Are you considering a vacation rental investment? Do you wonder where you’ll get the best return on a vacation home as you diversify your investment portfolio?
We’ve updated our list of the top 10 places to invest in a vacation rental from 2017 by analyzing the latest data from Evolve’s 7,500+ homeowners across North America.
This list should give you an idea of how much owners make on average with short-term rentals and paint a picture of the potential that exists for top performers.
The vacation rental industry isn’t just growing – it’s changing. Competition is fierce, and peak performance means going above and beyond what the status quo calls for. Professional real estate photos, hotel amenities, detailed listing descriptions, immediate responses, and professional booking experiences are essential ingredients for vacation rental success.
See what you could be making with a second home by checking our list of the 10 best places to buy a vacation rental in 2018.
1. Panama City Beach, Florida
Panama City Beach is one of the best places to invest in a vacation rental for a number of reasons. It continues to see strong demand for private accommodations, coupled with low real estate costs and strong nightly rates.
The median price for homes in Panama City Beach is $339,950, and it’s expected to rise, meaning there’s great potential for appreciation while you’re collecting rental income.
According to our data, a vacation home in Panama City Beach can bring in:
- $2,575 per month
- $30,911 per year
These estimates are based on average performance for the area, but the earning potential is much higher. One Evolve property, a three-bedroom condo in Panama City Beach, received $30,809 in bookings during its first six months on the market and earned over $71,000 in just over a year. See the results here.
The average income would likely be sufficient to cover your costs, but the real money comes into play when you hit the kinds of numbers that top performers achieve.
2. Napa, California
The rolling hills, picturesque estates, and hundreds of award-winning vineyards are reasons why Napa Valley is the second best area for vacation rental. California Wine Country attracted 3.5 million visitors in 2016 and more travelers are booking vacation rentals because they offer a taste of the local experience.
With higher real estate costs, the median listing price for homes in Napa is $775,000, investors in this area are able to cover their costs by commanding a higher nightly rate.
According to our data, an average 2-bedroom vacation home in Napa can bring in:
- $3,375 per month
- $40,501 per year
While this is an impressive annual income, it hardly represents the ceiling for this market area. These Napa Valley owners booked $230,602 worth of rental income in the six months after making the transition from bed and breakfast to vacation rental, and they’ve since gone on to earn $722,773 in the past two years.
3. Palm Springs, California
Palm Springs is a repeat on the list of the top places to invest – it ranked eighth in 2017. With a large supply of vacation rental inventory, famous architecture, year-round tourism, and events that draw visitors worldwide, it has climbed to a position in the top three.
The median price for a home in Palm Springs is $460,000, and most owners find it’s not difficult to cover their costs with their rental income.
According to our data, a vacation home in Palm Springs can bring in:
- $3,088 per month
- $37,065 per year
Those estimates are what you can expect to earn on average with a 3-bedroom property. Our vacation rental performance report shows that owners who make smart investments in their properties can command higher rates and move into the 75th percentile for earnings.
In fact, Rick Labrie listed his newly renovated 3-bedroom Palm Springs house and cleared nearly $50,000 in five months. Just past the one-year mark, he’s made over $86,000.
4. Gatlinburg, Tennessee
Gatlinburg is a top family vacation destination that’s become one of the most profitable places for vacation rental investors. With predictable visitor flows year after year, an established vacation rental market, and affordable real estate, this is a place where first-time investors can feel confident building a nest egg.
The median listing price for a home in Gatlinburg is $239,500, and real estate inventory has historically been in ample supply.
We estimate that the average vacation rental can bring in:
- $2,230 per month
- $26,767 per year
A smart investment in a property with in-demand amenities (game rooms, mountain views, indoor pools, proximity to attractions) has the potential to pay off immensely.
One Evolve property in Gatlinburg earned over $125,000 in the first year it was listed. However, it’s important to note that Gatlinburg slipped to the number four spot in 2018 after being ranked second last year, perhaps because new investors are catching on to this area’s potential and creating greater competition.
5. Cape Cod, Massachusetts
New England’s favorite summer getaway is also one of the best places to buy a vacation rental in the United States. The population on the Cape triples every year as visitors take up week-long residence in beach cottages and historic homes, providing the predictable tourism that makes this peninsula such an attractive place to invest.
The median listing price for a home in Cape Cod is $499,000. Costs vary widely based on proximity to the beach, location along the Cape, and property size, but that doesn’t impact your ability to generate rental income.
Based on data from our Vacation Rental Performance Report, average earnings for vacation rentals on the Cape are:
- $1,991 per month
- $23,900 per year
That’s a pretty solid number, but with a smart marketing plan and desirable amenities, we’ve seen owners in the 75th percentile earning around $35,743 per year. Evolve helped a first-time real estate investor earn $28,475 in bookings during her first month with a Provincetown vacation home. Check out the backstory here. She’s now been with Evolve for two years and has generated $110,830 in rental income – nearly 30% more than the average.
