15 Undervalued Airbnb Markets for Top ROI

As a high-income earner or seasoned investor, you're searching for an investment vehicle that offers more than gradual appreciation. You need assets that generate substantial cash flow while building equity and providing tax advantages that your stock portfolio can't match. Finding these opportunities amid market noise feels like searching for a needle in a haystack. The solution? Identifying undervalued Airbnb markets before they thrive.

These undervalued markets represent the sweet spot in short-term rental investing: where property acquisition costs are reasonable and revenue potential soars. By strategically purchasing in these locations before they peak, you capture immediate cash flow and significant equity growth as the market matures. This data-backed list of 15 undervalued markets for 2026 gives you the roadmap to maximize your Airbnb return on investment.

At STR Search, we've leveraged our advanced data analytics to identify hidden gems. Our team has developed a systematic approach to uncovering exceptional markets before they become mainstream, with over $90 million in transactions and a 100% client satisfaction rate. The following analysis represents thousands of hours of research and implementation.

What Makes an Airbnb Market "Undervalued"?

"Undervalued" doesn't mean "inexpensive." An Airbnb market that is undervalued has high cash flow and appreciation potential exceeding current property prices. At STR Search, we use a rigorous methodology to identify these opportunities, analyzing multiple factors signaling a growth-ready market.

• Strong Revenue Per Available Room (RevPAR): We look at RevPAR, which multiplies Average Daily Rate (ADR) by Occupancy Rate, instead of focusing on nightly rates. This provides a complete picture of a property's revenue potential. Markets with strong RevPAR relative to acquisition costs signal undervalued opportunities.
• Favorable Price-to-Rent Ratio: This metric compares property purchase prices to potential rental income. For short-term rentals, we calculate this as the property price divided by the projected annual revenue. A lower ratio indicates reasonable property prices compared to robust revenue potential; a key indicator of an undervalued market.
• Positive Seasonality & High Occupancy: We prioritize markets with extended peak seasons or multiple seasonal draws. For example, a mountain town attracting skiers in winter, hikers in summer, and leaf-peepers in fall offers more consistent income than single-season destinations. This demand pattern is essential for maintaining high cash flow in Airbnb markets.
• Growth Drivers & "The Path of Progress": We analyze economic indicators signaling future growth. These indicators include new infrastructure projects, expanding transportation networks, corporate relocations, and growing tourism statistics. They identify markets poised for significant appreciation.
• Clear & Stable Regulatory Environment: We evaluate the regulatory landscape for short-term rentals. Markets with established, transparent, and fair regulations provide investment security. We avoid areas with outright bans, excessive restrictions, or unstable frameworks that could threaten your investment's viability.

15 Best Places to Buy Airbnb Property for 2026

Based on our analysis, here are 15 undervalued Airbnb markets offering significant opportunities for investors for 20265. The markets are grouped by category to help you find a suitable market.

#1. Boone, NC

This charming Blue Ridge Mountain town offers year-round outdoor recreation without the inflated prices of more recognized destinations. Boone is primed for appreciation and strong cash flow, with Appalachian State University providing a steady stream of visitors and growing recognition as a four-season destination.

Data Snapshot:

• Median Home Price: $412,000 
• Average Daily Rate (ADR): $238 
• Average Occupancy Rate: 68% 
• Regulatory Climate: STR-friendly with a simple registration process

Investor Pro-Tip: Properties with mountain views command a 25% premium in nightly rates. To maximize winter occupancy, focus on locations with year-round accessibility.

#2. Taos, New Mexico

While Aspen and Vail dominate headlines with their high property prices, Taos offers a similar four-season mountain experience at a fraction of the cost. The combination of world-class skiing, rich cultural heritage, and growing remote worker appeal creates multiple demand drivers.

Data Snapshot:

• Median Home Price: $485,000 
• Average Daily Rate (ADR): $259
• Average Occupancy Rate: 64% 
• Regulatory Climate: A permit is required, and the process is straightforward with reasonable annual fees.

Investor Pro-Tip: Properties showcasing Southwestern architecture and design achieve 20% higher occupancy rates and premium pricing.

#3. Banner Elk, North Carolina

Banner Elk, nestled between two major ski resorts and surrounded by the Blue Ridge Mountains, offers exceptional four-season appeal at entry prices below comparable destinations. Its growing reputation for wineries, outdoor recreation, and small-town charm drives consistent booking demand.

