Rental properties are some of the most profitable business ventures for real estate investors. If done right, it can give not just a decent return on investment but also a steady source of passive income.
Short-term rentals, particularly those listed on platforms like Airbnb, offer even greater returns compared to traditional rentals. The high Airbnb cash on cash return attracts investors into going the vacation home route instead of the conventional long-term rental strategy.
That being said, let’s take a closer look at how an Airbnb cash on cash return is way better than the traditional one and which ones are the best rental markets that will generate great returns.
Watch our video below to find out the 10 top Airbnb locations for cash on cash return:
The Best Locations for Airbnb Cash on Cash Return
With regard to making money in real estate, adopting a short-term rental strategy for your property is one of the fastest and most efficient ways to get your return on investment. Converting your real estate investments into vacation homes is a great way of generating positive cash flow as long as you have the right real estate investment strategy.
Part of creating a sound investment strategy is knowing how to determine good cash on cash return.
Why Does Cash on Cash Return Matter in Real Estate?
Investors use cash on cash return to see whether a property is profitable or not. It measures a property’s annual return relative to the money initially put out by the investor, assuming that no loans were taken and it was fully funded by the individual.
Cash on cash return is calculated by dividing the investment property’s cash inflows by the investor’s cash outflows before taxes. Simply put, the property’s net cash flow is divided by the total amount of cash the investor has put in.
A cash on cash return essentially helps investors figure out how much money can be earned back yearly from their total cash investment.
It Is Not a Return on Investment.
You’ve probably heard the term “cash on cash return” thrown around in conversations to imply return on investment. And while they seem quite similar and are often used interchangeably, they are two different things.
Cash on cash return considers the out-of-pocket investment made by an individual to determine a property’s potential annual return. Return on investment or ROI, on the other hand, considers the entire investment as a whole – out-of-pocket expenses, loans, and other options used to finance the purchase of the property – to see the rate of return and profitability of the investment.
It Is Not Net Operating Income.
Cash on cash return is also sometimes confused with net operating income or NOI. Different formulas are used to determine both values. However, the main difference between the two is cash on cash return takes into account debt services. An NOI does not. The same principle is applied to both Airbnb cash on cash return and the traditional one.
Calculator and Other Helpful Investment Property Tools
To make things easy for real estate investors, online real estate marketplace platforms, like Mashvisor, offer different tools users can use to locate properties and analyze relevant real estate data.
One such tool is a cash on cash return calculator. And while there are plenty of investment property return calculators easily accessible online, Mashvisor’s Airbnb calculator is one of the best calculators used and preferred by thousands of investors. It not only helps investors figure out their traditional or Airbnb cash on cash return but it also gives them access to all markets across the US to help them find the most suitable traditional or Airbnb income property that aligns well with their investment goals and criteria.
Why Are Airbnb Rentals More Profitable than Traditional Rentals?
While traditional rental property owners prefer long-term rentals because of the stability they provide, vacation homeowners choose to go this route for a few valid reasons. They are more popular since they offer travelers cheaper alternatives to hotels. The practicality offered by such properties makes them a magnet for those who often travel for business or those who want to go on budget-friendly vacations.
And while vacation rentals don’t provide the stability of fixed, regular monthly payments, Airbnb owners get to enjoy higher monthly rental rates, especially in places where the Airbnb demand is high.
Airbnb rentals offer property owners greater control over rent and property management. Plus, the risk of ending up with a bad tenant is less likely to occur compared to those with traditional rental properties.
What Makes for a Good Cash on Cash Return for Real Estate Investors?
Real estate investing can be done in several ways. Those who choose to venture into rental properties can choose between two strategies: traditional and short-term rentals. Investors with a lower risk tolerance are more likely to go the traditional rental route, while those with a greater risk appetite choose to go with the short-term rental strategy. Ultimately, the choice of whether to go long-term or short-term rentals will depend on the investor’s profile and circ*mstance.
While different factors, directly and indirectly, affect a property’s cash on cash return rate, regardless of whether it’s a long term rental property or a vacation home, most experts agree that a good return rate falls anywhere between 8% to 12%. Any property that generates this type of cash on cash return rate is considered a worthwhile investment. The only catch is that it is harder to find properties that offer these numbers nowadays. So generally, getting at least a 3% cash on cash return is already considered acceptable in most markets.
