The short-term vacation rental industry is booming. In 2019 alone, the number of vacation rentals grew by 26%. Airbnb is expected to go public later this year, Vrbo recently underwent a brand makeover, and Evolve has expanded our team and made big upgrades to our owner and guest experiences as we continue our mission to make vacation rental easy for everyone.
For the fourth year in a row, we’re happy to share our list of the ten best places to buy a vacation rental. Our experience managing more than 14,000 vacation rental properties has given us insight into 700+ U.S. markets and how they might perform for you.
How we chose where to invest in a vacation rental
The numbers below are based on a combination of proprietary and public data. We looked at a broad set of vacation rental performance data across the U.S. to learn where bookings lead to higher median revenue. We used Zillow’s 2019 median listing price of homes in each area and, to help calculate cap rate, we estimated the yearly expenses of running a rental at 30% of total revenue.
While every individual homeowner’s rental situation will be different, this information should at least help you better understand the 2020 market opportunities and begin to focus your search. If you’ve been considering buying a second home, take a closer look at properties in these locations and let us know how we can help you in your search.
1. Surfside Beach, Texas
- Median rental revenue: $23,999
- Median listing price: $109,950
- Example cap rate: 15%
For the second year in a row, Surfside makes our top ten list, this time moving to the top spot. This quaint town on the Texas shoreline an hour from Galveston offers travelers the usual beachy fare. However, the waves and wildlife at nearby Brazoria National Wildlife Refuge attract surfers and bird-watchers alike, making this a unique, family-friendly destination.
Properties that perform the best as a Surfside Beach vacation rental boast an inviting outdoor living space, where guests can enjoy grilling a family dinner on the deck while taking in the stunning oceanfront view just steps away from Seaside beach. Luckily, this area is situated on a narrow tract of land, so beachfront real estate is not too hard to come by.
2. McGaheysville, Virginia
- Median rental revenue: $49,994
- Median listing price: $289,000
- Example cap rate: 12%
If Virginia is for lovers, then McGaheysville, Virginia is for nature lovers. Located in the heart of the Shenandoah Valley, this area is known for outdoor recreation opportunities such as hiking, skiing, canoeing, kayaking, rafting, and leaf peeping in autumn.
With Massanutten Resort and Shenandoah National Park north and the Appalachian Trail toward the south, a McGaheysville vacation rental is ideal for travelers seeking easily accessible mountain adventures.
If you’re looking to invest in this area, try finding a property close to Massanutten Resort or Shenandoah National Park, so your guests can explore both areas with no trouble. Other amenities that attract more guests in this area include an outdoor space, a grill, a private hot tub, and a game room.
3. Gatlinburg, Tennessee
- Median rental revenue: $45,017
- Median listing price: $319,900
- Example cap rate: 9%
For the fourth year in a row, the Gatlinburg area is one of our top ten places to buy a vacation rental (which isn’t surprising for multiple reasons). This mountain resort destination has consistently been an ideal vacation spot for families, bachelor and bachelorette parties, youth groups, and any other type of ‘retreat’ you can imagine.
Travelers flock here ten months out of the year for attractions like Dollywood, Ripley’s Aquarium of the Smokies, and skiing at Ober Gatlinburg–but most of all for the awe-inspiring wilderness of the Great Smoky Mountain National Park.
The closer your property is to these attractions, the better. While the median annual rental revenue for the past year is $45,017, we’ve seen Evolve homeowners earn more than $150,000 over the course of a year. Essential amenities for the Gatlinburg area include hot tubs, gas grills, outdoor fire pits, and game rooms.
4. Broken Bow, Oklahoma
- Median rental revenue: $39,067
- Median listing price: $399,999
- Example cap rate: 9%
Making its debut on our top ten list is the hidden gem of Broken Bow, located in southeast Oklahoma and boasting rich historical sites and lush natural attractions. Nestled between the Kiamichi and Ouachita Mountains, Broken Bow is a gateway to Beavers Bend State Park, home to black bears, bald eagles, and forest trails.
