North Carolina is one of the most pleasant places on the East Coast. But is buying vacation rentals for sale in North Carolina a sound investment?
Table of Contents
- Is North Carolina a Good Location for Investing in Vacation Rentals?
- Things to Consider When Finding Vacation Rentals for Sale in North Carolina
- 4 Tips for Finding the Right Vacation Rentals for Sale in North Carolina
- 10 Best Cities in North Carolina for Vacation Rentals
North Carolina. The Old North State. The Tar Heel State.
North Carolina is home to one of the most scenic coastlines on the eastern seaboard of the US. It draws millions of tourists every year and is considered one of the best places for businesses in 2022.
Given its status, investors from all over the country are buying North Carolina investment properties left and right. The question now is: should you follow suit?
In this article, we will discuss the different factors you need to consider before buying vacation rentals for sale in North Carolina. We’ll discuss a few questions you need to ask yourself and certain tips in finding the right property for you with the help of Mashvisor. Hopefully, by the end of this, you will find the answers to some of your questions, which will help you make the right decision.
Is North Carolina a Good Location for Investing in Vacation Rentals?
The Tar Heel State is famous for some of the most beautiful beaches on the East Coast. Both residents and visitors are fond of its coastline, as well as its diverse geography and culture. Yuppies, growing families, and retirees flock to NC every year to experience the different things it can offer both potential in-migrants and visitors.
As a real estate investor, investing in North Carolina may be one of the better decisions you can make. The state takes pride in its growing job market and thriving economy, thanks to locally birthed multinational companies like Pepsi and Krispy Kreme and its booming tech sphere.
North Carolina’s also been named one of the top five most favorite states in the country, with its proximity to beaches and mountainscape, pleasant weather, educational districts, thriving tourism, and reasonable cost of living.
With all of such great qualities, it’s no wonder North Carolina remains one of the top states in the country for investors like you.
Pros and Cons of Investing in Vacation Rentals for Sale in North Carolina
When investing in short-term rental properties, North Carolina offers a lot of potential to investors. It will significantly depend on your investment goals, but overall, as a vacation rental market, NC can give you a good return on investment dollar-for-dollar.
Let’s take a closer look at what investing in vacation rentals in the Old North State is like.
Like any investment vehicle, real estate investing comes with ups and downs. Here are some of the good things about investing in short-term rental properties:
- It is an investment. Just like any real estate property, vacation rentals for sale in North Carolina are suitable to add to your growing portfolio. They will most likely increase in value as the years go by. A coastal location like North Carolina, in particular, boasts some of the most beautiful beaches on the East Coast and the entire country. Such a unique characteristic all the more increases a property’s value.
- It is a great income source. North Carolina rental properties offer very good cash on cash returns for both traditional and vacation rentals. It makes NC rental properties a profitable investment that will give you a decent monthly rental income.
- You get to save on vacations. If you’re an out-of-town or out-of-state investor, you will always have a place to retreat to in North Carolina. You don’t need to spend much on costly hotels and resorts. And you can stay for as long as you want as long as your Airbnb calendar allows.
- It will improve your quality of life. Investing in vacation rentals has the potential to improve your way of life. On top of having a good income source, it can also give you a place to recharge and relax. You have a place to get away from it all and be by yourself or spend quality time with your loved ones.
On the other hand, rental property investing has some downsides, too:
- It will cost you. Real estate investing is not cheap. A house is one of the most expensive things you will buy in your life. If you think owning a house is already expensive, wait until you decide to buy a vacation rental. The cost of owning and operating an Airbnb business is steep. You will have additional mortgage payments, taxes, utilities, and insurance, just like you would with your primary residence. You also need to think about the operating costs.
- You have another home to think of and maintain. For the vacation rental property to be a successful business venture, it needs to be well-maintained. It means religiously inspecting the property after every transition and taking care of all the necessary repairs and maintenance. A vacation rental property is more at risk of wear-and-tear with frequent guest transitions. The cost of maintenance will eat up a large chunk of your monthly budget.
