• Short-term-rental site AirDNA revealed its new list of best places to invest in an Airbnb or Vrbo.
• AirDNA ranked cities on measures including occupancy, revenue growth, and home prices.
• Smaller spots with regional tourism and sectors that need temporary housing dominated the 2025 list.

The best place to start an Airbnb may not be a big-name destination like Jackson Hole, Aspen, or Palm Springs.

Instead, promising places to invest in short-term rentals usually have a combination of regional tourism and populations that are reliant on temporary housing, like traveling nurses or graduate students, according to Jamie Lane, an economist at analytics site AirDNA.

"The markets that do best have a mix," Lane told Business Insider.

Indeed, many of the top spots in AirDNA's new ranking of the best places in the US to invest in short-term rentals were midsize cities with affordable homes and growth potential. AirDNA evaluated places based on factors including how many nights per year current Airbnb and Vrbo listings were booked, growth in revenue per listing in the past year, and the cost of homes and apartments currently for sale.

Cracking the top 10 is Frankfort, Kentucky, a city of just 28,000 residents located an hour east of Louisville in the heart of the Kentucky Bourbon Trail — a short drive to a dozen famous distilleries, Lane said.

"While it seems like a small city, it's in the middle of a massive tourism industry," he told Business Insider.

Fairbanks, Alaska, which appeared on last year's list but jumped to the No. 2 position this year, has a robust summer travel market and a need for temporary housing for workers at nearby hospitals and a University of Alaska campus.

On a national level, the rate of new Airbnbs and Vrbos opening across the US has slowed after a post-pandemic surge. New listings grew only by 6.8% in 2024 from the year prior, compared to 14.4% in 2023 and 22.1% in 2022, AirDNA data showed.

New hosts may also face crackdowns as cities continue to rewrite the rules on short-term rentals in attempts to preserve housing affordability for locals. Lane said places including Oahu, Hawaii, were dropped from the list due to their especially tight rules for Airbnbs and Vrbos.

Here are the top 11 cities that AirDNA highlighted as the best places to invest in an Airbnb or Vrbo in 2025.

For each place, we included the projected average revenue potential, the previous year's listing growth in that city, and the annual occupancy rate, all according to AirDNA. From Redfin, we sourced each city's median sale price for homes to get a sense of how much an investment property might cost.