A good cash on cash return rate ranges from 8% to 12%.
30 of the Top US Cities Where Real Estate Investors Can Get a Good Airbnb Cash on Cash Return
We have listed 30 of the top rental markets that generate a good Airbnb cash on cash return. But first, let’s take a look at the different factors we used to come up with this list of the best locations for Airbnb rental properties:
- Median property price. Not to be confused with average price. This is the middle point of all the property prices publicly listed in a market. This number means that half of the houses sold in a market are more expensive while the other half is cheaper. It is a far more accurate way of determining housing affordability compared to using average house prices.
- Average price per square foot. This shows the average property cost by the square foot.
- Days on market. A higher average number indicates signs of a weak market or one in favor of buyers. On the other hand, a market with a lower average DOM is a sign of a strong market that is more favorable for sellers.
- Number of Airbnb rental listings. This indicates the number of vacation homes that are marketed and tagged as active listings on Airbnb.
- Daily Airbnb rental income. This number is the given average Airbnb rental income per day in a specific market.
- Airbnb occupancy rate. The occupancy rate gives investors an idea of the ratio of a property’s booking potential in a month. The number of bookings is relative to the percentage of occupancy. The higher the percentage, the more potential bookings.
- Monthly Airbnb rental income. This is the average monthly Airbnb rental income in a specific location. This gives an investor an idea of how much he or she can earn if the rental property is listed on Airbnb. This number is drawn using real estate comps.
- Airbnb cash on cash return rate. This is the amount of the Airbnb rental property’s potential annual return relative to the investor’s initial out-of-pocket expense.
- Walk Score. This helps determine how convenient a location is to access goods and services without owning a car. The higher the score, the more convenient it is to do errands on foot.
Here are 30 of the best locations that offer the best cash on cash return for Airbnb rental properties. The Airbnb data below is provided by Mashvisor.
1. Fairbanks, AK
- Median Property Price: $288,168
- Average Price per Square Foot: $174
- Days on Market: 114
- Airbnb Rental Listings: 227
- Airbnb Daily Rate: $137
- Airbnb Occupancy Rate: 44%
- Airbnb Rental Income: $3,484
- Airbnb Cash on Cash Return: 7.78%
- Walk Score: 33
2. Gaylord, MI
- Median Property Price: $317,522
- Average Price per Square Foot: $153
- Days on Market: 63
- Airbnb Rental Listings: 117
- Airbnb Daily Rate: $232
- Airbnb Occupancy Rate: 38%
- Airbnb Rental Income: $3,588
- Airbnb Cash on Cash Return: 7.39%
- Walk Score: 81
3. Geneva, OH
- Median Property Price: $181,596
- Average Price per Square Foot: $134
- Days on Market: 269
- Airbnb Rental Listings: 117
- Airbnb Daily Rate: $228
- Airbnb Occupancy Rate: 64%
- Airbnb Rental Income: $2,533
- Airbnb Cash on Cash Return: 7.38%
- Walk Score: 66
4. Mountain View, AR
- Median Property Price: $267,239
- Average Price per Square Foot: $180
- Days on Market: 73
- Airbnb Rental Listings: 100
- Airbnb Daily Rate: $151
- Airbnb Occupancy Rate: 16%
- Airbnb Rental Income: $2,852
- Airbnb Cash on Cash Return: 7.37%
- Walk Score: 39
5. Tobyhanna, PA
- Median Property Price: $280,057
- Average Price per Square Foot: $167
- Days on Market: 42
- Airbnb Rental Listings: 264
- Airbnb Daily Rate: $296
- Airbnb Occupancy Rate: 92%
- Airbnb Rental Income: $3,448
- Airbnb Cash on Cash Return: 7.29%
- Walk Score: 25
6. Galena, IL