Related: What Is Airbnb? 6 Things to Know Before You Start Hosting
North Carolina by the Numbers
Now, let’s take a quick look at what the Old North State has to offer real estate investors. The data below was taken from real estate website Mashvisor on August 2022:
- Median Property Price: $552,859
- Average Price per Square Foot: $301
- Days on Market: 85
- Number of Traditional Listings: 19,560
- Monthly Traditional Rental Income: $1,624
- Traditional Cash on Cash Return: 1.91%
- Traditional Cap Rate: 1.96%
- Price to Rent Ratio: 28 (high)
- Monthly Vacation Rental Income: $3,220
- Vacation Rental Cash on Cash Return: 3.93%
- Vacation Rental Cap Rate: 4.02%
- Vacation Rental Daily Rate: $176
- Vacation Rental Occupancy Rate: 55%
- Walk Score: 45
According to the above numbers from Mashvisor, buying a vacation rental property for sale in NC is a good investment move. The state provides an average monthly Airbnb rental income north of $3,000 on a 3.93% cash on cash return and 55% occupancy rate. The minimum cash on cash return for a vacation rental to be considered profitable is 2.00%, along with an occupancy rate of above 50%.
Considering the median property value in NC and how popular it is among tourists, investing in an NC vacation rental might be a good thing for you, depending on your investment goals.
Things to Consider When Finding Vacation Rentals for Sale in North Carolina
As an investor, it is important to have a sound investment strategy in place before you purchase an investment property. Investment strategies will vary depending on the property’s location and the investor’s specific goals.
Before youinvest in vacation rentals for sale in North Carolina, you need to ask yourself some questions first and answer them as honestly as you can:
Can You Afford It at This Time?
Owning a vacation rental is literally owning another property. It means that your expenses on housing will double at the very least.
If you’re paying for mortgages on your existing property, understand that when you do buy an investment property in NC (or anywhere else, for that matter), you will be making another set of mortgage payments. This is also true with taxes, insurance, and upkeep costs. Plus, you need to set aside a budget for your operating costs.
With all the expenses that come with owning a vacation rental property, can you financially sustain it at this time? If you push through with the purchase, are you certain that your other financial obligations will not be compromised?
Is It a Good Long-Term Move for You?
Before setting out to buy an income property for sale, you first need to determine how you plan to use it. Owning a vacation home can be exciting at first, but it takes a great amount of time and effort to keep it going. Do you have the patience and resolve to see it through for the long haul? Are you committed enough to make it last for as long as you can, to the point of going beyond recovering your investment?
If your answer to the above questions is “yes,” then perhaps a vacation rental in NC is, indeed, a good investment to get into.
Related: How to Buy Your First Airbnb Property
4 Tips for Finding the Right Vacation Rentals for Sale in North Carolina
Investing in a vacation rental property in the Old North State is made easier if you know how to go about it properly. We’ve listed a few tips below to help get you started.
1. Know Your Target Market
One of the first things you need to determine before setting out to buy vacation rentals for sale in North Carolina is to get inside the mind of the people you wish to attract.
Ask yourself what sort of people you see yourself renting your vacation home to. Are they young professionals? Families with young children? Pet-lovers? Adventure seekers? Older adults and retirees?
Knowing your target market will help you identify which locations to invest in and which types of properties to consider.
For example, if your target market is young families, the location must be easily accessible to activities and events geared towards this particular demographic. The property itself should be spacious enough to accommodate a small-to-medium-sized family. Additionally, you will need to make sure that the place is child-proofed and provides enough entertainment options fit for a family.
Identifying your target audience will allow you to come up with a list of must-haves and nice-to-haves. The must-haves include spacious areas, a washer, a dryer, and a strong wifi connection. Nice-to-haves are things that can add great value to your property but don’t take away from it if they’re not there.
Knowing what your target market is will help narrow down your options to those that will help you achieve your business goals.
Related: When’s the Best Time to Find Rental Property?
2. Look for the Ideal Location
Any investor worth his salt knows that the success of a real estate investment depends on its location. Finding the right location entails plenty of hard work. On top of identifying your target audience, you need to perform extensive due diligence to ensure that you end up in a location that will optimize your income generation.
What to Look for in a Location
As far as location goes, you should be on the lookout for the following:
- Access to Public Amenities. One of the very first things you should look at when choosing a location for your vacation rental property is how accessible it is to public amenities. Places such as restaurants, shopping centers, public parks, museums, and public transportation all matter to a potential guest.
- Neighborhood. When you go out to buy vacation rentals for sale in North Carolina, take note of neighborhoods that are near the city center. It will give your guests easier access to major transit routes, which adds to your property’s appeal. Ideally, your neighborhood of choice should also have a thriving—or at least, a growing—economy. Neighborhoods with plenty of closed establishments and distressed properties are most unlikely to attract visitors.
- Development. You should also look into future development plans for the neighborhood as they will affect your property’s long-term value and your own investment plans.
- Safety and Security. Choose a neighborhood where there is a very low crime rate. Whether you own a traditional or vacation rental, crime-ridden areas are a big turn-off for tenants and guests.
