Best Countries for Short-Term Rentals in 2025

Investing in short-term rentals can be highly profitable—but only if you choose the right location.

Once you move beyond well-known (and often overpriced) markets like the U.S., Canada, or the U.K., there are still plenty of underrated destinations where Airbnb demand is rising and property prices remain relatively affordable.

That said, most Airbnb investments are not serious investments at all—they’re emotional, lifestyle-driven purchases. And unsurprisingly, many owners either break even or lose money simply because they didn’t run the numbers or properly analyze the local market and neighborhoods.

If you're aiming for strong returns—not just a holiday home—you need to be strategic, data-driven, and above all, selective about the location.

Where to Invest? Key Factors for Successful Short-Term Rental Locations

1. Look for Cities with Strong Airport Connectivity

Short-term rentals rely heavily on tourism, so strong flight connections are essential.

I recommend using tools like flightconnections.com or Google Flights to evaluate how well-connected a destination is.

Ideally, the city/area should have direct flights from at least two of the three major regions—North America, Europe, and Asia. The more continents it connects to, the better. This ensures a steady flow of international visitors year-round.

Avoid destinations that rely on just a handful of flights. These markets can become too niche, and if an airline suddenly cuts service, your booking volume could take a serious hit.

The same goes for seasonality—if there are plenty of flights in the summer, that’s great. But if they stop during the autumn and winter months, you could end up losing a lot of money.

2. Find Countries or Cities with Long Tourism Seasons

Another key factor is choosing a destination that attracts visitors year-round—or at least for most of the year (7+ months).

This is why many European cities or coastal towns aren’t ideal for short-term rental investments. They often see a strong influx of tourists between May and September, but outside of that, it’s eerily quiet. Bookings drop off, and the few you do get are typically much cheaper.

A better option is to focus on international hubs, where tourism is more consistent throughout the year thanks to a mix of leisure and business travel.

Alternatively, consider countries with warm, stable climates year-round—often found in Latin America or the Caribbean. These destinations tend to have much longer rental seasons, which means steadier income and fewer low-occupancy months.

Do your research and look for places that draw tourists across all seasons, not just the summer spike.

3. Find Countries or Cities with Minimal STR Regulations

Short-term rental regulations are tightening in many major cities around the world. Especially in Europe.

Places like New York, Istanbul, Edinburgh, Barcelona, and Paris have introduced strict rules—or even outright bans—that make it extremely difficult to operate legally on platforms like Airbnb.

I strongly recommend avoiding cities where obtaining a short-term rental license is required, complicated, expensive, or nearly impossible. The risk of regulatory changes or enforcement crackdowns is simply too high.

Instead, focus on countries that welcome foreign investment and have a favorable, predictable environment for short-term rentals.

Look for places where rental laws are clear, permits are accessible, and the government supports tourism as a core part of the economy.

4. Find Countries or Cities with Low Taxes

Local taxation is another crucial factor to consider when investing in short-term rentals.

Tax systems vary widely, and your situation will depend on whether you buy as an individual (subject to rental income tax) or through a company (subject to corporate tax).

Some countries have high corporate taxes but lower rental income taxes—and vice versa. Before you make any investment, make sure you understand the local tax structure thoroughly. It's essential to consult with a local attorney or tax advisor.

Another important element is VAT (Value Added Tax), accommodation tax, or city tax—which are increasingly being applied to short-term stays in many destinations. These can significantly impact your profitability as they account for 5-15% from gross revenue.

Ideally, target countries where such taxes are low, non-existent, or loosely enforced.

5. Find Unsaturated Markets

Many markets around the world are already saturated with Airbnbs, making it extremely hard to generate solid yields.

It’s much wiser to find a property in a location where there’s a steady influx of tourists, but a lack of new builds or certain types of accommodations (like 5+ bedroom villas or family-friendly units) where hotels fall short.

Look for areas where tourism is growing but local development hasn’t kept up—secondary cities, up-and-coming coastal towns, or places with restrictive zoning that limits hotel supply. These markets often offer higher occupancy, stronger pricing power, and less competition on Airbnb or Booking.com.

You're not just buying property—you’re filling a gap in the market.

Potential Net Yields Around the World

We identified around 300 properties across 20+ countries that were not only performing well in the rental market but also listed for sale. This allowed us to estimate net yields with a reasonable degree of accuracy.

