Location, Location, Location: The Best Cities to Buy a Vacation Rental

Investing in vacation rentals is a hot trend right now, and for a good reason! Whether you’re a seasoned real estate investor, a vacation home seeker, or a property manager, choosing the right location is crucial for maximizing your return on investment. But with so many attractive destinations, how do you choose the best place to invest? We will walk you through the factors to consider when buying a vacation rental and highlight the top locations for vacation rental investments in 2024.

Factors to Consider When Buying a Vacation Rental

Before diving into the best locations to buy a vacation rental, it’s essential to understand the factors that can influence your investment decision:

1. Market Demand: Look for areas with high tourism rates and a steady flow of visitors throughout the year. Seasonal demand can impact your rental income, so consider places that attract tourists year-round.
2. Rental Income Potential: Evaluate the average rental income in the area. High demand areas typically offer better rental income potential, but also consider the competition and average occupancy rates. Tools like AirDNA and Mashvisor can help you analyze the potential ROI for different locations—make sure you do your due diligence before jumping in with an investment.
3. Property Prices and Appreciation: Assess the current property prices and the historical appreciation rates in the area. Investing in a region with rising property values can provide long-term financial benefits.
4. Local Regulations: Different cities have different rules about short-term rentals. Some places may have strict regulations or higher taxes, which could impact your ROI and your ability to rent out the property. Make sure to research local regulations and tax laws thoroughly before making a decision.
5. Amenities and Attractions: Properties near popular attractions, beaches, mountains, or other desirable locations tend to attract more renters. Access to amenities like restaurants, shopping, and entertainment can also boost your rental’s appeal. While these may not be the biggest point of consideration if you are looking to invest in a niche, tranquil retreat targeting specific visitors, proximity to amenities and attractions can significantly boost your property’s appeal.
6. Property Management: Running a vacation rental comes with costs such as maintenance, repairs, property management fees, and cleaning services. The well known 50% rule suggests that about half of your rental income will go towards these expenses. Consider the availability of reliable property management services in the area (like GoodNight Stay, for example). Efficient management by a team who understands the region with experience can enhance guest experiences and increase your rental’s profitability.
7. Seasonality and Climate: Understand the seasonality of the location and how it affects demand. Properties in areas with mild climates may attract visitors year-round, while those in more seasonal locations might have peak periods.

Top Locations to Buy a Vacation Rental

So, with the above points of consideration in mind, here are some top locations we recommend you looking into.

Ellsworth, Maine

Ellsworth boasts the highest occupancy rate among the recommended markets at 73%. Its proximity to Acadia National Park drives high demand. The park’s stunning landscapes, hiking trails, and outdoor recreational activities attract nature enthusiasts year-round. Beyond the park, Ellsworth offers charming local amenities, including quaint shops, delicious seafood restaurants, and cultural attractions like the Grand Theatre. The combination of natural beauty and small-town charm makes Ellsworth an ideal location for vacation rentals, appealing to both adventure seekers and those looking to relax in a picturesque setting.

Logan, Ohio

Logan is known for its picturesque scenery in Hocking Hills State Park and along the Hocking River. This small city offers strong all-around numbers, making it an excellent option for investors looking for a mix of natural beauty and cultural activities. The area’s breathtaking waterfalls, caves, and hiking trails draw outdoor enthusiasts, while Logan’s historic downtown provides a variety of local shops, restaurants, and festivals. With a strong sense of community and a steady influx of tourists, Logan presents a solid investment opportunity for those seeking to capitalize on both nature and culture.

Nashville, Tennessee

The Music City is not just for country music fans. With its vibrant nightlife, rich history, and a booming culinary scene, Nashville attracts a diverse array of visitors. Downtown Nashville is also a very walkable area, alleviating visitors of the hassle of having to rent a car or having to coordinate an Uber every time they move from honky tonk A to honky tonk B. Nashville’s popularity is on the rise, making it a strong market for vacation rentals, especially in areas close to downtown.

Columbus, Georgia

Columbus is a hub for outdoor enthusiasts and history buffs, making it an excellent vacation rental market. With a solid cap rate of 9% and a low median home price of $161K, Columbus offers high profitability for investors. The city’s location on the Chattahoochee River provides opportunities for white-water rafting, kayaking, and scenic riverwalks. Additionally, Columbus is home to several historical sites and museums, including the National Infantry Museum and Soldier Center, attracting history lovers year-round. Its vibrant arts scene, with the Springer Opera House and RiverCenter for the Performing Arts, further enhances its appeal.

Spring Hill, Florida

Spring Hill is a paradise for nature lovers. Its proximity to Weeki Wachee Springs State Park and the Chassahowitzka Wildlife Management Area drives a strong occupancy rate of 62%. Weeki Wachee Springs offers unique attractions such as mermaid shows and riverboat cruises, while the wildlife management area provides opportunities for bird watching, kayaking, and hiking. Despite its relatively high median home price, the area’s natural beauty and recreational opportunities make it a lucrative investment. Spring Hill’s tranquil environment and accessibility to Tampa’s metropolitan amenities add to its desirability for vacation renters.

Sneads Ferry, North Carolina

Sneads Ferry offers high ADR and annual revenue despite its higher median home price of $555K. Its coastal location near North Topsail Beach and untouched shoreline make it a prime destination for vacation rentals. The town’s serene environment is perfect for those seeking a peaceful getaway. Visitors can enjoy activities such as fishing, boating, and exploring the nearby wildlife refuges. The local seafood industry, with its fresh catches and seafood festivals, adds a unique charm to the area. Sneads Ferry’s combination of coastal beauty and laid-back lifestyle makes it an attractive option for investors aiming to offer a tranquil retreat.

Scottsdale, Arizona

Scottsdale is a premier destination for luxury and leisure, offering a blend of high-end resorts, world-class golf courses, and a thriving arts scene. Its year-round sunny climate and proximity to the stunning Sonoran Desert make it a magnet for tourists. Scottsdale’s diverse attractions, including upscale shopping, renowned dining options, and vibrant nightlife, ensure a steady stream of visitors. The city’s robust real estate market, combined with its high rental demand, makes it an attractive investment opportunity. Additionally, Scottsdale hosts numerous events and festivals, further boosting its appeal and potential for rental income.

Ready to Invest?

If you’re ready to take the plunge into vacation rental investment, having a trusted partner can make all the difference. Alpha Residential is GoodNight Stay’s dedicated premier team of real estate agents, renowned for their professionalism, integrity, and industry knowledge. Having sold over $3.5 billion in residential real estate across 6,000+ units and over $500 million in commercial real estate, they are well-equipped to guide you in selecting the perfect location for a vacation rental. Alpha Residential can assist you in finding a property ideal to be an investment opportunity, and GoodNight Stay can help manage your short-term rental to maximize your ROI. Contact Alpha Residential today to take the first step toward owning a successful vacation rental!