Top Short-Term Rental Investment Hotspots in the U.S.: Why Peoria, Illinois is Leading the Charge in 2025

As the landscape of real estate investment continues to evolve, investors are increasingly turning their attention to short-term rentals in small and mid-sized cities.

A recent report by AirDNA has pinpointed Peoria, Illinois, as a prime location for rental investment, showcasing remarkable growth in this sector.

With an impressive 2

1.1% increase in short-term rental listings between 2023 and 2024, Peoria offers investors not just growth but also affordability and an untapped market potential.

In this article, we will explore the factors that contribute to Peoria's leading position in the short-term rental market and why it is a hotspot for investment in
2025.

Key Takeaways

• Peoria, Illinois, leads U.S. short-term rental investments with significant growth and property affordability.
• Small and mid-sized cities are becoming increasingly attractive for short-term rental investors in
  2025.
• Geographic diversity and minimal home value appreciation make cities like Peoria and Ohio notable investment hotspots.

The Rise of Short-Term Rentals in Small and Mid-Sized Cities

In recent years, the short-term rental market has undergone a notable transformation, particularly in small and mid-sized cities across the United States.

According to a comprehensive analysis by AirDNA, which examined over 540,000 properties as of January 1, 2025, these less traditional markets have emerged as lucrative investment sites.

Jamie Lane, AirDNA's Senior Vice President of Analytics, noted that rural areas have seen a significant 16% increase in short-term rental listings, while mid-sized cities are experiencing a growth of
10.3%.

This trend reflects an increasing recognition among investors about the potential of smaller markets to yield profitable returns.

Key states such as Illinois and Ohio have surfaced prominently in the rankings, largely due to their cities being characterized by low home value appreciation but high rental income potential.

For instance, Peoria, Illinois, has distinguished itself with a remarkable
21.1% growth in the number of short-term rentals from 2023 to 2024, offering investors an impressive gross yield of
15.3% and a steady occupancy rate of
58.9%.

This strong performance can be attributed to a flourishing demand that surpasses supply, indicating that new rentals can thrive alongside existing ones.

Notably, the average revenue potential in Peoria hovers around an attractive $31,131, coupled with the city’s low living costs, making it an appealing market for those looking to invest in short-term rentals.

Peoria, Illinois: A Case Study in Rental Investment Success

The surge in short-term rental opportunities in Peoria also indicates a shift in travel habits, with many tourists and business travelers seeking unique accommodations.

With its rich history, vibrant arts scene, and numerous outdoor activities, Peoria stands out as a destination that appeals to a wide range of visitors.

Investors can leverage the city’s offerings by enhancing their property’s appeal through strategic upgrades and targeted marketing.

Moreover, the growing trend towards remote work has increased the demand for flexible lodging options, making short-term rentals not just an investment, but a lifestyle choice for many.

By capitalizing on this evolving landscape, investors can not only ensure their properties stand out but also contribute positively to the local economy, providing quality lodging solutions in a market that is eager for more such options.