Every standard "best cities for Airbnb" list tends to recycle the exact same travel hotspots: Gatlinburg, Joshua Tree, Scottsdale, and the Great Smoky Mountains. However, a fresh analytical deep dive into national real estate data approaches the short-term rental market from an entirely different angle, surfacing unexpected locations—such as Sandusky, Ohio—at the top of the yield charts.
Short-term rental analytics platform BNBCalc recently pulled performance metrics for 462 cities across all 50 states, ensuring that every analyzed market was backed by a minimum of 50 real properties. By ranking the top city in each state based on revenue per dollar of purchase price and filtering out anomalies through strict quality reviews, the resulting dataset highlights under-the-radar markets that industry content creators typically ignore.
The rationale behind ignoring heavily saturated tourist hubs is straightforward: markets that everyone talks about are priced like everyone is talking about them. By shifting the focus to unglamorous or overlooked regions, investors gain a clearer view of raw gross yields. However, beneath those initial headline-grabbing percentages lies a more complex financial reality shaped by today’s high interest rate environment.
Why Gross Yield Matters in Modern Real Estate
To evaluate markets on an equal playing field, the analysis relies on modeled gross yield, defined as annual revenue divided by home value. This metric intentionally excludes mortgages, down payments, property taxes, insurance, cleaning services, utilities, and management fees. Gross yield simply measures what a property generates before any operating or financing costs are applied.
While cash-on-cash returns traditionally offer a more direct look at what lands in an investor’s bank account, they rely heavily on individualized assumptions regarding interest rates, down payment amounts, operating expense ratios, and whether property management is outsourced. If any of those variables are off, the cash-on-cash calculation breaks down. Gross yield, by contrast, provides a standardized baseline of revenue over price that remains identical regardless of financing structure.
Yet, when applying real-world financing to the median winner on the list, the numbers quickly reveal the challenges facing today’s buyers. The median winning property across the surveyed state capitals and regional hubs sits at a purchase price of $251,338, generating an annual gross revenue of $27,671. This translates to an appealing modeled gross yield of 10.91%.
The Uncomfortable Realities of Today’s Interest Rates
Purchasing that median property with a 20% down payment requires an initial cash investment of $50,267. Financing the remaining balance with a 30-year fixed mortgage at a 7% interest rate results in an annual debt service of $16,052. Meanwhile, operating expenses—covering cleaning supplies, utilities, insurance, property taxes, and general repairs—consume approximately 37.5% of revenue, adding another $10,376 in annual overhead.
After accounting for debt and operating costs, the property clears roughly $1,241 annually. On an initial cash investment of just over $50,000, that equals a modest 2.5% cash-on-cash return, a figure easily outperformed by a standard high-yield savings account without the added headache of property maintenance.
The financial picture darkens further for remote investors who must hire a local property manager. Management companies typically charge roughly 20% of gross revenue, which amounts to $5,534 for the median property. Factoring in management fees turns the modest net positive into an annual loss of approximately $4,292.
Working backward through these financial assumptions reveals that covering debt service and operating costs before turning a profit requires a gross yield of roughly 10.5%. Out of the 50 state-winning cities analyzed, exactly 26 clear that hurdle, while 24 fall short. This means roughly half of the best-performing cities in the country fail to break even on a conventional purchase at current lending rates, underscoring the reality that a strong gross yield alone does not guarantee a profitable investment.
Standout Markets to Watch
Despite the broader financing headwinds, several regional markets stand out for their unique performance metrics, high revenue potential, or distinct local economic drivers.
Sandusky, Ohio, claims the top spot on the national list, boasting a 15.35% gross yield across 181 properties with an average home value of $145,150. Proximity to the Cedar Point amusement park heavily drives the local calendar. Furthermore, with 48% of listings run by independent hosts, the market has not yet fully professionalized, offering a compelling opportunity for independent operators.
Detroit, Michigan, displays a 15.1% gross yield across a much deeper sample of 506 properties at an average price of $137,024. Because of the city’s size, citywide metrics blend high-performing blocks with struggling ones, making hyper-local, address-level homework essential for prospective buyers.
Kapolei, Hawaii, records a 15.06% gross yield across 337 properties with an average price of $597,065. Generating $109,736 annually, it boasts by far the largest revenue figure in the dataset. However, real estate experts emphasize that Kapolei’s performance is driven more by municipal zoning laws than standard market dynamics.
Abilene, Texas, registers a 15.05% gross yield across 315 properties priced at a median of $194,996, with 58% of listings operated independently. Lacking a major beach, theme park, or recurring seasonal rally, Abilene’s rental demand remains steady year-round, a notable advantage in a heavily seasonal asset class.
At the opposite end of the spectrum, Lewes, Delaware, sits at the bottom of the state rankings with a 5.43% gross yield across 212 properties averaging $540,439. The data illustrates that having a top city in every state is entirely different from having a viable investment deal, particularly when coastal or luxury property values outpace their earning potential.
Navigating Local Regulations and Due Diligence
Beyond financing and gross yields, local short-term rental laws can entirely alter the viability of an investment. High yields are frequently found in municipalities that have instituted strict zoning restrictions or outright bans on transient lodging.
Kapolei serves as a prime example of this regulatory complexity. While Honolulu permits short-term rentals in designated resort areas and specific apartment districts, residential rentals across the rest of Oahu face long minimum-stay requirements. Because Ko Olina sits within the Kapolei region as a designated resort zone, its high gross yield exists entirely due to where municipal zoning lines are drawn. Citywide datasets cannot indicate which side of a zoning boundary an individual property falls on, making regulatory research paramount.
Similarly, cities such as Atlantic City, Baltimore, Detroit, and Myrtle Beach operate within jurisdictions that have frequently revised their short-term rental frameworks. In many cases, local regulations act as the primary determinant of an investment’s success or failure rather than a mere secondary footnote.
Industry analysts recommend that prospective buyers avoid relying solely on broad citywide rankings and instead evaluate specific addresses, analyze neighborhood comps, examine monthly seasonality trends, and cross-reference potential long-term rental or Section 8 income as a financial safety net. Additionally, understanding tax implications—such as utilizing potential bonus depreciation or cost segregation studies to offset W-2 income under material participation rules—can significantly impact first-year returns.
Ultimately, while national yield rankings provide a useful starting point for identifying unglamorous markets with strong revenue efficiency, sustainable real estate investing requires comprehensive localized due diligence, careful financial modeling, and strict adherence to municipal laws before committing capital.