Starting a short-term rental business in popular tourist destinations like Destin, Florida, or Vail, Colorado, may have strong appeal, but a new report suggests that some small and mid-sized cities across the U.S. might be better places to start.

AirDNA, a company that collects short-term rental data from both public and proprietary sources, released a report in January ranking the best places to invest in short-term rentals, and a number of small and mid-sized cities made the list.

Overall in 2026, investing in short-term rentals is more accessible than it has been in years, the report found. That’s due largely to declining mortgage rates over the past couple of years, which lowers the bar for affording a rental property.

To rank the best places to invest, AirDNA looked at thousands of homes currently for sale as of Jan. 1, 2026 and calculated the potential annual rental income before expenses for each property relative to its listing price. It also examined demand and booking frequency, potential revenue growth, purchasing budget and the strength of rentals currently available based on listings on Airbnb, VRBO and Booking.com.

The ranking also considered the factors that drive demand in each area, such as beaches, ski resorts, national parks and wineries.

“When we look at the types of markets that continually come up top of the list, it’s not your traditional beach or mountain markets. It’s a trend that shows people want to travel and see rural areas around the country, which started during the pandemic and has still continued,” Jamie Lane, chief economist at AirDNA, tells CNBC Make It.

“Each market sort of has its own story, but broadly it’s been more of these small and mid-sized cities, not traditional leisure markets, that have been driving growth,” Lane adds.

AirDNA ranked Port Arthur, Texas, as the best place to invest in short-term rentals in 2026, with an average annual revenue potential of $35,000 before accounting for expenses.

The number of short-term rentals in Port Arthur increased by 23% from 2024 to 2025, indicating rising demand and performance, according to the report. The city also has an occupancy rate of 78%.

Compared with other cities on the list, Port Arthur doesn’t offer the highest annual revenue potential, but Lane says that’s not the only factor to consider.

“Just because an area has high revenue potential, that doesn’t necessarily mean it’s a good investment. We have to look at that in relation to the cost of the home to generate that revenue,” he says.

Port Arthur is located 90 miles east of downtown Houston and is home to the largest oil refinery in the U.S.

“Port Arthur is a market that centers around oil and gas, but it’s also on the coast. It does drive a lot of guests there for exploring the marshlands and wetlands nearby. It’s a market that people will come and stay for longer versus just a long weekend,” Lane says.

Lane adds that Port Arthur remains a good place to invest in short-term rentals because home values are relatively affordable for investors. The median list price in Port Arthur is $151,265 as of Dec. 31, according to Zillow.

Known as the Cajun Capital, Port Arthur is a place where visitors can enjoy local seafood and learn more about the area’s legends, like the late Janis Joplin, at the Museum of the Gulf Coast’s music hall of fame.

Here are the top 10 places to invest in short-term rentals in 2026, according to AirDNA, as well as the estimated average annual revenue potential for properties currently listed for sale in each market.

1. Port Arthur, Texas: $35,000
2. Abilene, Texas: $55,000
3. Downtown Saint Paul, Minn.: $45,000
4. Charleston, W.Va.: $32,000
5. Springfield, Ill.: $35,000
6. Lake Charles, La.: $37,000
7. Montgomery, Ala.: $42,000
8. Akron, Ohio: $39,000
9. Lebanon, Pa.: $42,000
10. Jackson, Miss.: $44,000

Abilene, Texas, ranked second for short-term rental investments, with an average annual revenue potential of $55,000, according to AirDNA. The number of short-term rentals in Abilene increased by 15% from 2024 to 2025, and the city has has an occupancy rate of 77%.

Lane says seeing Abilene ranked No. 2 was surprising, but it likely reflects the opening of the first data center in OpenAI’s Stargate program, a push to develop infrastructure to power artificial intelligence in the U.S. The flagship site is about 180 miles west of Dallas and is leased by Oracle, CNBC reports.

In response to the opening, “the hotel occupancies were through the roof,” Lane says.

Having the data center in Abilene is part of the city’s efforts to position itself as a technology hub, according to Cities Today, a news platform focused on urban mobility and innovation.

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