- Median Property Price: $510,164
- Average Price per Square Foot: $255
- Days on Market: 73
- Airbnb Rental Listings: 229
- Airbnb Daily Rate: $268
- Airbnb Occupancy Rate: 65%
- Airbnb Rental Income: $5,021
- Airbnb Cash on Cash Return: 7.21%
- Walk Score: 76
7. East Stroudsburg, PA
- Median Property Price: $455,873
- Average Price per Square Foot: $166
- Days on Market: 78
- Airbnb Rental Listings: 334
- Airbnb Daily Rate: $290
- Airbnb Occupancy Rate: 98%
- Airbnb Rental Income: $5,358
- Airbnb Cash on Cash Return: 7.23%
- Walk Score: 78
8. Groton, CT
- Median Property Price: $632,283
- Average Price per Square Foot: $285
- Days on Market: 654
- Airbnb Rental Listings: 100
- Airbnb Daily Rate: $100
- Airbnb Occupancy Rate: 39%
- Airbnb Rental Income: $5,991
- Airbnb Cash on Cash Return: 7.12%
- Walk Score: 57
9. Niagara Falls, NY
- Median Property Price: $190,578
- Average Price per Square Foot: $121
- Days on Market: 179
- Airbnb Rental Listings: 179
- Airbnb Daily Rate: $155
- Airbnb Occupancy Rate: 24%
- Airbnb Rental Income: $2,585
- Airbnb Cash on Cash Return: 7.02%
- Walk Score: 80
10. Temecula, CA
- Median Property Price: $734,128
- Average Price per Square Foot: $354
- Days on Market: 57
- Airbnb Rental Listings: 290
- Airbnb Daily Rate: $446
- Airbnb Occupancy Rate: 26%
- Airbnb Rental Income: $7,118
- Airbnb Cash on Cash Return: 6.88%
- Walk Score: 28
11. Auburn, AL
- Median Property Price: $455,615
- Average Price per Square Foot: $221
- Days on Market: 27
- Airbnb Rental Listings: 189
- Airbnb Daily Rate: $349
- Airbnb Occupancy Rate: 76%
- Airbnb Rental Income: $4,201
- Airbnb Cash on Cash Return: 6.79%
- Walk Score: 84
12. North Las Vegas, NV
- Median Property Price: $424,965
- Average Price per Square Foot: $228
- Days on Market: 73
- Airbnb Rental Listings: 191
- Airbnb Daily Rate: $213
- Airbnb Occupancy Rate: 66%
- Airbnb Rental Income: $4,324
- Airbnb Cash on Cash Return: 6.78%
- Walk Score: 62
13. Klamath Falls, OR
- Median Property Price: $428,203
- Average Price per Square Foot: $219
- Days on Market: 179
- Airbnb Rental Listings: 120
- Airbnb Daily Rate: $217
- Airbnb Occupancy Rate: 93%
- Airbnb Rental Income: $3,984
- Airbnb Cash on Cash Return: 6.74%
- Walk Score: 66
14. Nashville, IN
- Median Property Price: $407,180
- Average Price per Square Foot: $260
- Days on Market: 79
- Airbnb Rental Listings: 161
- Airbnb Daily Rate: $281
- Airbnb Occupancy Rate: 79%
- Airbnb Rental Income: $4,520
- Airbnb Cash on Cash Return: 6.73%
- Walk Score: 56
15. Jim Thorpe, PA
- Median Property Price: $355,350
- Average Price per Square Foot: $165
- Days on Market: 143
- Airbnb Rental Listings: 128
- Airbnb Daily Rate: $245
- Airbnb Occupancy Rate: 64%
- Airbnb Rental Income: $3682
- Airbnb Cash on Cash Return: 6.71%
- Walk Score: 53
16. Wisconsin Dells, WI
- Median Property Price: $331,459
- Average Price per Square Foot: $179
- Days on Market: Data not available
- Airbnb Rental Listings: 259
- Airbnb Daily Rate: $341
- Airbnb Occupancy Rate: 29%
- Airbnb Rental Income: $3,539
- Airbnb Cash on Cash Return: 6.7%
- Walk Score: 69
17. Greensboro, NC
- Median Property Price: $313.467
- Average Price per Square Foot: $237
- Days on Market: 84
- Airbnb Rental Listings: 253
- Airbnb Daily Rate: $112
- Airbnb Occupancy Rate: 75%
- Airbnb Rental Income: $3,183
- Airbnb Cash on Cash Return: 6.69%
- Walk Score: 80
18. Lake Ariel, PA
- Median Property Price: $368.060
- Average Price per Square Foot: $167
- Days on Market: 101
- Airbnb Rental Listings: 162
- Airbnb Daily Rate: $331
- Airbnb Occupancy Rate: 51%
- Airbnb Rental Income: $3,698
- Airbnb Cash on Cash Return: 6.66%
- Walk Score: 14
19. High Point, NC
- Median Property Price: $331,437
- Average Price per Square Foot: $154
