Vacation rental investing has been a popular real estate trend in recent years. To benefit from a homey experience, an increasing number of tourists are opting to stay in other people's second homes. When it comes to investment, vacation rentals provide you with the benefit of having a location to spend your vacations while also allowing you to rent out the property for the rest of the year to meet your operating expenses – and even profit!
However, as everyone who has dealt with any kind of real estate investor knows, location is crucial to the success of your business. When considering where to invest in a vacation rental, consider that it cannot just be your preferred vacation area. The site must also have a strong demand for short-term rentals and a high rental revenue without breaking the bank to purchase the property.
We've put up a list of the top areas to own a short-term rental in the United States right now to help you decide where to purchase a vacation rental house in 2022 and beyond.
What Does “Best Places to Buy a Vacation Rental Home” Mean?
Because the ultimate objective of every real estate investor is to make money, we've focused on the best spots to purchase and own a vacation property in 2022. The best places to own a short-term vacation rental may be defined in various ways. We'll highlight the US areas with the highest cap rates for short-term rentals using data from Mashvisor, a sophisticated real estate data analytics platform.
For those of you who are new to the world of real estate investment, cap rate – short for capitalization rate – is a real estate measure derived by dividing a rental property's net operating income by its current market value. Although not the sole criterion for vacation rental success, it is essential to consider when deciding where to invest.
For 2022, the best vacation rental property markets are
The market is continuously shifting, and last year's hot spots aren't the same as this year's or next year's. We've looked at some of the finest areas to invest in a vacation rental currently, and we've compiled a list of some of the top cap rates for short-term rentals, according to Mashvisor data.
1. Gatlinburg (Tennessee)
This little village in Tennessee is nestled in the foothills of the Great Smoky Mountains. Thousands of people visit the national park each year. The target market is obvious, and the audience is well defined since you can readily target visitors to the national park. With each guest comes the necessity for housing, which presents a great potential for Gatlinburg investors.
This might be the spot for you to establish a cabin rental company. Gatlinburg has OTA-friendly rules, which means you won't have to deal with red tape to get your short-term rental up and running.
2. Fresno County (California)
On the other hand, Fresno County has its own set of investment options. Fresno is well-known for drawing large crowds. With graduations, visiting parents, and other events, there is a high university population, which helps to keep your vacancy rates low. Fresno is also a quick getaway from San Francisco, so it'll be a desirable prospect for city people who wish to escape the metropolis.
California isn't generally considered a smart investment because of its higher listing costs, but Fresno is an exception. The house costs are incomparable when compared to coastal California. In Fresno, the vacation rental investment market isn't as difficult to enter into as it is in other cities, providing steady returns.
3. The city of Fort Myers, Florida
Fort Myers is another popular destination in Florida. Fort Myers, located on the west coast of Florida, has beautiful weather without the threat of hurricanes. Hurricane protection and insurance may be costly in such vulnerable locations, although Fort Myers has been spared from some of the worst hurricanes.
The Gulf Coast, real estate market is now booming. There isn't enough supply to fulfill demand. If you intend to purchase in Fort Myers right now, expect a higher sticker price, but you can rest certain that this is a long-term investment in your holiday rental, and the Florida trend isn't going away anytime soon.
4. South Lake Tahoe (California)
Many travelers seeking a vacation by the water go to South Lake Tahoe. Peak season is lucrative in this area, particularly if you can get a vacation rental investment property directly on the ocean. Waterfront property comes in many forms and sizes, but one thing is certain: it's in high demand.
The place is so beautiful that it almost sells itself. Aside from that, property appreciation in this location is fantastic, so you'll be OK if you want to sell your holiday rental home or convert it to a permanent residence in the future.
5. Raleigh-Durham, North Carolina
It's hard to choose between Raleigh and Durham for top vacation rental investments, just as it's impossible to choose between beach and mountain vacations. Both cities have essentially equal real estate indices, indicating that they are good investments. The CAP rate for these two cities is outstanding, and there isn't much of a barrier to the entrance since property prices are very low in this region.
Many tourists are becoming aware of the many advantages these two cities offer, as seen by increased vacation rental occupancy rates. Beyond statistical evidence, “The Triangle,” as the area is known, draws many visitors to the three cities that make up the region; but, owing to the short distance between each city, tourists may visit any of them while in Raleigh, Durham, or Chapel Hill.
6. Baltimore, Maryland
Baltimore, Maryland, is only a short distance from the nation's capital. This metropolitan region has gotten a lot of attention as the city works to increase its liveability and tourism appeal in recent years.
Although Washington, D.C. is a sure destination for bookings, home costs inside the city borders may be rather high. Baltimore, Maryland, is near enough to Washington, D.C., that vacation rental owner might profit from attracting D.C. visitors without having to pay such a high fee.
Now it's your turn.
These ten locations are now some of the greatest areas in the US to purchase a vacation rental, offering some of the highest returns on investment.
However, before deciding to invest in any of them as a holiday home, be sure to research the local short-term rental laws to ensure that vacation rentals are legal and educate yourself with the taxes and fees you will be responsible for.
You may begin the exciting and successful adventure of investing in real estate and launching your vacation rental company after you've resolved all legal obstacles.
The journey that lies ahead begins with the purchase of the holiday property. Short-term rental ownership is a terrific investment, but it doesn't stop when signing the title. Property management software is required for every successful vacation rental company.
Manage your reservations, connect with major OTAs like Airbnb and Vrbo, and operate your website from one simple location. The initial stage is to purchase the property, followed by installing Lodgable’s cutting-edge vacation rental software.