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Despite a pause due to the pandemic, travel is back once again, and vacationers will need a comfortable place to stay. Many people simply don’t want to deal with hotels and prefer a nice vacation rental. If you own any additional residential real estate or plan to buy some, consider using it as an investment property.
Many people want cozy vacation rentals – which is why Airbnb has become a 4-billion-dollar business as of 2022.
The vacation rental market is projected to reach $63 billion by 2024, so now is the time to consider the best places to buy vacation rental property.
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How To Choose The Best Places to Buy Vacation Rental Property
When choosing an area to buy your investment property, you need to think about the potential of making rental income so you have a return on investment. If you already have a second home, consider converting it into a short-term rental, if it is in the right location.
If you comfortably own a second home in a high-priced big city, you are in luck. However, don’t give up on the potential of the vacation rental market in small towns. Matter of fact, it can be more lucrative to check out the home market in up-and-coming areas within proximity to increasingly expensive large cities such as Los Angeles, California, Miami, Florida, Boston, Massachusetts, San Francisco.
When booking vacation rentals, people are often looking for areas outside big cities that have activities such as boating, biking, watersports, mountain views and more. The proximity to these big cities is a selling point to renters, who want to be near but not in the hustle of a city.
Don’t fret over being in two places at once. You can always employ the services of property management professionals to keep an eye on things. While it can be an added expense, it will make your real estate investment life easier.
The list below consists of the best areas to invest in Airbnb vacation rental property. These areas are in the top list thanks to metrics pertaining to revenue potential, rental demand, and revenue growth.
Hawaii
The cities of Lahaina, Kihei, and Koloa made the top spots on the cities for Airbnb investment. There are 100 waterfalls in the island state of Hawaii.
Lahaina is in West Maui, Maui County. This location is a top vacation spot with as much as 80% of Maui’s tourism. The American Planning Association rated its Front Street as one of the “Top Ten Greatest Streets”. There are plenty of beaches, restaurants and a stunning harbor for tourists to enjoy.
When it comes to vacation rentals in Lahaina, there is an 83% occupancy rate and median monthly revenue averages $6,300. It has a rental demand of score 97.
Kihei, Hawaii has an annual revenue potential of $65,000 for real estate investors and a rental demand score of 97. It has six miles of beaches for kayaking, swimming, and surfing. It also has shopping malls, farmer’s markets and plenty of clubs for nightlife to attract renters.
Koloa, Hawaii is an historic town and small community. Highlights of the area include the 10-mile Koloa Heritage Trail and Old Town’s main strip for great shopping and art galleries. Average revenue potential here is $66,518 with a rental demand rating of 87. The occupancy rate of vacation rentals here is 77%. At least 80% of the rentals here have received a rating of 4.5 out of 5.
South Carolina
The historic city of Charleston, South Carolina is a hub for good food, a great harbor, and an average monthly rental income of $4,500 for homeowners. 85% of vacationers have given their vacation rental here at least 4.5 out of 5. Of the active listings, there is a 75% occupancy rate.
Florida
Many home buyers flock to Florida for sunshine, beaches, and tax breaks. It is also a hot spot for Airbnb rentals. As of 2021, the median sale price of a single-family home in the Sunshine State was $348,000.
Among the top 30 cities rated by Airbnb with the best growth for short-term rentals, the state of Florida had the most. The Florida cities on the list included Port Saint Joe, West Palm Beach, Fernandina Beach, Kissimmee, Panama City Beach, Gulf Breeze, Davenport, Key West, Destin, Gatlinburg, Clearwater Beach, Santa Rosa Beach, Bradenton Beach, and Miami Beach.
The city with the highest-ranked growth in Port Saint Joe. Vacation rentals in this city boast a 79% occupancy rate and can bring homeowners a monthly income of $5,000. There are over 1,000 active rentals in this small town near the Gulf of Mexico.
As mentioned earlier, Florida has many tax breaks to consider – this includes property taxes. The property taxes here are below the national average at 0.83%.
As of 2021, the median sale price of a single-family home in the Sunshine State was $348,000. Real estate groups like SquareFoot Homes can ensure you get the home of your dreams in a decent price range.
North Carolina
North Carolina makes the list with the cities of Sneads Ferry and Holly Ridge. Homes in Sneads Ferry can bring in an average of $4,000 monthly rental revenue at an 87% occupancy rate. Currently, the median home price is $340,072.
Georgia
Homebuyers in Georgia can often benefit by being near amazing outdoor activities or in proximity to Atlanta.
Blue Ridge, Georgia can attract vacation renters with its many outdoor activities and festivals. The median home listing price for this area is $256,000.
Tybee Island has great growth for short term rentals with its average monthly rental revenue of $4,700. The occupancy rate of an investment property here is 69%. It is also 18 miles east of the popular city Savannah, Georgia.
Tennessee
Homebuyers interested in gaining a second home in Tennessee should consider Nashville, Gatlinburg, and Sevierville.
In addition to being the country music capital, Nashville is a hot spot for short-term rentals in the state. There are over 6,000 active vacation rentals that come with an annual revenue potential of $126,331. It has a revenue growth score of 94 out of 100 from Airbnb. In addition to good revenue potential, the city’s property taxes are only $4.5 per $100 of property.
Sevierville, Tennessee is close to the Great Smoky Mountains – a popular tourist destination. The area has an average property tax rate of 0.35% of the property’s fair market value. Needless to say, it has one of the lowest property tax rates in the United States. A rental property in Sevierville may bring home an average of $68,821 annually.
Gatlinburg is also very close to the Great Smoky Mountains. Monthly revenue from property averages $5,000 with a 77% occupancy rate.
Short-term rentals are a great way to utilize a second home and earn a lucrative return on investment. People are traveling all over the country and world. So, if you have the means to buy more property, you can tap into this uphill market. Start by looking at the best places to buy vacation rental property.
Feature Image Credit: carballo