- Days on Market: 31
- Airbnb Rental Listings: 164
- Airbnb Daily Rate: $202
- Airbnb Occupancy Rate: 65%
- Airbnb Rental Income: $3,340
- Airbnb Cash on Cash Return: 6.65%
- Walk Score: 58
20. South Bend, IN
- Median Property Price: $361,507
- Average Price per Square Foot: $166
- Days on Market: 39
- Airbnb Rental Listings: 369
- Airbnb Daily Rate: $316
- Airbnb Occupancy Rate: 73%
- Airbnb Rental Income: $3,238
- Airbnb Cash on Cash Return: 6.61%
- Walk Score: 80
21. New Bern, NC
- Median Property Price: $376,397
- Average Price per Square Foot: $201
- Days on Market: 149
- Airbnb Rental Listings: 120
- Airbnb Daily Rate: $159
- Airbnb Occupancy Rate: 52%
- Airbnb Rental Income: $3,432
- Airbnb Cash on Cash Return: 6.54%
- Walk Score: 74
22. New Paltz, NY
- Median Property Price: $693,920
- Average Price per Square Foot: $259
- Days on Market: 61
- Airbnb Rental Listings: 138
- Airbnb Daily Rate: $314
- Airbnb Occupancy Rate: 75%
- Airbnb Rental Income: $7,503
- Airbnb Cash on Cash Return: 6.52%
- Walk Score: 74
23. Sheboygan, WI
- Median Property Price: $255,391
- Average Price per Square Foot: $141
- Days on Market: 46
- Airbnb Rental Listings: 120
- Airbnb Daily Rate: $316
- Airbnb Occupancy Rate: 71%
- Airbnb Rental Income: $2,933
- Airbnb Cash on Cash Return: 6.51%
- Walk Score: 88
24. Glendale, AZ
- Median Property Price: $454,925
- Average Price per Square Foot: $252
- Days on Market: 38
- Airbnb Rental Listings: 214
- Airbnb Daily Rate: $202
- Airbnb Occupancy Rate: 74%
- Airbnb Rental Income: $4,164
- Airbnb Cash on Cash Return: 6.45%
- Walk Score: 89
25. Waianae, HI
- Median Property Price: $449,048
- Average Price per Square Foot: $471
- Days on Market: 75
- Airbnb Rental Listings: 159
- Airbnb Daily Rate: $215
- Airbnb Occupancy Rate: 53%
- Airbnb Rental Income: $3,760
- Airbnb Cash on Cash Return: 6.45%
- Walk Score: 5
26. Twentynine Palms, CA
- Median Property Price: $360,292
- Average Price per Square Foot: $276
- Days on Market: 65
- Airbnb Rental Listings: 202
- Airbnb Daily Rate: $195
- Airbnb Occupancy Rate: 88%
- Airbnb Rental Income: $3,232
- Airbnb Cash on Cash Return: 6.43%
- Walk Score: 54
27. Bisbee, AZ
- Median Property Price: $330,911
- Average Price per Square Foot: $213
- Days on Market: 206
- Airbnb Rental Listings: 120
- Airbnb Daily Rate: $140
- Airbnb Occupancy Rate: 62%
- Airbnb Rental Income: $2.948
- Airbnb Cash on Cash Return: 6.41%
- Walk Score: 18
28. Springfield, MO
- Median Property Price: $297,546
- Average Price per Square Foot: $131
- Days on Market: 51
- Airbnb Rental Listings: 253
- Airbnb Daily Rate: $124
- Airbnb Occupancy Rate: 63%
- Airbnb Rental Income: $2,360
- Airbnb Cash on Cash Return: 6.4%
- Walk Score: 92
29. Bellaire, MI
- Median Property Price: $369,971
- Average Price per Square Foot: $195
- Days on Market: 137
- Airbnb Rental Listings: 211
- Airbnb Daily Rate: $268
- Airbnb Occupancy Rate: 89%
- Airbnb Rental Income: $3,342
- Airbnb Cash on Cash Return: 6.4%
- Walk Score: 55
30. Gulfport, MS
- Median Property Price: $304,820
- Average Price per Square Foot: $147
- Days on Market: 150
- Airbnb Rental Listings: 197
- Airbnb Daily Rate: $154
- Airbnb Occupancy Rate: 60%
- Airbnb Rental Income: $2,826
- Airbnb Cash on Cash Return: 6.40%
- Walk Score: 61
Related: 100 Best Short Term Rental Markets in 2022
The Bottom Line
Generating a positive cash flow in rental properties is made easier if you have the right data and tools to help you come up with the best rental strategy. Regardless of whether you choose to go the traditional rental route or short-term rentals, an investor should always perform their due diligence to ensure they make a decent traditional or Airbnb cash on cash return which greatly affects the overall ROI rate.
