While popular beach towns and scenic mountain getaways have historically dominated short-term rental investment rankings, persistently elevated mortgage rates are prompting a strategic shift. Budget-conscious real estate investors are increasingly turning their attention toward smaller, under-the-radar destinations that offer a viable entry point into the market without requiring astronomical capital.
AirDNA, a prominent data analytics firm that compiles and processes performance metrics for platforms like Airbnb and Vrbo, released its annual report examining the top hidden-gem short-term rental locations across the United States. The findings, shared exclusively with Realtor.com, shine a spotlight on 17 distinct locations. Nearly all of these emerging markets are clustered in the Midwest or the South, where relatively affordable home values intersect with surprisingly high profit potential.
Topping the list of these lesser-known short-term rental hot spots is Rockford, IL. The Midwestern market is already a familiar name to real estate observers after previously clinching the top spot in the Realtor.com Hottest Housing Markets ranking, propelled by sustained buyer demand and a brisk market pace. Another Midwestern destination, Akron, OH, secured the second-tier position, while Warner Robins, GA, rounded out the top three.
Other markets identified by AirDNA as promising projected returns on investment exceeding 10% include Utica, NY; Otsego Lake, MI; Lawton, OK; Millersburg, OH; Midland, TX; Geneva, OH; Castle Rock Lake, WI; Houghton, MI; Michigan City, IN; Gary, IN; Manhattan, KS; Terlingua, TX; Nolin River Lake, KY; and Dunnellon, Dunnellon, FL.
Linda Rollins, a senior research analyst at AirDNA, emphasized the appeal of these markets during a challenging economic climate for real estate buyers.
"This is a great list. There are so many markets that have affordable home prices," Rollins said. "With mortgage rates being so high, it’s so hard to justify investing. But when you do have an area where home prices are still affordable, you could make a decent down payment and still be able to see those numbers work."
To isolate these smaller vacation rental markets from major metropolitan noise, AirDNA researchers established strict criteria for their analysis. They limited the scope to areas with between 400 and 1,000 active listings, positive year-over-year inventory growth, and a rising annual revenue per available room. RevPAR is widely recognized as a critical industry metric used to measure a property’s operational efficiency in filling rooms at competitive average daily rates.
Markets were ultimately ranked by yield, a calculation derived by comparing average annual short-term rental revenue relative to the local average home price. The cities featured on the final list delivered robust yields ranging between 10% and 14%.
Additional common threads identified among these ranked cities include having 20% or fewer listings categorized as professionally managed. This specific metric signals that the individual markets are not yet saturated by large-scale short-term rental management companies, leaving ample room for independent operators. Furthermore, none of the selected municipalities currently enforce active regulatory bans or stringent local restrictions against short-term rentals.
Home values across the entire ranking remain remarkably budget-friendly compared to coastal hotspots, ranging from a low of $266,555 in Houghton, MI, to $482,304 in Michigan City, IN. Corresponding potential average annual revenues across these diverse locations span from $27,833 to $50,046.
National Parks and Military Bases Provide Reliable Demand
Bram Gallagher, an economist at AirDNA, noted that each enclave on the newly released list benefits from a reliable, built-in source of recurring demand dictated by its specific geographic region. In the Midwest, many of the top-performing markets draw steady, dependable traffic from nearby national parks. For instance, Gary and Michigan City sit in close proximity to the Indiana Dunes, while Akron sits just a short drive from Cuyahoga Valley National Park.
According to Gallagher, physical proximity to national parks and outdoor recreational destinations emerged as a primary selling point for travelers during the COVID-19 pandemic, when people actively sought open spaces to maintain social distancing. Crucially, that consumer travel preference and behavioral shift remained robust even after the public health emergency receded.
"Travel is a really repeat business. People go out and visit national parks, they come back with their slideshows, and they show all their friends," Gallagher said.
At the same time, what truly underpins the enduring commercial popularity of these smaller markets situated near national parks is foundational housing affordability, which offers prospective real estate investors a significantly lower barrier to entry.
"The affordability, combined with the unique demand generators, [is] regularly pulling people into some of these markets," Gallagher added.
Rollins successfully put that empirical research into practice roughly a year ago, utilizing AirDNA data to purchase a $400,000 four-bedroom short-term rental property located in the Akron suburb of Stow, OH, positioned just a convenient 10-minute drive from the Cuyahoga Valley National Park.
"I can buy a house in that market, and I can make the numbers work because of the revenue that is coming in, because of these niche demand drivers," Rollins said of her personal investment experience.
Rollins and her husband officially launched their rental property in December 2025 and currently project earning $70,000 annually, placing their returns about $5,000 ahead of her initial conservative financial projections.
Meanwhile, in regions spanning the South and the West, military installations and major industrial hubs serve as powerful anchors for local short-term and mid-term rental markets. Local demand drivers vary widely, ranging from family members attending basic training graduations at Fort Sill near Lawton, OK, to traveling contract workers seeking temporary housing for four to six months while engaged on assignments in Midland’s bustling oil fields or Abilene’s expanding data centers.
"If you’re an investor that has been questioning how do you make the numbers work when mortgage rates are so high and homes are becoming less affordable, come to this list, and it might be a bit more manageable," Rollins advised.
Midwestern Champion Capitalizes on Regional Proximity
While the top-performing market of Rockford lacks a major national park or a large military base, Gallagher and Rollins point out that the northern Illinois area benefits immensely from its close geographic proximity to large, significantly more expensive regional metropolitan hubs, including Chicago and Madison, WI. This proximity guarantees a steady, reliable supply of weekend leisure visitors.
"It’s right outside of these major metros in the Midwest, so if you’re looking for a quick getaway, then you can go there for a weekend and hang out and see what’s local," Rollins explained.
The average home value in Rockford hovers just above $300,000, which is paired favorably with an average annual revenue potential of roughly $42,000. This combination amounts to a robust 14% average yield in what Gallagher described as a textbook "great recipe for success." Additionally, the local market has experienced a notable year-over-year listing inventory growth of 13% alongside a 6% boost in RevPAR.
David Dale Johnson, a real estate agent at Berkshire Hathaway HomeServices Crosby Starck Real Estate, noted that another hidden factor quietly fueling Rockford’s short-term rental strength is the area’s thriving sports tourism industry.
"Youth and amateur tournaments at venues like Mercyhealth Sportscore One and Two, along with other local facilities, bring in teams and families for multinight stays," Johnson said. "That visitor flow supports not just hotels, but also Airbnb- and Vrbo-style short-term rentals."
In addition to family sports tourism, Rockford’s robust local healthcare sector generates steady mid-term rental demand from traveling medical professionals on temporary hospital assignments.
"Together, those dynamics help explain why Rockford may stand out in short-term rental data," Johnson concluded.
