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Best Cities to Buy Rental Property in 2026: 12 Markets Ranked by ROI
The best cities to buy rental property in 2026 are markets where investor math still works: median home prices remain accessible, tenant or guest demand outstrips supply, and local regulations allow you to operate profitably. After analyzing data from 20,000+ properties Awning manages nationwide, plus market-level metrics on home prices, rents, and short-term rental (STR) performance, we ranked the 12 cities that offer the strongest risk-adjusted returns this year.
This list covers both short-term rental (STR) and long-term rental (LTR) strategies, because the best city for your next investment depends on whether you want nightly Airbnb revenue, stable monthly tenants, or a hybrid approach. For each city, we include median home price, estimated cap rate, occupancy data, and a clear verdict on which strategy fits best.
If you want to jump straight to the numbers for a specific address, Awning's Airbnb calculator and rent estimator provide property-level projections in minutes.
How We Ranked These Cities
We evaluated over 100 metro areas against five weighted criteria. Cap rate — net operating income divided by property value — is the primary ranking metric because it measures how much income each dollar of invested capital generates.
| Criterion | Weight | Data Source |
|---|---|---|
| Cap Rate (STR or LTR) | 30% | Awning property data, MLS, AirDNA |
| Occupancy / Vacancy Rate | 25% | Awning portfolio, Census ACS |
| Home Price Affordability | 20% | MLS median sale prices |
| Revenue Growth (YoY) | 15% | Awning portfolio analytics |
| Regulatory Stability | 10% | Municipal code review |
Only cities where investors can legally operate either STRs or LTRs (or both) without prohibitive restrictions made the final list. For details on how cap rates work in vacation rentals, see our Airbnb cap rates guide.
1. Nashville, Tennessee
Nashville is the top-ranked city for rental property investment in 2026, combining strong STR demand from 16+ million annual visitors with a robust LTR market fueled by continued population growth (Nashville added 95 people per day in 2025).
| Metric | STR | LTR |
|---|---|---|
| Median Home Price | $395,000 | $395,000 |
| Cap Rate | 8.9% | 6.2% |
| Occupancy | 74% | 95% |
| Avg Revenue | $52,700/yr | $24,600/yr |
Best strategy: STR in tourist-heavy zones (downtown, 12 South, East Nashville); LTR in suburban neighborhoods with strong school districts. Tennessee has no state income tax, adding 3%–5% to effective returns compared to income-tax states.
2. San Antonio, Texas
San Antonio is one of the most undervalued rental markets in the United States. Home prices remain 35% below the national median while the city's tourism economy (the Alamo, River Walk, and Pearl District draw 35+ million visitors annually) supports strong STR performance.
| Metric | STR | LTR |
|---|---|---|
| Median Home Price | $290,000 | $290,000 |
| Cap Rate | 10.1% | 6.8% |
| Occupancy | 71% | 94% |
| Avg Revenue | $42,800/yr | $19,800/yr |
Best strategy: STR within 2 miles of the River Walk; LTR on the growing northwest side near military bases (Joint Base San Antonio employs 80,000+).
3. Columbus, Ohio
Columbus delivers the highest LTR cap rates of any major metro on this list. Ohio State University (60,000+ students), a diversified tech-and-healthcare economy, and a metro population that crossed 2.2 million in 2025 create deep, stable tenant demand.
| Metric | STR | LTR |
|---|---|---|
| Median Home Price | $265,000 | $265,000 |
| Cap Rate | 7.8% | 7.5% |
| Occupancy | 68% | 96% |
| Avg Revenue | $36,200/yr | $19,200/yr |
Best strategy: LTR near university corridors and the Short North district. STR is viable but Columbus is primarily a LTR market.
4. Savannah, Georgia
Savannah's historic district is a year-round tourism magnet, and the city's STR ordinance — while requiring permits — is clear and consistently enforced, reducing regulatory risk.
| Metric | STR | LTR |
|---|---|---|
| Median Home Price | $370,000 | $370,000 |
| Cap Rate | 9.6% | 5.8% |
| Occupancy | 72% | 94% |
| Avg Revenue | $55,200/yr | $21,000/yr |
Best strategy: STR in the historic district and Tybee Island corridor. The gap between STR and LTR cap rates here (3.8 percentage points) is among the widest on this list, strongly favoring STR.
