With the beginning of the New Year, you are probably thinking about starting a new real estate investing business. New Year is the time to be positive and optimistic and to be thinking about expanding your real estate investment portfolio. Or if you are not a real estate investor yet, this is the time to become one by buying your first investment property. Whether you are a beginner real estate investor searching for a first rental property or an experienced real estate investor looking for a new income property, you should consider buying a vacation home, or a second home. “Why investing in a vacation home in particular?”, you might be thinking. “What are the benefits of investing in a vacation home over other types of investment properties?” And last but not least, “What are the best places to buy a vacation home in the US housing market right now?” To help real estate investors make the best investment decisions in the New Year, we answer all these important real estate questions below.
Note: This is part 2 of The 20 Best Places to Buy a Vacation Home in the US at the Beginning of 2018. To go to part 1, which specifically focuses on the best places to buy a vacation home in Florida, click here.
Related: The Future of Vacation Rental Investment Properties
Why Should You Invest in a Vacation Home and What Are the Advantages of Investing in a Vacation Home?
As we’ve already mentioned, this is part 2 of The 20 Best Places to Buy a Vacation Home in the US at the beginning of 2018, and it part 1 we’ve already answered these crucially important real estate questions. Thus, here we provide just a brief recap. In short, vacation homes are an amazing real estate investment opportunity, especially for beginner real estate investors, because they serve a dual purpose: you spend your vacation days in them, and you rent them out as Airbnb rentals for the rest of the year. This significantly decreases the burden of potentially high vacancy rate which many new real estate investors fear. In addition, second homes used as vacation homes and vacation rentals are eligible for some tax deductions, which however vary widely depending on how many days a year you live in them as the home owner and how many days a year you rent them out as short-term rentals. To avoid legal issues, it is best to consult with a tax adviser before you buy a vacation home to use as a rental property and you starting renting it out on Airbnb.
Related: Why It Totally Makes Sense to Rent Out Your Vacation Homes
What Makes for the Best Places to Buy a Vacation Home?
That’s another important real estate question which we tackled in part 1 before we looked at the actual best places to buy a vacation home. In brief, the best places to buy a vacation home are places where you want to spend your holidays, locations where the Airbnb rental strategy is legal, and places which yield high return on investment for short-term rentals, particularly Airbnb cash on cash return and Airbnb cap rate. Our list of the best places to buy a vacation home in the US housing market at the moment includes cities from TripAdvisor’s ranking of the most popular summer vacation rental spots in the US. Nevertheless, many of these cities are top vacation spots in the winter as well due to the pleasant climate and the local attractions. The data for each city presented here is generated by Mashvisor’s investment property calculator to help you choose among the best places to buy a vacation home according to your own investment needs and preferences. Last thing before we jump to the actual best places to buy a vacation home in the early 2018 is noting that the cap rate and the cash on cash return for Airbnb rentals (as well as traditional rentals) calculated by Mashvisor’s rental property calculator is the same as our calculator assumes all cash investment property payments.
Related: Four Things to Consider Before Purchasing an Airbnb Investment Property
What Are the Best Places to Buy a Vacation Home in the US Housing Market Now?
Please note that this list of the best places to buy a vacation home in the US housing market consists of 20 cities, which we have divided in two articles. To go to part 1, which includes locations exclusively in the State of Florida, click here.
1. Ocean City, MD
- Median Property Price: $309,000
- Airbnb Rental Income: $3,720
- Airbnb Cash on Cash Return: 11.1%
- Airbnb Cap Rate: 11.1%
- Airbnb Occupancy Rate: 51.4%
- Traditional Rental Income: $970
- Traditional Cash on Cash Return: 1.0%
- Traditional Cap Rate: 1.0%
The official website of Ocean City says that a beach vacation there is comprised of free beaches, boardwalk, fishing, seafood, and shopping. What more do you need to convince a real estate investor to buy a rental property – and even better, a vacation home – in this location?! No wonder the expected cash on cash return and cap rate for short-term rentals are so high, and the Airbnb occupancy rate is also excellent.