6. Kissimmee, Florida
With Disney World, Legoland, and Universal Studios in their backyard – is it any surprise that vacation rentals in Kissimmee are in high demand? Buying a property in this area carries low risk because there are tourists visiting year round who are looking for cost-effective accommodations. The competitive real estate prices don’t hurt either.
The median listing price for real estate in Kissimmee is $215,400, but it’s on the rise as more investors discover the potential for generating rental income in this area.
The average vacation rental in Kissimmee can expect to bring in:
- $1,940 per month
- $28,887 per year
A family that purchased a three-bedroom condo in Kissimmee collected $48,155 in rental income in 18 months with Evolve, putting them well above the average.
7. Myrtle Beach, South Carolina
Holding its position as the seventh-best place to invest in a vacation rental across 2017 and 2018, Myrtle Beach continues to prove its value to investors. With miles of beach, predictable tourism, a large inventory of oceanside condos, and low real estate costs, it’s an easy market to enter.
The median listing price for real estate in Myrtle Beach is $175,000, making this seaside town an affordable place to buy.
The average vacation rental in Myrtle Beach can expect to generate:
- $1,536 per month
- $18,438 per year
Our data has shown that owners in the 75th percentile tend to earn closer to $27,171 per year.
One Evolve property made $12,340 in two months – despite the challenge of being listed for the first time during the off-season. The owners went on to make over $50,000 in one year, proving there’s great potential for owners to make money in this area.
8. Savannah, Georgia
Art and history meet in this coastal city where Southern charm flows as abundantly as sweet tea. Visitors come year-round to stroll through streets lined with Spanish Moss-draped trees and European architecture in the historic districts. With Tybee Island a short drive away, providing a beach escape within 30 minutes of the city, it’s quickly becoming one of the hottest places to invest in a vacation rental.
The median listing price for real estate in Savannah is $219,995. If you’re looking for prime waterfront real estate or homes in the historic district, the price point skews higher – prepare to spend $400,000 to over $1 million.
The range for vacation rental income varies depending on property size, with our data showing that the average 2-bedroom home earns:
- $2,591 per month
- $39,796 per year
One Evolve property, a four-bedroom home near Tybee Island, generated over $50,000 in eight months, while a three-bedroom house halfway between Savannah’s historic district and Tybee Island brought in $23,859 in just under a year.
What makes one property perform better than another? Location, curb appeal, and additional sleeping space.
9. Corpus Christi, Texas
Known for its deep inventory of affordable waterfront property, Corpus Christi is a vacation destination with a lot of investment potential. Warm weather stretches from early spring to late fall, extending the tourist season during which vacation rental owners can host guests and collect income.
The median listing price for real estate in Corpus Christi is $210,000, putting vacation homes at a price point that many first-time investors will find reasonable – especially given the potential for returns.
According to our data, on average, a 3-bedroom vacation rental can bring in:
- $2,355 per month
- $28,268 per year
Evolve homeowners in Corpus Christi typically earn closer to $40,897 a year, which is what we’ve seen for vacation rentals in the 75th percentile. A one-bedroom Evolve condo on the beach made over $15,000 in four months, putting it on a trajectory to hit that 75th percentile in its first year.
10. Killington, Vermont
Killington may not be on your radar yet, but this small mountain town should be. The Vermont ski area earned the final spot on the list of the best places to buy a vacation rental because it’s an affordable market where the demand for private accommodations is just now being realized.
The median listing price for real estate in Killington is $174,000, and a large supply of houses makes it possible to buy a well-appointed property without paying a premium.
According to our internal data, the average vacation rental can expect to bring in:
- $3,178 per month
- $38,142 per year
We’ve seen similar results across other Vermont ski areas as well. A first-time vacation rental owner in Stowe made $35,572 in five months. And we’ve worked with owners in Killington who cleared $41,517 in under 11 months, and $36,400 in under eight months.
What to Know Before You Invest in a Vacation Rental
The real estate adage, “location, location, location,” applies to successful vacation rental investments. But there’s more to being successful than choosing the right location.
Curb appeal, competition, availability, marketing, and management can make or break a vacation rental business – no matter how attractive its location.
If you’ve already thought through these other considerations, you’re in a good place to buy a vacation home. If you are still in the process of figuring it all out, we have some resources that can help.
1. Vacation Rental 101 Guide: Everything you need to know to get started with vacation rental
2. Vacation Rental Performance Reports: Information about how much you can earn
3. Rental Income Calculator: See how your expected earnings and expenses stack up
With the right tools and strategy, you can go into vacation rental fully aware of the challenges and opportunity. You’ll be in a position to bypass the learning curve and hit the ground running.
We know because Evolve has worked with more than 7,500 owners across North America to make their vacation rentals successful.
If you need to get a great return on your investment, but you don’t have the time to take on vacation rental management as a full-time job, Evolve might be the partner you’re looking for.
Offering unrivaled flexibility and an industry-low 10% fee, Evolve outperforms traditional property managers at a fraction of the cost. There are no costs to join, no term conditions, and you’ll get everything you need to get off to a successful start with vacation rental. Call our Homeowner Consultants at 877.881.7584 to see how you can get more out of your vacation rental investment.