Investing in Short-Term Rentals in Alabama

If you’re exploring a short-term rental in Alabama, 2025 could be your best opportunity yet. From the stunning Gulf Coast to charming small towns and vibrant college cities, Alabama offers diverse markets with impressive rental performance and affordability. Below, we break down the Top 10 Short-Term Rental Markets in Alabama, based on average daily rates (ADR), occupancy, and revenue data from AirROI, Airbtics, AirDNA, and Rabbu.

Whether you’re an investor seeking cash flow or a homeowner exploring Airbnb potential, this guide highlights where Alabama’s rental returns are strongest.

1. Gulf Shores / Orange Beach

Why it stands out: Alabama’s beach capital. High ADRs ($360–$420), strong family bookings, and seasonal surges.

  • Annual Revenue: $40,000+
  • Market Notes: Best for larger condos and beachfront homes. Expect peak occupancy in summer months.

2. Orange Beach (Premium Coastal Market)

Why it stands out: Top-tier beachfront rates and some of the strongest RevPAR in the state.

  • Annual Revenue: Similar to Gulf Shores, often higher for premium properties.
  • Investor Tip: Focus on properties near Perdido Beach Blvd or Romar Beach.

3. Fairhope / Daphne / Eastern Shore

Why it stands out: Upscale coastal charm with low inventory and high ADR.

  • Average Revenue: ~$39,000
  • Best For: Boutique cottages and small-town getaways.

4. Auburn / Opelika

Why it stands out: A reliable event-driven market thanks to Auburn University.

  • ADR: Moderate but consistent.
  • Best For: 2–3 bedroom homes near campus or downtown.

5. Birmingham

Why it stands out: Year-round business and medical travel make for steady occupancy.

  • Average Revenue: ~$23,000
  • Hot Neighborhoods: Highland Park, Five Points South, Avondale.

6. Huntsville

Why it stands out: Alabama’s fastest-growing metro, driven by NASA, defense, and tech sectors.

  • Demand: Strong for both short-term and mid-term rentals.
  • Pro Tip: Look near the U.S. Space & Rocket Center or Ditto Landing.

7. Mobile

Why it stands out: Coastal access with affordable entry prices and historic charm.

  • Average Revenue: ~$19,000
  • Neighborhoods: Midtown, Downtown, Old Dauphin Way.

8. Montgomery

Why it stands out: Steady bookings from conventions, medical, and government travel.

  • Average Revenue: ~$22,000
  • Investor Advantage: Affordable purchase prices = stronger potential cash flow.

9. Mentone / Lookout Mountain Area

Why it stands out: The mountain retreat market is booming.

  • Property Type: Cabins with hot tubs and views.
  • Revenue Range: $25k-$35k annually.

10. Fort Payne / Eclectic Micromarkets

Why it stands out: Low competition, high weekend demand.

  • Best For: Cabins, lake houses, or unique stays.

Quick Neighborhood Tips

  • Gulf Shores / Orange Beach: Perdido Beach Blvd, West Beach, Romar Beach.
  • Fairhope Area: Downtown Fairhope, Spanish Fort.
  • Auburn / Opelika: Near campus, downtown Auburn.
  • Birmingham: Avondale, Highland Park.
  • Huntsville: Midtown or near tourist sites.
  • Mobile: Old Dauphin Way, Midtown.
  • Mentone / Fort Payne: Near trails or state parks.

(Always verify city and HOA rules for short-term rentals before purchasing.)

The Bottom Line for Investors

Markets with lower purchase prices and stable demand often deliver the highest ROI. While beach towns like Gulf Shores bring higher gross revenue, inland and mountain towns may yield stronger cap rates due to lower upfront costs

FAQs: Short-Term Rentals in Alabama

Q1: Do I need a special license for short-term rentals in Alabama?
A: Regulations vary by city. Some require permits or registration; others have lenient policies. Always check local zoning laws.

Q2: Which Alabama markets are best for year-round occupancy?
A: Birmingham, Huntsville, and Montgomery have steady travel demand year-round from business, medical, and government sectors.

Q3: What are typical property management fees for STRs in Alabama?
A: Expect 15% to 25% for full-service management, depending on property type and location.

Q4: How do I finance an investment property for short-term rental use?
A: The Edwin Mortgage Team at Edge Home Finance offers DSCR, investor, and traditional mortgage options tailored for short-term rental investors.

Q5: Which areas have the least competition right now?
A: Mentone, Fort Payne, and some smaller lake or mountain areas have lower inventory and strong guest demand.

Partner with the Edwin Mortgage Team

Ready to invest in Alabama’s short-term rental market? The Edwin Mortgage Team at Edge Home Finance helps investors secure the right loan program with clarity and speed.

Contact:
• Jammi Cash NMLS #1930614 – Loan Coordination & Client Updates
• Nathan Jordan NMLS #2670112 – Client Relations & Partnerships
Office: 7 Snow Street, Oxford, AL 36203

Let’s make your next short-term rental investment a success.
Contact the Edwin Mortgage Team today.