2. Myrtle Beach, SC
- Median Property Price: $190,000
- Airbnb Rental Income: $2,250
- Airbnb Cash on Cash Return: 8.5%
- Airbnb Cap Rate: 8.5%
- Airbnb Occupancy Rate: 47.8%
- Traditional Rental Income: $1,390
- Traditional Cash on Cash Return: 2.3%
- Traditional Cap Rate: 2.3%
According to Visit Myrtle Beach South Carolina, this resort city attracts tourists with its soft sandy beaches, entertainment opportunities, variety, affordability, golf courses, food options, shopping, hospitality, and beautiful nature. Thus, it comes as no surprise that Myrtle Beach is one of the best places to buy a vacation home in the US housing market to rent out through Airbnb rentals. The expected return on investment in terms of Airbnb cash on cash return and Airbnb cap rate is really good, mostly owing to the highly affordable property price levels.
3. Gatlinburg, TN
- Median Property Price: $220,000
- Airbnb Rental Income: $1,700
- Airbnb Cash on Cash Return: 7.0%
- Airbnb Cap Rate: 7.0%
- Airbnb Occupancy Rate: 51.0%
- Traditional Rental Income: $1,160
- Traditional Cash on Cash Return: 2.8%
- Traditional Cap Rate: 2.8%
If as a real estate investor you are looking for one of the best places to buy a vacation home in the US away from the beach, Gatlinburg, TN might be the best location for your first or next investment property. Mashvisor’s investment property calculator suggests expected cash on cash return and cap rate for short-term rentals of 7.0%.
Now, before we continue, we should clarify something with regards to return on investment. Many real estate professionals say that good cap rate and good cash on cash return are anything in the range of 8-12%. However, we have to be realistic here. With the recent growth in the real estate investing business, real estate investors should be very happy with any rental property generating 5% or more in cap rate and cash on cash return.
Related: Traditional Cap Rate by City 2022—What Investors Can Expect
4. Virginia Beach, VA
- Median Property Price: $480,000
- Airbnb Rental Income: $880
- Airbnb Cash on Cash Return: 1.0%
- Airbnb Cap Rate: 1.0%
- Airbnb Occupancy Rate: –
- Traditional Rental Income: $1,760
- Traditional Cash on Cash Return: 2.5%
- Traditional Cap Rate: 2.5%
Although Virginia Beach, VA is a mostly suburban location, it is the most populous city in the State of Virginia and one of the best places to buy a vacation home in the US housing market at the moment. It’s a resort city with miles of beaches with opportunities for swimming and several state parks but also a home to a few large corporations and two universities, which makes it an ideal location for owning an Airbnb rental property.
5. Orange Beach, AL
- Median Property Price: $469,000
- Airbnb Rental Income: $3,190
- Airbnb Cash on Cash Return: 4.7%
- Airbnb Cap Rate: 4.7%
- Airbnb Occupancy Rate: 50.0%
- Traditional Rental Income: $2,250
- Traditional Cash on Cash Return: 1.8%
- Traditional Cap Rate: 1.8%
According to the Gulf Shores & Orange Beach website, Alabama’s white-sand beaches offer “adventure, fun, relaxation”. Well, what more do you need to hear to just want to spend your holidays in this place?! No wonder Orange Beach, AL is one of the best places to buy a rental property. The return on investment as computed by Mashvisor’s investment property calculator is close to 5%, which is relatively good cash on cash return and good cap rate in our highly competitive world of real estate investments, especially when it comes to Airbnb rentals.
6. San Diego, CA
- Median Property Price: $703,000
- Airbnb Rental Income: $1,480
- Airbnb Cash on Cash Return: 1.2%
- Airbnb Cap Rate: 1.2%
- Airbnb Occupancy Rate: –
- Traditional Rental Income: $2,580
- Traditional Cash on Cash Return: 2.3%
- Traditional Cap Rate: 2.3%
Next on our list of the best places to buy a vacation home is San Diego, CA. This one comes as no surprise to any real estate investor considering investing in Airbnb rental properties. However, real estate investors should be aware of the fact that the property price level is higher in San Diego because of the hot real estate market, which brings the return on investment down despite the good Airbnb rental income.
