Buying a vacation rental is one of the very lucrative strategies investors can take on. With the summer of 2019 buzzing with vacationers searching for a beach town getaway for a couple of days, the best places to buy a vacation rental property right now are beach destinations. If you want your vacation rental investment to be successful, there are certain factors to keep in mind before choosing your beach destination.
Finding the Best Beach Towns
Owning a vacation rental for your own personal use differs from investing in one to rent out to short-term guests on their beach vacations. While there are hundreds of locations to choose from, the best beach destinations for a vacation rental investment have certain characteristics. Because the goal is to generate enough income from beach home rentals to make a sustainable and profitable return on investment, you need to consider the following:
The Higher Price
Be prepared for higher prices when investing in coastline cities as the location of beach houses prompts a more attractive property, hence the higher price tag. Vacation homes also may have higher mortgage and insurance rates.
The Return Rate
How profitable is the real estate market you’re considering? Check key statistics on nightly rates for vacation rentals, average Airbnb occupancy rate, and cash on cash return or cap rate.
Seasonality
The thing about buying a vacation home in beach towns is these locations won’t be as hot year-round. Typically, people hit the beaches in the summer, so this is the peak season for most beach destinations. Take into consideration how good the profits are in the hot months, as the return generated in that period might need to be enough to cover the off-season.
Related: 7 Best Airbnb Locations with No Off-Season for Real Estate Investing
Airbnb Regulations
There has been a surge in the popularity of online booking platforms like Airbnb and VRBO. It’s much easier for both vacation rental hosts and guests to connect via these online platforms. This has highly motivated real estate investors and homeowners to switch over to the vacation rental industry. However, this increase in short term/vacation rental activity has sparked new laws and regulations which now need to be considered by investors before choosing a housing market. Some of the hottest beach destinations impose strict restrictions on non-owner occupied properties. Always check out short-term rental laws before investing in a vacation rental market.
The 10 Best Beach Destinations in 2019
To help you narrow down your search and find the top-performing beach destinations for Airbnb investment property, we’ve got some data for you. Mashvisor’s tools analyzed the US vacation rental market to locate the cities with the highest potential for a strong return. Here’s where real estate investors should be buying a vacation rental property in 2019.
1) Daytona Beach, FL
- Median Property Price: $242,563
- Price per Square Foot: $165
- Monthly Airbnb Rental Income: $2,517
- Airbnb Cash on Cash Return: 7.6%
- Airbnb Occupancy Rate: 58%
The first of multiple Florida cities on this list, Daytona Beach is a very strong housing market for buying a vacation rental property. It’s a hot beach destination among people of all ages, mainly spring-breakers, and has all the right numbers to motivate vacation rental investors. With the highest average cash on cash return on this list, Daytona Beach rentals will definitely turn over a strong profit.
2) Key West, FL
- Median Property Price: $1,152,783
- Price per Square Foot: $724
- Monthly Airbnb Rental Income: $8,549
- Airbnb Cash on Cash Return: 7.1%
- Airbnb Occupancy Rate: 73%
Key West is one of the most beautiful cities in Florida and offers its visitors unforgettable sunsets and memories to keep them coming back for more. Buying a vacation rental here will be one of the smartest moves you make in your real estate investment career. Although investment properties in the Key West real estate market do come at a higher price, the 7 percent return and high rental revenue are too good to pass up on. And, with Mashvisor’s tools, you can easily find a high-performing Key West rental property that is within your budget.
3) Galveston, TX
- Median Property Price: $399,863
- Price per Square Foot: $220
- Monthly Airbnb Rental Income: $4,216
- Airbnb Cash on Cash Return: 6.3%
- Airbnb Occupancy Rate: 58%
Located on the Gulf Coast of Texas, Galveston is one of the hottest beach destinations in the nation, attracting millions of visitors to its beaches every year. The beaches, events, and historic attractions draw in people keeping Galveston vacation rentals busy and their owners happy.
4) Gulf Shores, AL
- Median Property Price: $380,012
- Price per Square Foot: $282
- Monthly Airbnb Rental Income: $3,535
- Airbnb Cash on Cash Return: 5.6%
- Airbnb Occupancy Rate: 67%
Gulf Shores is quite the popular market year-round. Buying a vacation rental in this beach town will not disappoint. On average, we’re seeing Airbnb rentals generate almost a 6 percent return, which is a very strong rate.
5) Ocean City, MD
- Median Property Price: $368,094
- Price per Square Foot: $284
- Monthly Airbnb Rental Income: $2,813
- Airbnb Cash on Cash Return: 4.5%
- Airbnb Occupancy Rate: 52%
Ocean City is no hidden gem- it’s a hot market and competition is high. Real estate investors and vacation rental owners are generating strong rental income, and those making the most are offering unique experiences for Ocean City visitors. Although it is a seller’s market, if you’re buying a beach house here, make sure to choose an investment property that’ll draw in guests, not just any home you find for sale.
Related: What Should You Know Before Buying a Beachfront Property?
6) Panama City Beach, FL
- Median Property Price: $391,933
- Price per Square Foot: $283
- Monthly Airbnb Rental Income: $3,419
- Airbnb Cash on Cash Return: 4.2%
- Airbnb Occupancy Rate: 67%
Another Florida real estate market, its white sand beaches give Panama City Beach a certain edge over other hot vacation spots in the country. Real estate investors can’t go wrong with a vacation rental investment here in 2019.
7) Virginia Beach, VA
- Median Property Price: $376,736
- Price per Square Foot: $186
- Monthly Airbnb Rental Income: $2,796
- Airbnb Cash on Cash Return: 3.9%
- Airbnb Occupancy Rate: 47%
Virginia Beach is a coastal city with an amazing boardwalk beach-goers can enjoy. Landing a beachfront vacation rental in this location will give real estate investors even higher return rates than the market average.
8) Myrtle Beach, SC
- Median Property Price: $246,228
- Price per Square Foot: $146
- Monthly Airbnb Rental Income: $2,227
- Airbnb Cash on Cash Return: 3.0%
- Airbnb Occupancy Rate: 55%
A very popular Southeast destination along the Atlantic coast, Myrtle Beach offers its visitors a wide variety of activities to keep them busy, from deep-sea fishing to intricate golf courses. Oceanfront and channel-front homes have the most potential for high revenue.
9) Kaanapali, HI
- Median Property Price: $1,321,170
- Price per Square Foot: $961
- Monthly Airbnb Rental Income: $5,220
- Airbnb Cash on Cash Return: 4.1%
- Airbnb Occupancy Rate: 81%
Hawaii has got more beaches than we can count, so you’ve got plenty of opportunities when it comes to this real estate market. Vacation rental properties are pretty expensive here, but real estate investors can be confident that they’ll get a strong return by simply looking at that rental ROI and high occupancy rate.
10) Malibu, CA
- Median Property Price: $2,408,063
- Price per Square Foot: $1,190
- Monthly Airbnb Rental Income: $10,282
- Airbnb Cash on Cash Return: 2.8%
- Airbnb Occupancy Rate: 63%
The most expensive beach destination on the list, but that’s to be expected when talking about Malibu. Buying a vacation rental property will pay off as Malibu’s visitors are willing to pay for these luxury rentals.
Related: US Housing Market 2019: Where to Invest in West Coast Real Estate
With that, our list of the hottest beach destinations in 2019 comes to an end. If you want to really score the highest-return investments in any of the vacation rental markets listed above, use Mashvisor’s Property Finder. Click here to try it out.