To help you locate the best rental property with an ideal Airbnb cash on cash return rate, sign up for a free trial on Mashvisor now and get 15% off on your subscription.
Start Your Investment Property Search!
As a seasoned real estate enthusiast with a deep understanding of the dynamics in the rental property market, let's delve into the concepts presented in the article about Airbnb cash on cash return and traditional rentals.
Understanding Airbnb Cash on Cash Return:
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Importance of Cash on Cash Return:
- Cash on cash return is a crucial metric for real estate investors to assess the profitability of a property.
- It measures the annual return relative to the initial investment, assuming no loans were taken.
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Difference Between Cash on Cash Return and ROI:
- Cash on cash return focuses on the out-of-pocket investment, while ROI considers the entire investment, including loans.
- The article emphasizes the distinction between the two, highlighting that they are often used interchangeably but represent different perspectives on return assessment.
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Distinction from Net Operating Income (NOI):
- Cash on cash return is also differentiated from net operating income (NOI), as it accounts for debt services, unlike NOI.
- Both Airbnb cash on cash return and traditional cash on cash return incorporate this principle.
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Tools for Real Estate Investors:
- Online real estate marketplace platforms, such as Mashvisor, provide tools like the cash on cash return calculator to help investors analyze property data.
- The article particularly highlights Mashvisor's Airbnb calculator, underlining its popularity among investors for assessing both traditional and Airbnb cash on cash return.
Why Airbnb Rentals Over Traditional Rentals:
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Advantages of Airbnb Rentals:
- Airbnb rentals, despite lacking the stability of fixed monthly payments, offer higher monthly rates, especially in high-demand areas.
- Property owners gain greater control over rent and property management, with a lower risk of problematic tenants.
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Factors Influencing Cash on Cash Return:
- The choice between long-term and short-term rentals depends on an investor's risk profile and circ*mstances.
- While various factors impact cash on cash return, a generally accepted range for a good return rate is between 8% to 12%.
Top Locations for Airbnb Cash on Cash Return:
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Criteria for Selection:
- The article lists 30 top rental markets based on various factors:
- Median property price
- Average price per square foot
- Days on market
- Number of Airbnb rental listings
- Airbnb daily rate
- Airbnb occupancy rate
- Monthly Airbnb rental income
- Airbnb cash on cash return
- Walk Score (convenience of location for errands on foot)
- The article lists 30 top rental markets based on various factors:
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Examples of Top Locations:
- Each location is detailed with specific data, such as median property price, Airbnb rental income, and cash on cash return.
- Examples include Fairbanks, AK; Gaylord, MI; Geneva, OH; Temecula, CA; Nashville, IN, among others.
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Data Source and Platform Recommendations:
- Mashvisor is cited as a reliable source for Airbnb data and is recommended for its tools, including the Airbnb cash on cash return calculator.
Conclusion and Call to Action:
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Importance of Due Diligence:
- The article concludes by stressing the importance of due diligence for investors, regardless of their chosen rental strategy.
- It encourages investors to sign up for Mashvisor's services for optimal property search and analysis.
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Bottom Line:
- Generating positive cash flow is emphasized, and the article suggests that having the right data and tools is essential for making informed decisions in both traditional and Airbnb rental strategies.
In summary, the article provides a comprehensive guide for real estate investors, covering key concepts such as cash on cash return, distinctions between ROI and NOI, advantages of Airbnb rentals, and specific data-driven insights into top locations for maximizing Airbnb cash on cash return.
