax rate is 0.44%.
4. Yucca Valley, CA
Yucca Valley, California, is a small town located in San Bernardino County, known for its stunning desert landscapes and proximity to outdoor recreational activities, Yucca Valley attracts visitors interested in hiking, rock climbing, and enjoying the unique Joshua trees that dot the area.
Yucca Valley, CA has experienced a slight drop in home values by 1.62%, with the average home price now at $373,350. The city’s ADR is $216.00, with an occupancy rate of 61%, resulting in an annual revenue of $47,925 from 796 active listings. The gross yield is 12.84%, and the cap rate is 7.70%. The property tax rate is 0.78%.
For more comprehensive insights into Yucca Valley as a rental market, explore Chalet Intel.
5. Vail, CO
Vail, Colorado, is a world-renowned ski resort town located in the Rocky Mountains, it has become one of the premier destinations for skiing and snowboarding in the United States.
Vail has seen a 0.60% increase in home values, with the average price now at $416,948. This market thrives with an ADR of $331.00 and an occupancy rate of 56%, translating to an annual revenue of $49,234 from 972 active rentals. The gross yield here is 11.81%, with a cap rate of 7.08%. The property tax rate is 0.41%.
For more comprehensive insights into Vail as a rental market, explore Chalet Intel.
6. Joshua Tree, CA
Joshua Tree, CA, is a unique desert town located near the entrance to Joshua Tree National Park, known for its striking landscapes, iconic Joshua trees, and fascinating rock formations.
Joshua Tree has experienced a decline in home values by -4.76%, with the average price at $381,657. The city’s ADR is $180.00, with an occupancy rate of 60%, leading to an annual revenue of $41,936 from 974 active listings. The gross yield is 10.99%, and the cap rate is 6.59%. The property tax rate is 0.78%.
To explore investment opportunities in Joshua Tree, visit Chalet Intel. Our guides offer the knowledge and tools you need to make informed decisions and maximize your returns.
Each of these markets based on low property tax offers unique opportunities for short-term rental investors, combining strong financial metrics with appealing tourist attractions. For a comprehensive overview, including detailed analyses, calculators, and regulation insights, make sure to explore our latest tool, Chalet Intel.