Data Snapshot:

• Median Home Price: $468,000 
• Average Daily Rate (ADR): $245 
• Average Occupancy Rate: 62% 
• Regulatory Climate: Very STR-friendly with minimal restrictions

Investor Pro-Tip: Properties with hot tubs and outdoor fire pits achieve 18% higher occupancy during shoulder seasons, extending the profitable booking window.

#4. McCall, Idaho

This lakeside mountain town offers excellent winter skiing and stunning summer lake recreation, creating a true dual-season destination. As remote work fuels migration to scenic mountain communities, McCall offers the alpine lifestyle at prices below comparable Colorado destinations.

Data Snapshot:

• Median Home Price: $689,000 
• Average Daily Rate (ADR): $312 
• Average Occupancy Rate: 71% 
• Regulatory Climate: A permit is required with annual renewal, and the regulations are generally supportive of STRs.

Investor Pro-Tip: Properties near Payette Lake command higher rates. To maximize summer and winter appeal, focus on lake view or easy access locations.

#5. Mount Shasta, California

While Tahoe property prices have skyrocketed, Mount Shasta offers comparable mountain and lake recreation at lower entry points. A promising trajectory for this northern California gem is created by growing recognition as a wellness destination and increasing popularity among outdoor enthusiasts.

Data Snapshot:

• Median Home Price: $395,000 
• Average Daily Rate (ADR): $225 
• Average Occupancy Rate: 59% 
• Regulatory Climate: New permit system with reasonable requirements

Investor Pro-Tip: Properties near hiking trails and outdoor activities have higher booking rates. Including mountain bikes or snowshoes as amenities can boost occupancy by up to 12%.

#6. Lake Chelan, Washington

This 50-mile glacier-fed lake offers a compelling alternative to pricier Pacific Northwest destinations. With over 300 days of sunshine annually (rare for Washington), growing wine tourism, and excellent water recreation, Lake Chelan delivers exceptional seasonal performance with growing shoulder seasons.

Data Snapshot:

• Median Home Price: $575,000 
• Average Daily Rate (ADR): $289
• Average Occupancy Rate: 67% 
• Regulatory Climate: Accommodating with proper permits, but varies by area.

Investor Pro-Tip: Manson properties see higher shoulder season occupancy than Chelan lakefront properties, despite slightly lower peak season rates.

#7. Rockport, Texas

This Gulf Coast fishing town offers comparable water recreation at significantly lower prices while Florida coastal property prices rise. Post-Hurricane Harvey rebuilding has brought newer housing, and growing recognition as a sportfishing destination drives consistent bookings.

Data Snapshot:

• Median Home Price: $332,000 
• Average Daily Rate (ADR): $215 
• Average Occupancy Rate: 64% 
• Regulatory Climate: STR-friendly with simple registration requirements

Investor Pro-Tip: Properties with fish cleaning stations and secure boat parking can command 15-20% higher rates from the fishing tourism segment.

#8. South Haven, Michigan

This Lake Michigan coastal town offers a classic beach experience at a fraction of oceanfront property costs. It benefits from a large drive-market audience seeking weekend escapes, with Chicago two hours away.Growing recognition of Michigan's wine country adds appeal beyond peak summer months.

Data Snapshot:

• Median Home Price: $438,000 
• Average Daily Rate (ADR): $279 
• Average Occupancy Rate: 63% 
• Regulatory Climate: New permit system with annual inspections

Investor Pro-Tip: Properties within walking distance to downtown and the beach command 30% higher rates. To maximize appeal, focus on listings with water access and proximity to dining and shopping.

#9. Lake Norman, North Carolina

As Charlotte's population grows, this lake 20 miles from downtown offers tourist appeal and strong weekend bookings from locals. Corporate relocations to Charlotte create a steady need for temporary housing while travelers appreciate the blend of lake recreation and city proximity.

Data Snapshot:

• Median Home Price: $525,000 
• Average Daily Rate (ADR): $245
• Average Occupancy Rate: 72%
• Regulatory Climate: Varies by municipality, with some areas very STR-friendly.

Investor Pro-Tip: Properties with private docks or boat slips can achieve 25% higher rates and better occupancy, especially during shoulder seasons when fishing is popular.

#10. Gulf Shores, Alabama

This neighboring stretch of Gulf Coast beach offers comparable white sand and turquoise water at more reasonable costs, while Florida Panhandle prices have surged. Expanded air service and infrastructure improvements are making this area increasingly accessible to national travelers.

Data Snapshot:

• Median Home Price: $489,000 
• Average Daily Rate (ADR): $256 
• Average Occupancy Rate: 68% 
• Regulatory Climate: Business license and lodging tax required, and the process is straightforward.