- Economy. The local economy should be healthy. Small to medium-scale businesses should be thriving and adorning the streets. It makes an area a lot more attractive to tourists.
- Airbnb Regulations. Like all states, there are specific but few Airbnb regulations in place in North Carolina. As a result, it is easier for vacation rental investors to get into the North Carolina market. We advise that you learn more about the rules and regulations of the specific location you’re considering before you make a move.
North Carolina Rental Comps
On top of all the abovementioned considerations, as a rental property investor, you need to familiarize yourself with how the rental market is performing. It will give you deeper insight into your area of choice and allows you to make well-informed decisions.
A big part of knowing the local rental market’s health is by looking at how other similar properties are doing. Comparable properties, or rental comps, are houses with nearly the same characteristics as your subject property. Rental comps allow you to see how much a similar property makes in the same market.
Rental comps will give you an idea of how much a similar property earns in monthly Airbnb rental income. It also gives you the cash on cash return and occupancy rate of each property, as well as its fair market value. Knowing all the key metrics will give you realistic and accurate ROI projections when you compute the subject property’s profitability.
Rental comps are easy to find, especially when you use a website like Mashvisor for your property hunting. Mashvisor users enjoy access to a huge database covering almost the entire US housing market. Its database is regularly updated with information and data coming from trusted and reliable sources like Zillow, Realtor.com, and Airbnb.
When you look for a property or location using Mashvisor, you can see how each available listed property is performing in the rental market by either hovering on the pins on the map or clicking on it.
Using Mashvisor to Locate the Most Ideal Investment Location
As a real estate investment tool, Mashvisor helps countless investors find the best properties that will enable them to achieve their goals. The website is very user-friendly and easy to navigate.
You can use its Property Search tool to look for good neighborhoods with the best numbers for Airbnb properties. Its real estate heatmap can be used to see how a particular area is doing in terms of:
- Traditional Rental Income
- Airbnb Rental Income
- Traditional Cash on Cash Return
- Airbnb Cash on Cash Return
- Listing Price
- Airbnb Occupancy Rate
You can select any one of the filters above in the real estate heatmap to give you a better overview of the market. The heatmap tool makes it easier for you to find suitable neighborhoods and properties with very promising income-generating potential.
To learn more about how Mashvisor can help you find profitable investment properties, schedule a demo today.
3. Consider Its Economy
According to CNBC, North Carolina is the number one state for business in the country today. It should somehow put your mind at ease about its economy. However, as an investor, you should still look for a location with the best possible economy to rake in better returns.
Keep in mind that part of identifying a good vacation rental location is a good local economy. Most guests and visitors prefer to stay in neighborhoods where local businesses are open and thriving. It means they can easily access numerous dining and shopping options, making their overall experience more memorable and fun.
4. Check Out Its Tourism Industry
Lastly, one of the primary reasons most investors decide to start a vacation rental business is tourism. A city’s tourism activities affect its economy on a larger scale. For instance, Orlando FL won’t be as big a tourist spot if it weren’t for its theme parks and attractions. Because it brings in millions of tourists annually, the city’s economy is flourishing.
While not many locations are on par with Orlando and other similar hot tourist spots, each location offers different things to visitors. Tourism is not all about pleasure. A place could also experience a healthy tourism industry based on the number of people visiting for business.
Regardless, when choosing a location to start an Airbnb business, always consider how well its tourism industry is doing, as it will contribute to your occupancy rate.
To start looking for the best vacation rental properties for sale in North Carolina or any state, city, and neighborhood of choice, click here.
10 Best Cities in North Carolina for Vacation Rentals
As far as locations go, North Carolina is home to some of the most financially rewarding Airbnb markets in the US. We gathered the August 2022 rental market data from the real estate website Mashvisor to come up with the list below.