Related: Why Investors Should Be Looking Into Airbnb San Diego
7. Las Vegas, NV
- Median Property Price: $289,000
- Airbnb Rental Income: $1,600
- Airbnb Cash on Cash Return: 4.6%
- Airbnb Cap Rate: 4.6%
- Airbnb Occupancy Rate: %
- Traditional Rental Income: $1,410
- Traditional Cash on Cash Return: 2.7%
- Traditional Cap Rate: 2.7%
Are you surprised to hear that Las Vegas, NV is the next on the list of the best places to buy a vacation home in the US right now? Or ever, for that matter? Of course you are not. While the expected Airbnb cash on cash return and Airbnb cap rate are good, according to Mashvisor’s rental property calculator, in Las Vegas as a whole, some housing markets within the city are doing extremely well. Buffalo, Winchester, Rancho Charleston, Michael Way, and Huntridge all offer double-digit cash on cash return and cap rate for Airbnb rentals, which is an excellent return on investment for any rental strategy. Other Las Vegas neighborhoods – Downtown, The Strip, and Lone Mountain – are also among the best places to buy a vacation home in the US housing market at the beginning of 2018.
Related: Airbnb Las Vegas: The City With No Off Season
Buffalo, Las Vegas, NV
- Median Property Price: $250,000
- Airbnb Rental Income: $4,220
- Airbnb Cash on Cash Return: 12.7%
- Airbnb Cap Rate: 12.7%
- Airbnb Occupancy Rate: 46.5%
- Traditional Rental Income: $1,670
- Traditional Cash on Cash Return: 3.6%
- Traditional Cap Rate: 3.6%
Winchester, Las Vegas, NV
- Median Property Price: $220,000
- Airbnb Rental Income: $3,010
- Airbnb Cash on Cash Return: 12.2%
- Airbnb Cap Rate: 12.2%
- Airbnb Occupancy Rate: 52.0%
- Traditional Rental Income: $1,250
- Traditional Cash on Cash Return: 3.5%
- Traditional Cap Rate: 3.5%
Rancho Charleston, Las Vegas, NV
- Median Property Price: $246,000
- Airbnb Rental Income: $3,310
- Airbnb Cash on Cash Return: 12.0%
- Airbnb Cap Rate: 12.0%
- Airbnb Occupancy Rate: 55.1%
- Traditional Rental Income: $1,470
- Traditional Cash on Cash Return: 3.4%
- Traditional Cap Rate: 3.4%
Michael Way, Las Vegas, NV
- Median Property Price: $200,000
- Airbnb Rental Income: $2,800
- Airbnb Cash on Cash Return: 11.7%
- Airbnb Cap Rate: 11.7%
- Airbnb Occupancy Rate: 57.4%
- Traditional Rental Income: $950
- Traditional Cash on Cash Return: 2.0%
- Traditional Cap Rate: 2.0%
Huntridge, Las Vegas, NV
- Median Property Price: $197,000
- Airbnb Rental Income: $2,650
- Airbnb Cash on Cash Return: 11.0%
- Airbnb Cap Rate: 11.0%
- Airbnb Occupancy Rate: 42.7%
- Traditional Rental Income: $1,130
- Traditional Cash on Cash Return: 2.8%
- Traditional Cap Rate: 2.8%
Downtown, Las Vegas, NV
- Median Property Price: $360,000
- Airbnb Rental Income: $3,220
- Airbnb Cash on Cash Return: 8.1%
- Airbnb Cap Rate: 8.1%
- Airbnb Occupancy Rate: 63.9%
- Traditional Rental Income: $1,500
- Traditional Cash on Cash Return: 2.3%
- Traditional Cap Rate: 2.3%
The Strip, Las Vegas, NV
- Median Property Price: $399,000
- Airbnb Rental Income: $2,150
- Airbnb Cash on Cash Return: 6.4%
- Airbnb Cap Rate: 6.4%
- Airbnb Occupancy Rate: 51.1%
- Traditional Rental Income: $2,410
- Traditional Cash on Cash Return: 7.3%
- Traditional Cap Rate: 7.3%
Lone Mountain, Las Vegas, NV
- Median Property Price: $287,000
- Airbnb Rental Income: $2,310
- Airbnb Cash on Cash Return: 5.9%
- Airbnb Cap Rate: 5.9%
- Airbnb Occupancy Rate: 43.0%
- Traditional Rental Income: $1,220
- Traditional Cash on Cash Return: 1.8%
- Traditional Cap Rate: 1.8%
8. Pigeon Forge, TN
- Median Property Price: $255,000
- Airbnb Rental Income: $1,670
- Airbnb Cash on Cash Return: 5.6%
- Airbnb Cap Rate: 5.6%
- Airbnb Occupancy Rate: 38.4%
- Traditional Rental Income: $950
- Traditional Cash on Cash Return: 0.8%
- Traditional Cap Rate: 0.8%
To take advantage of the Appalachian wilderness, every real estate investor should think about buying an investment property in Pigeon Forge, TN, as one of the best places to buy a vacation home in the US at the moment. Pigeon Forge offers a very affordable median property price, which makes it a good investment choice for beginner real estate investors. Short-term rental properties offer good return on investment.