From our own experience owning Airbnbs in several countries, we’ve found that net income—what you actually keep from gross bookings—typically falls between 70% to 40%. That means if you’re running the property passively with on-the-ground management, regular maintenance, supplies, cleaning, VAT, etc., you’ll need to allocate 30%–60% of your gross revenue to operating costs.

In Europe, the US, and the UK, operating costs tend to be higher, often pushing close to 50% - 60% of gross bookings.
In Latin America, the Caribbean, or parts of Asia, you can often keep 60%–70% of your earnings thanks to lower labor costs, cheaper supplies, and generally reduced overhead.

Of course, every property is unique, and there’s no one-size-fits-all model. But these benchmarks are a solid starting point when estimating your potential net yield and expenses. Based on our research, the top-performing short-term rental properties can generate over 7% net yield annually when managed passively. However, these are the exception rather than the rule.

The reality is that most Airbnbs fall closer to 4–5% net yield, which is quite similar to what you’d expect from traditional long-term rentals—especially when factoring in management fees, cleaning, maintenance, taxes, and platform commissions.

So while high returns are possible, they’re typically found in carefully selected markets and properties, not across the board.

10 Best Countries for Airbnb Investment

1. Dominican Republic (Punta Cana and Las Terranas)

The Dominican Republic offers a powerful mix of low property prices, high tourism demand, and minimal regulations. With year-round warm weather and strong occupancy in areas like Punta Cana and Las Terrenas, net yields can easily exceed 7%—even with passive management. Property management and labor costs are low, boosting profitability.

2. Bahamas (Nassau, Exuma and Eleuthera)

With its luxury appeal and consistent tourist flow from the U.S. and UK, the Bahamas remains a high-yield Airbnb destination. While property prices can be steep, nightly rates are also high, especially for villas and waterfront homes. STR regulations are relatively light outside Nassau. Best yielding properties are currently (2025) located in Exuma and Eleuthera.

3. Greece (Athens and islands)

Greece has become a favorite for short-term rentals, particularly in Athens (due to culture) and on islands like Crete, Mykonos and Santorini. Tourism is strong from April to October, and properties are still attractively priced compared to Western Europe. Regulation exists but is generally manageable.

4. Spain (Malaga, Andalusia and Canay Islands)

Spain offers both urban and coastal opportunities, especially in regions like Andalusia and the Canary Islands (which have year-round demand). Be cautious with stricter cities like Barcelona or Madrid, but other areas still offer high yields and easier licensing.

5. Italy (Rome, Florence and Amalfi Coast)

Tourist hotspots like Rome, Florence, and the Amalfi Coast provide strong short-term rental returns. There's growing demand for countryside villas as well. While bureaucracy can be heavy, Italy remains attractive for lifestyle buyers who also want steady rental income.

6. Indonesia (Bali)

Bali is the crown jewel for STRs in Indonesia, offering close to 10% net yields in the right neighborhoods. Foreigners can invest via leaseholds or company structures. High tourist volumes, cheap property management, and low costs make it a standout in Southeast Asia.

7. Colombia (Medellin, Cartagena and Bogota)

Cities like Medellín and Cartagena are booming with international travelers and digital nomads. Prices are still low, and Airbnb regulations are relatively relaxed. Expect high occupancy and low operational costs, leading to solid net returns.

8. Aruba (Noord)

Aruba is a stable, high-demand destination in the Caribbean with a strong U.S. tourist presence, especially in the Noord area. While real estate prices can be high, occupancy rates are excellent, the season is long and the government is generally supportive of short-term rental activity.

9. Mexico (Tulum, Puerto Vallarta and Cabo San Lucas)

From Tulum to Puerto Vallarta and Mexico City, Mexico offers a huge range of STR opportunities. Low prices, favorable exchange rates, and strong tourist flows from the U.S. make it easy to earn strong yields, especially with local management.

10. Costa Rica (Jaco, Quepos and Tamarindo)

Costa Rica continues to attract tourists, retirees, and digital nomads, especially in hotspots like Tamarindo, Jaco, and Quepos. The country offers political stability, a well-developed tourism industry, and a favorable climate for STRs. While prices in prime beach areas have risen, occupancy remains high year-round due to strong North American demand. Local property management is widespread.

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