Take note that the locations below are ranked from the highest to the lowest cash on cash return for Airbnb rentals. The list contains only markets with:
- A median price of below $1 million
- At least 100 active Airbnb listings
- Monthly Airbnb rental income of $2,000 and above
- Minimum of 2% cash on cash return
- Airbnb occupancy rate of 50% and up
According to the real estate website Mashvisor, here are the top locations to invest in vacation rentals for sale in North Carolina:
1. Midway Park
- Median Property Price: $182,644
- Average Price per Square Foot: $142
- Days on Market: 80
- Monthly Vacation Rental Income: $2,153
- Vacation Rental Cash on Cash Return: 7.05%
- Vacation Rental Cap Rate: 7.37%
- Vacation Rental Daily Rate: $100
- Vacation Rental Occupancy Rate: 62%
- Walk Score: 12
2. New Bern
- Median Property Price: $359,042
- Average Price per Square Foot: $177
- Days on Market: 118
- Monthly Vacation Rental Income: $3,476
- Vacation Rental Cash on Cash Return: 6.48%
- Vacation Rental Cap Rate: 6.65%
- Vacation Rental Daily Rate: $138
- Vacation Rental Occupancy Rate: 64%
- Walk Score: 74
- Median Property Price: $352,397
- Average Price per Square Foot: $174
- Days on Market: 192
- Monthly Vacation Rental Income: $3,260
- Vacation Rental Cash on Cash Return: 6.08%
- Vacation Rental Cap Rate: 6.26%
- Vacation Rental Daily Rate: $133
- Vacation Rental Occupancy Rate: 61%
- Walk Score: 80
4. Cape Carteret
- Median Property Price: $436,225
- Average Price per Square Foot: $216
- Days on Market: 32
- Monthly Vacation Rental Income: $3,784
- Vacation Rental Cash on Cash Return: 5.68%
- Vacation Rental Cap Rate: 5.80%
- Vacation Rental Daily Rate: $236
- Vacation Rental Occupancy Rate: 53%
- Walk Score: 40
5. Winston Salem
- Median Property Price: $345,574
- Average Price per Square Foot: $171
- Days on Market: 46
- Monthly Vacation Rental Income: $2,774
- Vacation Rental Cash on Cash Return: 5.23%
- Vacation Rental Cap Rate: 5.40%
- Vacation Rental Daily Rate: $120
- Vacation Rental Occupancy Rate: 64%
- Walk Score: 86
- Median Property Price: $846,589
- Average Price per Square Foot: $294
- Days on Market: 102
- Monthly Vacation Rental Income: $5,558
- Vacation Rental Cash on Cash Return: 5.20%
- Vacation Rental Cap Rate: 5.28%
- Vacation Rental Daily Rate: $423
- Vacation Rental Occupancy Rate: 54%
- Walk Score: 54
7. High Point
- Median Property Price: $354,546
- Average Price per Square Foot: $160
- Days on Market: 25
- Monthly Vacation Rental Income: $3,077
- Vacation Rental Cash on Cash Return: 5.19%
- Vacation Rental Cap Rate: 5.34%
- Vacation Rental Daily Rate: $184
- Vacation Rental Occupancy Rate: 54%
- Walk Score: 58
8. Kitty Hawk
- Median Property Price: $763,325
- Average Price per Square Foot: $367
- Days on Market: 55
- Monthly Vacation Rental Income: $5,038
- Vacation Rental Cash on Cash Return: 4.94%
- Vacation Rental Cap Rate: 5.00%
- Vacation Rental Daily Rate: $320
- Vacation Rental Occupancy Rate: 51%
- Walk Score: 12
- Median Property Price: $284,156
- Average Price per Square Foot: $147
- Days on Market: 81
- Monthly Vacation Rental Income: $2,344
- Vacation Rental Cash on Cash Return: 4.83%
- Vacation Rental Cap Rate: 4.99%
- Vacation Rental Daily Rate: $115
- Vacation Rental Occupancy Rate: 60%
- Walk Score: 50
- Median Property Price: $361,693
- Average Price per Square Foot: $248
- Days on Market: 68
- Monthly Vacation Rental Income: $2,637
- Vacation Rental Cash on Cash Return: 4.83%
- Vacation Rental Cap Rate: 4.98%
- Vacation Rental Daily Rate: $145
- Vacation Rental Occupancy Rate: 54%
- Walk Score: 42
To start looking for the best Airbnb properties for sale in North Carolina or any location of your choice, click here.
Wrapping It Up
North Carolina is a very promising state for real estate investors. Mashvisor’s August data shows how good its average Airbnb income and cash on cash return are, as well as its occupancy rate. The only thing that will probably pose a challenge for you is your financial situation, as well as your preparedness.
Real estate investing requires due diligence. You need to do your homework so you can draw the best investment strategies that will help you accomplish your goals.
To end, looking for profitable vacation rentals for sale in North Carolina is best done with the help of a website like Mashvisor.
For one, you can access a huge database that covers almost the entire US real estate market. Two, it is very easy to navigate, making it easy for both beginners and experienced investors to use. Three, its tools make it easy to find the right investment properties that align with your goals.
To access Mashvisor’s real estate investment tools, sign up for a 7-day free trial today, followed by 15% off for life.