9. Tybee Island, GA
- Median Property Price: $438,000
- Airbnb Rental Income: $3,710
- Airbnb Cash on Cash Return: 6.1%
- Airbnb Cap Rate: 6.1%
- Airbnb Occupancy Rate: 50.8%
- Traditional Rental Income: $1,130
- Traditional Cash on Cash Return: –
- Traditional Cap Rate: –
Back to the beach, when looking for good cash on cash return and good cap rate for Airbnb rentals, real estate investors should consider buying a property in Tybee Island, GA. As someone thinking about the Airbnb rental strategy, you should be aware of the many events taking place in Tybee Island around the year to adjust your nightly rate accordingly.
10. Galveston, TX
- Median Property Price: $326,000
- Airbnb Rental Income: $2,770
- Airbnb Cash on Cash Return: 6.9%
- Airbnb Cap Rate: 6.9%
- Airbnb Occupancy Rate: 35.3%
- Traditional Rental Income: $1,180
- Traditional Cash on Cash Return: 0.7%
- Traditional Cap Rate: 0.7%
The last two locations on our list of the best places to buy a vacation home in the US right now are in Texas. Actually, Texas is one of the five most popular states for tourism in the US, so it’s only logical that the Lone Star State would be the perfect location for an Airbnb rental property. Thus, Galveston, TX could easily be the location of your next income property if you are in favor of the Airbnb rental strategy as a landlord.
Related: Texas Real Estate Investing: The Best Areas
11. South Padre Island, TX
- Median Property Price: $315,000
- Airbnb Rental Income: $2,690
- Airbnb Cash on Cash Return: 6.0%
- Airbnb Cap Rate: 6.0%
- Airbnb Occupancy Rate: 42.1%
- Traditional Rental Income: $1,910
- Traditional Cash on Cash Return: 3.0%
- Traditional Cap Rate: 3.0%
Last but not least, South Padre Island, TX is another one of the best places to buy a vacation home in the US housing market at the beginning of 2018.
Related: The Best States With No Property Tax for Real Estate Investing
When you decide which of these top locations for short-term rentals is the best for you and your investment goals, you can start searching for the best real estate investment properties on Mashvisor immediately. Just sign up. Remember that Mashvisor’s investment property finder and Mashvisor’s investment property calculator will provide you with the best investment properties and figures related to them, for both traditional rentals and Airbnb rentals. Mashvisor is the top real estate investing tool, regardless of your preferences of a rental strategy as a real estate investor. Whether you are looking for a traditional rental or a short-term rental property, you are guaranteed to find an optimal choice on Mashvisor, always in a top location.
Meanwhile, if you think that buying a vacation home is the right investment decision for you as a real estate investor but are not in favor of any of the best places to buy a vacation home in this blog, you should take a look at our other blogs:
- The 7 Best Places to Buy a Vacation Home in Florida
- The Best Places to Buy a Vacation Home in Michigan
- What Are the Best Places to Buy a Vacation Home in New York State?
- The Best Places to Buy a Vacation Home in Texas
- Here Are the 3 Best Places to Buy a Vacation Home in Nevada
Note: This is part 2 of The 20 Best Places to Buy a Vacation Home in the US at the Beginning of 2018. To go to part 1, click here.