The area is popular for travelers who are looking to spend their days boating on the lake, fishing in Lower Mountain Fork River, or hiking and horseback riding along the David Boren Hiking Trail. Outdoor enthusiasts want a vacation rental close to these natural attractions, making a rustic-yet-modern cabin the number one choice of short-term renters in Broken Bow.
If this sounds like an appealing area for your investment, consider looking for cabins close to Broken Bow Lake that have amenities such as a fireplace, a furnished outdoor space, a private hot tub, and a grill.
5. Davenport, Florida
- Median rental revenue: $33,620
- Median listing price: $255,000
- Example cap rate: 9%
Named after Colonel William Davenport (who served as a commander in the Second Seminole War) the town of Davenport is a new addition to our list, which almost always features one or more Florida vacation spots.
While small in size, Davenport is experiencing rapid growth due to its close proximity to the Walt Disney World theme park area. But that isn’t Davenport’s only selling point; the area also features popular golf courses, plenty of shopping options, and noteworthy attractions like Lake Kissimmee State Park and the Bok Tower Gardens.
If you’re looking for a potential investment, shop around for a vacation rental that’s a short drive to Walt Disney World. To attract even more guests, look for a game room, an outdoor lanai, and multiple bedrooms and/or additional sleeping spaces for more guests. Evolve’s top ten performing homes in the Davenport area can sleep larger groups (up to 22 guests) like family getaways.
6. Maggie Valley, North Carolina
- Median rental revenue: $36,218
- Median listing price: $299,950
- Example cap rate: 8%
Located just 40 minutes outside of Asheville, Maggie Valley offers southern hospitality in the popular Great Smoky Mountains area. Snowbirds can spend their time on the slopes at Cataloochee Ski Area just north of town, nature lovers can hike, mountain bike, and horseback ride in Great Smoky Mountain National Park, or go see the stunning Soco and Mingo Falls. Motorcyclists can ride along the Blue Ridge Parkway and then visit the popular Wheels Through Time Motorcycle Museum that houses a collection of 350 rare motorcycles.
Being close to Asheville also offers travelers the option to explore local attractions in the city, such as the North Carolina Arboretum, the unique pinball museum, or all 125,000 acres of the Biltmore estate, a 250-room French Renaissance chateau built in 1889.
If you want to establish a Maggie Valley vacation rental business, then consider a cottage-like or cabin-like property, as those offer guests an idyllic escape from everyday life. Our data also shows that homes with private hot tubs, game rooms, and mountain views typically perform better than average.
7. Poconos, Pennsylvania
- Median rental revenue: $29,540
- Median listing price: $241,450
- Example cap rate: 8%
For the second year in a row, the Poconos makes our best places to buy a vacation rental list with its year-round access to outdoor recreation. The area is just a short drive from New York and New Jersey, making it the perfect city escape where travelers can find their fair share of adventure.
Skiing, golfing, fishing, and parasailing are just a few of the activities that attract travelers to this destination. The Poconos area also features hotspots like the Pocono Raceway, Mount Airy Casino Resort, and two family-friendly waterparks — Camelbeach Mountain and Kalahari.
Short story: invest in lakefront properties (like this one that earned Evolve owners more than 95K in one year) that can accommodate a large group (think 10 to 20 guests), since the Poconos often draws groups of multi-generational families and friends for reunions. Other features that convince travelers to book Poconos vacation rentals are hot tubs and game rooms (especially those with a pool table).
8. Finger Lakes, New York
- Median rental revenue: $20,338
- Median listing price: $172,525
- Example cap rate: 8%
The Finger Lakes region is New York’s largest wine-producing region with over 100 wineries in the region, boasting a reputation for creating world-renowned Rieslings. Travelers flock to this New York oasis for wine tastings and pairings on the Seneca Lake Wine Trail, as well as visiting the local breweries, distilleries, and craft hard cideries.
