Best Places to Invest in a Short-Term Rental with $1-5 Million

Key Takeaways

• The best places to invest $1M–$5M include iconic cities like Washington, D.C., Miami, and San Diego
• At higher price points, property type, local rules, and buyer liquidity matters just as much as headline demand or big-name destinations.
• AirDNA helps investors compare high-value STR markets using yield, revenue potential, and pricing data, not reputation or top-line revenue alone.

When your budget for a short-term rental (STR) investment is over $1M, your goal isn’t to chase demand but to underwrite everything perfectly. At this level, most markets already have proven appeal. The real question is whether pricing, regulations, and competition still leave room for strong returns once you account for acquisition and operational costs.

To identify the best places to invest $1M–$5M in an Airbnb, we analyzed AirDNA data across high-value STR markets, focusing on how for-sale properties perform relative to their revenue potential. The markets that made the list are the ones where income potential holds up against higher purchase prices and higher guest expectations.

What to Consider When Investing in an Airbnb with $1 Million or More

At the $1M+ level, short-term rental investing shifts from finding opportunity to managing complexity. Demand is rarely the question. Most markets that support seven-figure purchases already have proven appeal. What separates strong investments from expensive underperformers is how well pricing, regulations, and operating realities align.opera

Yields are lower but cash flow can be higher

Keep in mind that lower yields typically show up at higher price points and vice versa. It can take a large portfolio of lower priced properties with high yields to generate significant cash flow. While markets with higher prices typically have lower yields, they can generate more income per listing even at a lower return rate. With short-term rentals generally being a non-passive asset class, it can sometimes be advantageous to have fewer properties generating more profit, even if it comes at lower overall yields.

Focus on income relative to total cost

High-end markets might post eye-popping top-line revenue, but heightened acquisition costs, property taxes, insurance premiums, staffing, and maintenance can compress margins quickly. 

Investors with a $1-5M budget should focus on whether projected income meaningfully outpaces total carrying costs, not just whether the market “looks strong” on revenue alone.

Regulations influence high-end STR performance

Luxury and resort-heavy markets tend to come with stricter short-term rental regulations, HOA oversight, and permitting requirements. At this price point, even small regulatory constraints—like minimum stay rules, caps on rentals, or zoning limits—can materially affect booking velocity and flexibility. You’ll need to understand what’s allowed before underwriting.

Exit flexibility still matters

Higher price doesn’t always mean easier resale. Liquidity can vary widely depending on the market and the type of property. Locations that appeal to multiple buyer types—primary residents, second-home buyers, and investors—tend to offer more flexibility if market conditions shift. That optionality becomes more valuable as acquisition prices climb.

Our Methodology for Ranking the Best Places to Invest with a $1-5 Million Budget

To rank the best places to invest with a $1–5M budget, we analyzed AirDNA data across high-value short-term rental markets and focused on how currently for-sale properties perform relative to their revenue potential. Rather than chasing flashy nightly rates or gross revenue alone, we looked at yield, which meant comparing projected income against acquisition price.

In other words: We looked at how much income a property can realistically generate relative to what it costs to buy and operate. This helped us pinpoint regions with the best places to buy a short-term rental based on where seven-figure investments are more likely to produce income, not just prestige.

Best Places to Invest in STRs with $1 Million or More

The markets below stood out not because they post the highest nightly rates, but because they still allow income to scale at a seven-figure price point. These are places where demand is proven, acquisition costs haven’t fully eroded returns, and operations still leave room for healthy margins.

Keep in mind that performance at this level is highly asset-specific. Two properties at the same price can deliver very different results depending on location, layout, amenities, and local rules. The data below reflects currently for-sale properties as of December 2025, so the figures are subject to change. With that in mind, investors should evaluate yields at the individual property level before making any investment decisions.

1. Washington, D.C.

Washington, D.C. is an STR market with globally recognizable demand and a high-income traveler base. 

The city’s demand engine is diversified. Powered by leisure, weekday government and business travel, universities, and major events, performance tends to hold strong when purely leisure markets soften. Perennial, bucket-list attractions like the National Mall, Washington Monument, Lincoln Memorial, and Smithsonian stops support multi-day trips, while federal landmarks and travel tied to Capitol Hill and the White House ecosystem help maintain demand beyond the weekend.

This is not a cheap entry market, but the high average home prices can translate into long-term asset stability and pricing power for well-located, well-designed rentals. The income profile is equally compelling for experienced operators. Average revenue potential is $101,803 annually, supported by a more balanced booking calendar than many seasonal destinations.

Regulations:

Washington, D.C. is restrictive for investors seeking to operate non-owner-occupied STRs. Official guidance indicates short-term rentals may operate citywide only with a valid Short-Term or Vacation Rental License, and District law requires a Basic Business License with a “Short-Term Rental” endorsement. Secondary-property investor models are widely described as prohibited under the licensing framework.

2. San Diego, California

Situated at the southern tip of California, San Diego consistently ranks as a top-tier short-term rental market thanks to nonstop tourism, global brand recognition, and year-round pleasant weather.

Demand drivers are deep and varied. Iconic anchors like Balboa Park, the San Diego Zoo, SeaWorld San Diego, and LEGOLAND California pull consistent family travel. The coastal lifestyle sells itself, with high-demand areas from La Jolla Cove to Coronado and sunset staples like Sunset Cliffs. Add urban energy in the Gaslamp Quarter and the waterfront—dining, shopping, and nightlife—and you get a broad mix of trip types that keeps calendars full year-round.

Market economics are premium, but so is the upside. Average revenue potential is $91,545, which helps justify acquisition costs in a market where guests are willing to pay for location and experience.