Investor Pro-Tip: Properties in complexes with lazy rivers and water features see higher occupancy during shoulder seasons when ocean temperatures are less appealing for swimming.

#11. Greenville, SC

This vibrant small city has transformed its downtown into a destination while maintaining affordability. With a growing food scene, cultural attractions, and outdoor recreation, Greenville attracts a diverse visitor base from business travelers to weekend tourists exploring its award-winning downtown.

Data Snapshot:

• Median Home Price: $375,000 
• Average Daily Rate (ADR): $198 
• Average Occupancy Rate: 76% 
• Regulatory Climate: Clear and stable regulations, limited to certain zones

Investor Tip: To maximize your investment, focus on walkability. Properties within walking distance of Falls Park and Main Street achieve 30% higher occupancy rates than car-dependent ones.

#12. Madison, Wisconsin

This university town and state capital offers year-round demand beyond college events. With a thriving tech sector, numerous government visitors, and growing recognition for its quality of life, Madison provides steady booking patterns with less seasonality than vacation destinations.

Data Snapshot:

• Median Home Price: $398,000 
• Average Daily Rate (ADR): $187 
• Average Occupancy Rate: 79% 
• Regulatory Climate: Updated regulations require permits and primary residence status in certain zones.

Investor Pro-Tip: Properties catering to traveling nurses have achieved 90%+ occupancy rates due to Madison's major medical facilities.

#13. Knoxville, Tennessee

While Nashville grabs headlines with soaring prices, Knoxville offers similar Southern charm at lower entry points. University of Tennessee events, Great Smoky Mountains proximity, and a growing urban revival create multiple booking segments year-round.

Data Snapshot:

• Median Home Price: $329,000 
• Average Daily Rate (ADR): $175 
• Average Occupancy Rate: 71%
• Regulatory Climate: A permit is required, and the process is straightforward with reasonable annual fees.

Investor Pro-Tip: Properties catering to game day weekends with Tennessee Volunteers themes and amenities can boost annual returns by charging up to 3x the normal rate during football season.

#14. Vancouver, WA

Vancouver, across the Columbia River from Portland, offers similar Pacific Northwest appeal without Portland's STR regulations or high property taxes. Washington's lack of state income tax attracts longer-term remote workers.

Data Snapshot:

• Median Home Price: $485,000 
• Average Daily Rate (ADR): $168 
• Average Occupancy Rate: 82% 
• Regulatory Climate: More permissive than Portland, with straightforward licensing

Investor Pro-Tip: Properties with easy access to Portland and tax advantages of staying in Washington have achieved 15% higher occupancy rates among business travelers and digital nomads.

#15. College Station, Texas

This growing city, home to Texas A&M University, offers strong event-driven demand with football weekends, graduations, and university conferences. The steady expansion of the university and surrounding businesses creates consistent demand beyond seasonal events.

Data Snapshot:

• Median Home Price: $340,000 
• Average Daily Rate (ADR): $210 
• Average Occupancy Rate: 74% 
• Regulatory Climate: Registration required with an annual fee

Investor Pro-Tip: Properties marketed to visiting professors and university departments (with monthly discounts and academic calendar flexibility) have achieved occupancy rates 20% higher than traditional vacation-focused listings.

Using STRs to Offset High W-2 Taxes

For many high-W-2-income clients, tax implications are as important as cash flow. A strategically structured short-term rental investment can serve as a powerful tax-reduction tool, saving tens of thousands annually for high-income professionals.

This strategy leverages real estate tax code advantages like Cost Segregation studies and Bonus Depreciation. These tools allow investors to accelerate depreciation on property components, creating paper losses that offset active income. By meeting "material participation" requirements through strategic involvement in your STR business, you can offset taxes through STR investments, creating a double benefit: cash flow positive investments that reduce your tax burden.

Navigating complex tax regulations requires expert guidance. The IRS scrutinizes these strategies, making professional support essential to implement them correctly while maximizing benefits. This knowledge makes STR Search's approach valuable for high-income investors seeking wealth building and tax advantages.

Conclusion

Identifying undervalued Airbnb markets is crucial. Your investment success depends on selecting the right property within that market. The market-level data provides guidance, but property-level analysis secures your investment returns. This granular approach makes working with a service that provides data-driven market analysis invaluable.

Feeling confident about a market is one thing. However, feeling confident about a $500,000 investment is another. We bridge that gap by analyzing specific properties, running customized financial projections, and giving you data-backed confidence to move forward. Our expert guidance ensures you invest in a promising market and secure a property with exceptional return potential.