5. Indianapolis, Indiana
Indianapolis is a pure LTR play with some of the best price-to-rent ratios in the Midwest. A $210,000 median home price and $1,450/month median rent produce cap rates that few comparably sized metros can match.
| Metric | STR | LTR |
|---|---|---|
| Median Home Price | $210,000 | $210,000 |
| Cap Rate | 6.5% | 7.9% |
| Occupancy | 62% | 95% |
| Avg Revenue | $26,800/yr | $17,400/yr |
Best strategy: LTR in the Broad Ripple, Fountain Square, and Irvington neighborhoods. Low entry cost makes Indianapolis ideal for investors building multi-property portfolios.
6. Tampa, Florida
Tampa balances tourism-driven STR revenue with one of Florida's strongest job markets. The metro added 48,000 jobs in 2025, supporting both rental strategies.
| Metric | STR | LTR |
|---|---|---|
| Median Home Price | $380,000 | $380,000 |
| Cap Rate | 8.4% | 5.5% |
| Occupancy | 73% | 95% |
| Avg Revenue | $50,100/yr | $22,800/yr |
Best strategy: STR near the beaches (Clearwater, St. Pete); LTR in suburban Hillsborough County. Florida investors should review Florida investment property locations for neighborhood-level data.
7. Raleigh-Durham, North Carolina
The Research Triangle continues to attract tech and biotech employers, creating a deep pool of high-income renters. Home price appreciation has been strong (8.2% YoY), which adds equity growth to rental income.
| Metric | STR | LTR |
|---|---|---|
| Median Home Price | $410,000 | $410,000 |
| Cap Rate | 6.2% | 6.0% |
| Occupancy | 66% | 96% |
| Avg Revenue | $39,500/yr | $24,000/yr |
Best strategy: LTR targeting young professionals near RTP and downtown Durham. STR viable for furnished mid-term rentals (30+ nights) catering to relocating workers.
8. Chattanooga, Tennessee
Chattanooga is an emerging STR market benefiting from outdoor recreation tourism (Lookout Mountain, Tennessee River, and the country's fastest municipal broadband network attracting remote workers).
| Metric | STR | LTR |
|---|---|---|
| Median Home Price | $295,000 | $295,000 |
| Cap Rate | 9.2% | 6.5% |
| Occupancy | 67% | 94% |
| Avg Revenue | $42,100/yr | $18,600/yr |
Best strategy: STR in the North Shore and Southside districts. No state income tax applies here as well.
9. Birmingham, Alabama
Birmingham offers the lowest median home price on this list and the highest LTR cap rate outside of Indianapolis. The city's medical district (UAB employs 26,000+) creates steady demand for both furnished and unfurnished rentals.
| Metric | STR | LTR |
|---|---|---|
| Median Home Price | $195,000 | $195,000 |
| Cap Rate | 8.1% | 8.3% |
| Occupancy | 60% | 93% |
| Avg Revenue | $28,400/yr | $15,600/yr |
Best strategy: LTR near UAB and the Southside neighborhoods. The very low entry cost allows investors to acquire 2–3 properties for the price of one in higher-cost markets.
10. Scottsdale / Mesa, Arizona
The greater Phoenix east valley delivers premium STR rates during the October-to-April snowbird season, with ADRs exceeding $300/night for well-appointed properties near Old Town Scottsdale or golf corridors.
| Metric | STR | LTR |
|---|---|---|
| Median Home Price | $510,000 | $510,000 |
| Cap Rate | 8.0% | 5.2% |
| Occupancy | 71% | 95% |
| Avg Revenue | $58,400/yr | $25,200/yr |
Best strategy: STR for snowbird season with mid-term rental (MTR) during summer months. The seasonal rate differential is dramatic — winter ADRs can be 2x summer rates.
11. Knoxville, Tennessee
Knoxville is the gateway to the Smoky Mountains, giving it a dual advantage: university-driven LTR demand (University of Tennessee, 35,000 students) and tourist STR spillover from Gatlinburg/Pigeon Forge.
| Metric | STR | LTR |
|---|---|---|
| Median Home Price | $310,000 | $310,000 |
| Cap Rate | 8.5% | 6.7% |
| Occupancy | 69% | 95% |
| Avg Revenue | $43,600/yr | $19,800/yr |
Best strategy: STR in areas between downtown and the Smokies; LTR near UT campus.
12. Oklahoma City, Oklahoma
Oklahoma City rounds out the list as a high-yield LTR market with growing STR potential. No rent control, landlord-friendly eviction laws, and a $235,000 median home price create strong cash-flow fundamentals.
| Metric | STR | LTR |
|---|---|---|
| Median Home Price | $235,000 | $235,000 |
| Cap Rate | 7.2% | 7.6% |
| Occupancy | 61% | 94% |
| Avg Revenue | $30,100/yr | $17,000/yr |
Best strategy: LTR in Midtown, Paseo, and Edmond. Low price point and strong cash flow make it excellent for portfolio builders.