There are 11 long, narrow, and roughly north–south lakes in the area, so travelers can fill their days boating or fishing. You can also venture out to explore Watkins Glen State Park and hike the gorge trail, seeing 19 waterfalls along the way. It’s a perfect place for long weekend getaways.
Finger Lakes vacation rentals range from rustic cabins to luxury homes, and everything in-between. If you’re thinking about investing here, try to find a lakefront property with a furnished outdoor space, a firepit, and if possible, a private dock or dock access.
9. Waco, Texas
- Median rental revenue: $19,797
- Median listing price: $198,100
- Example cap rate: 6%
Located smack dab between Austin and Dallas, Waco bills itself as The Heart of Texas. Once home to quirky local attractions such as the Texas Ranger Hall of Fame & Museum, the Waco Mammoth National Monument, and the Dr. Pepper Museum, this small Texas town is more popular than ever among travelers, thanks to the success of local HGTV stars Chip and Joanna Gaines (of “Fixer Upper” fame) and their Magnolia business empire in Waco.
Waco is a welcoming town that’s sure to speak to history buffs, outdoor enthusiasts, and relaxation seekers alike. In the summer months, travelers can enjoy Lake Waco, cruise through downtown on the Brazos river, or hike the National Recreation Trail system in the 416-acres of Cameron Park.
If Chip and Joanna aren’t available to help you find the perfect home, we suggest looking for waterfront properties on Lake Waco or the Brazos river. Some profit driving features of homes in the area include furnished outdoor spaces and multiple bedrooms to sleep a larger number of guests.
10. Lead, South Dakota
- Median rental revenue: $24,475
- Median listing price: $418,950
- Example cap rate: 4%
Lead is in the heart of South Dakota’s northern Black Hills, known for destinations like the otherworldly Badlands National Park and Devils Tower in Wyoming.
In addition to the monumental outdoor attractions, the area is also rich in western history, especially in Lead’s nextdoor neighbor, Deadwood, the resting place of Wild West figures like Wild Bill Hickok and Calamity Jane.
Travelers stay in Lead specifically for close proximity to Terry Peak and Mystic Miner Mountain, both popular ski destinations, but it also offers easy access Mt. Rushmore, Custer State Park, and the famous Sturgis Motorcycle Rally.
Cabins are a popular rental in the area, so if you’re considering buying property in Lead, try to find a cabin with forest or mountain views. A furnished outdoor space with a grill are also great profit-driving features, as well as a close proximity to Crazy Horse Monument & Mt. Rushmore if possible.
So, where should you invest?
Investing is a personal decision. Only you can decide what’s best.
Maybe you want to invest in a proven vacation rental market like Gatlinburg or Florida, even if you’ll experience stiffer competition for bookings. Or maybe you want to invest in an area off the beaten path, such as Broken Bow, where you balance investment with personal enjoyment.
This list can only help you start your search. However, you can also work with Evolve’s Real Estate Services team. We can help you narrow down your locations, connect you to a realtor who specializes in vacation rentals, or even find you an existing Evolve vacation rental currently up for sale so you can start your vacation rental business running.
Here are some free resources that can help you better understand the potential of vacation rental investment:
- Vacation Rental Performance Reports: See key data on top markets across the U.S.
- Rental Income Calculator: Compare expected earnings and expenses
- Vacation Rental 101 Guide: Everything you need to know to get started with vacation rental
Ready to begin?
If you’ve already chosen a property and need to get your vacation rental off the ground, we can help.
Evolve’s fresh approach to vacation rental management gives you total marketing, booking, and customer support across all online listing sites (Airbnb, Vrbo, Booking.com, etc.), plus the power to choose your own “home team” to clean and monitor your property.
Basically, we drive more guests to your property for maximum income, while giving you more choices with fewer rules – all for an industry-low 10% management fee.
We’ve helped 14,000+ homeowners earn more than $750 million in rental income. And we’d love to help you.
See if you qualify or call one of our Vacation Rental Advisors today at 877.881.7584.