Regulations:

San Diego requires a Short-Term Residential Occupancy (STRO) license for rentals of a dwelling unit (or part of one) for less than one month, and hosts must also maintain a Transient Occupancy Tax (TOT) number for stays of 1–30 days. Overall, the environment is regulated but workable for investors who plan ahead and operate compliantly.

3. Colorado Springs, Colorado

Colorado Springs mixes iconic Colorado leisure demand with dependable non-leisure travel tied to the region’s military presence and major institutions. It draws weekenders from Denver, road-trippers, and families building itineraries around hiking, sightseeing, and regional attractions. All of these support strong occupancy across multiple seasons.

This is a premium-entry market, not a bargain STR play. You’re buying into a destination brand with pricing power.. The income profile is why serious investors keep it on the shortlist: average revenue potential is just over $86K, supported by consistent tourism and the ability to win with amenities like hot tubs, outdoor living, proximity to trails, and standout views. Average yield sits at 5.6%, a competitive return for an upscale asset base and a fit for investors who want durable demand and income that helps offset the cost of holding premium real estate.

Regulations:

Short-term rental hosting in Colorado Springs is permit-based. Hosts renting for 30 days or less are required to obtain a short-term rental permit. Overall, the environment is manageable but compliance-forward—it’s fairly investor-friendly if you’re prepared to follow the city’s permitting requirements.

4. Miami, Florida

Miami, Florida is known for its beaches, world-class nightlife, major cultural districts, and fast access to outdoor “bucket list” experiences, including two national parks. The city attracts leisure travelers, event-goers, international visitors, cruise add-ons, and extended-stay guests. That demand diversity smoothes seasonality and supports high ADRs.

Visitor demand is anchored by signature neighborhoods and attractions guests already want: South Beach energy, Art Deco character, and lifestyle-first areas. Culture sustains travel beyond beach season, with Wynwood Walls and major museums drawing weekend groups.

Miami’s earning profile is built for professional operators. Average revenue potential is almost $120K, signaling strong nightly rate performance and resilient demand across weekdays and weekends. The average gross yield of 5.6% is compelling at this price point.

Regulations:

Miami’s regulatory landscape is highly neighborhood- and jurisdiction-dependent, so investors should underwrite with zoning and building rules in mind. Miami-Dade County outlines standards for residential short-term vacation rentals, and the City of Miami indicates operators must obtain a Florida DBPR lodging license. 

5. Napa Valley, California

Napa Valley is built for quality of revenue, not just volume. Demand is sustained by wine tourism, culinary travel, outdoor recreation, and a steady stream of celebrations (anniversaries, bachelorette parties, and group getaways). That depth keeps the calendar moving and preserves pricing power.

Napa’s signature wine country is perhaps the greatest draw. The Napa Valley Wine Train pulls both first-timers and repeat visitors, while iconic wineries and estates keep Napa top-of-mind for bucket-list travel. Wine-country experiences in particular come with built-in itineraries. Guests often arrive with a schedule (or want one curated), supporting premium rates for guest-ready homes with group-friendly layouts, elevated design, and concierge-style touches. 

Napa also extends beyond the vineyards. Hot air balloon rides, bike tours, river outings, galleries, and entertainment broaden the audience and help smooth seasonality.

Market fundamentals reinforce the premium positioning. Average revenue potential is more than $110K, reflecting higher ADRs and longer, itinerary-driven stays. Average yield is 5.5%, a compelling cash-flow profile for a luxury market.

Regulations:

STR regulations here are restrictive overall—especially in the City of Napa. The City requires a vacation rental permit and limits hosted accommodation permits (noted as capped at 60), with rules such as renting no more than two bedrooms and non-transferable permits. Investors should underwrite assuming tighter operational constraints and verify permit availability before acquisition.

How to Find the Best Markets to Invest In at Any Budget

Regardless of whether you’re working with a $200K or $5M budget, the goal is the same: find markets where income potential, acquisition cost, and operating realities line up in a way that leaves room for returns. Entry costs, realistic revenue potential, and competitive pressure often matter more than how famous a market is.

AirDNA makes it easier to start with what you can afford and work forward. Instead of targeting a destination first and hoping the numbers line up, AirDNA helps you answer a more practical question: where to buy an Airbnb based on real return potential.

Start with price, then validate performance

Begin by using AirDNA’s For-Sale Properties data to surface properties to what falls within your target price range. The Listing Price filter allows you to set a price range with upper and lower limits. 

Use yield to stress-test affordability

A lower purchase price doesn’t automatically mean a better deal. Yield helps close that gap by showing how income potential stacks up against what it costs to buy.

By applying a minimum yield threshold, you can quickly filter out markets where affordability comes at the expense of performance.

Use the yield filter in the For-Sale Properties tab to surface listings that meet your return targets and eliminate options that are unlikely to support your investment goals.

FAQs 

Is investing $1M–$5M in an Airbnb still worth it?

It can be, but only in markets where income potential keeps pace with acquisition and operating costs. At higher price points, strong returns depend less on demand alone and more on pricing discipline, regulatory clarity, and asset quality. 

Is it better to buy one $3M Airbnb or multiple lower-priced properties?

That depends on your risk tolerance and operating strategy. While more expensive homes typically have lower yields, they can generate more income per listing even at a lower return rate. With short-term rentals generally being a non-passive asset class, it can sometimes be advantageous to have fewer properties generating more profit, even if it comes at lower overall yields.

On the other hand, multiple lower-priced properties can diversify demand and reduce exposure to seasonality or regulatory changes. AirDNA data can help compare both approaches using yield and revenue efficiency.