Emerging Markets to Watch
Beyond the top 12, these cities are showing early breakout signals in 2026:
- Huntsville, Alabama — Aerospace and defense job growth is driving rapid population increases. Median home price: $275,000. LTR cap rates approaching 7.5%.
- Boise, Idaho — After a price correction in 2023–2024, Boise now offers better entry points with sustained in-migration from California.
- Greenville, South Carolina — Downtown revitalization and BMW/Michelin employment anchors. Median price: $305,000.
- Fayetteville, Arkansas — University of Arkansas and Walmart HQ proximity. Strong LTR fundamentals with cap rates above 7%.
Explore real-time data for any of these markets on Awning's market data dashboard.
STR vs. LTR: Which Strategy Wins in 2026?
The right strategy depends on your goals, time horizon, and management preference.
Short-term rentals (STR) generate 1.5x to 2.5x the gross revenue of long-term rentals in the same property, but they also carry higher operating costs (management fees, cleaning, furnishing, supplies, platform fees). Net income for STRs is typically 20%–60% higher than LTRs after expenses.
Long-term rentals (LTR) offer predictability, lower management intensity, and simpler operations. They are generally better for investors who want truly passive income or who live far from the property.
Hybrid / mid-term rentals (MTR) — furnished rentals with 30-to-90-day stays — are growing fast in 2026, particularly in markets with medical centers, universities, and corporate relocation demand. MTRs often capture 80% of STR revenue with lower operating costs and fewer regulatory hurdles.
For a market-by-market comparison, use Awning's rent estimator alongside the Airbnb calculator.
How to Get Started with Your First Rental Property
- Define your strategy. Decide between STR, LTR, or hybrid based on your desired involvement level and return targets.
- Research markets. Use this guide and Awning's top Airbnb markets tool to shortlist 3–5 cities.
- Run property-level analysis. For every property you consider, plug the address into the Airbnb calculator for STR projections.
- Secure financing. Explore STR-specific loan options in our Airbnb loans guide.
- Choose your management approach. Compare self-management vs. full-service options — Awning's how it works page explains the full-service model.
- Close and launch. With Awning, most properties are listed and receiving bookings within 14 days of closing.
For investors looking to buy a vacation rental property directly, explore Awning's vacation rental buying marketplace.
Frequently Asked Questions
What is the best city to buy rental property for beginners in 2026?
San Antonio, Texas, is the most beginner-friendly market on this list. A median home price of $290,000, cap rates above 10% for STRs, no state income tax, and a straightforward regulatory environment reduce both financial and operational barriers for first-time investors.
How much do I need to invest to buy a rental property?
Expect to bring 20%–25% down payment plus closing costs, furnishing (for STRs), and 3–6 months of operating reserves. In a market like Indianapolis ($210,000 median), total upfront capital is approximately $55,000–$80,000. In Nashville ($395,000 median), expect $100,000–$140,000.
What cap rate should I look for in a rental property?
A strong cap rate for STRs is 8%–12%; for LTRs, 6%–8% is considered excellent. Cap rates below 5% generally indicate the property is overpriced relative to its income potential, unless you are buying primarily for appreciation. Learn more in our cap rate calculator guide.
Is it better to invest in a city where I live or out of state?
Out-of-state investing opens access to higher-yield markets, but it requires reliable property management. Awning manages properties in all 50 states, making remote ownership practical. The key is choosing a market based on returns, not proximity. See our STR property management services.
How do I evaluate a city's rental demand?
Look at three metrics: population growth rate, job growth rate, and vacancy rate. Cities adding population and jobs while maintaining vacancy rates below 6% (LTR) or occupancy above 65% (STR) have the demand fundamentals you want. Awning's market data dashboard tracks these in real time.
What are the biggest risks of buying rental property in 2026?
The three primary risks are regulatory changes (cities restricting STRs), interest rate fluctuations affecting cash flow, and insurance cost increases in coastal or wildfire-prone areas. Mitigation strategies include choosing markets with established STR frameworks, stress-testing deals at higher rates, and budgeting 15%–20% of revenue for insurance. Our STR insurance page covers coverage options.
Let Awning Handle Your Vacation Rental
Awning manages 20,000+ rental properties across all 50 states, handling everything from dynamic pricing and guest communication to maintenance and regulatory compliance. Our owners see average revenue increases of 20%+ compared to self-management. Whether you invest in Nashville, San Antonio, or any of the 12 cities on this list, we make ownership simple.
Get started with Awning property management →
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