# The Best Short-Term Rental Markets in Every State, Ranked by Gross Yield
The typical "best Airbnb markets" conversation circles back to the same handful of names. Gatlinburg, Tennessee. Joshua Tree, California. Scottsdale, Arizona. The Smoky Mountains. These destinations dominate investor checklists and appear on nearly every top-ten list circulating online.
BiggerPockets took a different approach. Rather than relying on brand recognition or tourist traffic alone, the analysis examined gross yield data across every state to identify where short-term rental operators actually generate the strongest cash-on-cash returns.
Gross yield matters because it strips away noise. It measures the annual rental income as a percentage of total property investment. A $200,000 property generating $30,000 in yearly rental income produces a 15% gross yield. That metric reveals where short-term rentals convert bookings into real money faster than comparable markets.
The research shifted focus away from obvious tourist destinations toward markets where acquisition costs remain reasonable relative to nightly rental rates. A Gatlinburg property might command $400 per night but cost $350,000 to purchase. A lesser-known market might generate $200 per night on a $150,000 property. The second example delivers superior yield despite lower absolute revenue.
This distinction matters enormously for short-term rental investors. High-profile destinations attract capital. More investors bidding on fewer properties drives purchase prices skyward. Entry costs balloon. Seasonal occupancy patterns tighten margins. Competition intensifies. Investors who follow the crowd often accept lower returns simply because they paid premium acquisition prices in premium locations.
The yield-focused analysis identified secondary markets where operators find superior combinations of purchase price and rental demand. These cities offer legitimate tourist appeal without the hyperinflated real estate valuations. They possess seasonal patterns that work for owner-operators willing to manage inventory dynamically. They typically feature adequate short-term rental regulations or operate in jurisdictions with minimal restrictions on hosting.
The data breaks down by state, providing investors with geographic granularity. Rather than treating Florida as a monolith, the analysis pinpoints which Florida cities deliver the strongest yields. Same for Texas, Colorado, and other high-volume vacation destinations. An investor exploring markets in Arizona doesn't need to default to Scottsdale. The data reveals alternative Phoenix-area communities or northern Arizona options that may offer better yield profiles.
Gross yield rankings also expose underrated markets that rarely appear in national conversation. Smaller cities in secondary states often produce yields exceeding 12-15% when purchase prices remain accessible and local tourism sustains occupancy rates above 60%. These markets lack the brand cachet of Gatlinburg but deliver comparable or superior returns on invested capital.
For landlords considering the short-term rental conversion, understanding local gross yields informs fundamental business decisions. Converting a long-term rental requires confidence that short-term rates will produce income exceeding traditional lease revenue plus vacancy, maintenance, and platform fees. State-by-state yield data provides that benchmark.
The rankings also signal to real estate agents and property managers where market conditions favor short-term rental conversion over traditional leasing. Markets with trailing gross yields under 8% likely work better as long-term rentals. Markets exceeding 12% merit serious consideration for Airbnb strategy.
Investors who chase brand names pay premium prices for proven demand. Investors who chase data find yield in overlooked corners. The analysis demonstrates that national "best markets" lists miss half the opportunity.