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In this article<\/p>\n
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\n<\/iframe> <\/p>\n<p><span data-preserver-spaces=\"true\">A vacation home or\u00a0<\/span><a class=\"editor-rtfLink\" href=\"https:\/\/www.biggerpockets.com\/guides\/the-ultimate-guide-to-short-term-rental-properties\" target=\"_blank\" rel=\"noopener\"><span data-preserver-spaces=\"true\">short-term rental\u00a0<\/span><\/a><span data-preserver-spaces=\"true\">(STR) can be a fantastic investment opportunity\u2014 if you know where to look.\u00a0<\/span><a class=\"editor-rtfLink\" href=\"https:\/\/www.biggerpockets.com\/blog\/breaking-down-the-location-location-location-principle-in-real-estate\" target=\"_blank\" rel=\"noopener\"><span data-preserver-spaces=\"true\">Location<\/span><\/a><span data-preserver-spaces=\"true\">\u00a0truly is everything in the\u00a0<\/span><a class=\"editor-rtfLink\" href=\"https:\/\/www.biggerpockets.com\/blog\/buying-vacation-rental-property\" target=\"_blank\" rel=\"noopener\"><span data-preserver-spaces=\"true\">short-term rental market<\/span><\/a><span data-preserver-spaces=\"true\">.\u00a0<\/span><\/p>\n<p><span data-preserver-spaces=\"true\">As an investor, you\u2019ll be looking for homes in areas that will deliver a good cap rate and rental revenue while still being affordable (unless you have the cash to buy in Malibu, in which case you probably don\u2019t need this article).\u00a0<\/span><\/p>\n<p><span data-preserver-spaces=\"true\">Late in 2023, we covered the top\u00a0<\/span><a class=\"editor-rtfLink\" href=\"https:\/\/www.biggerpockets.com\/blog\/on-the-market-158\" target=\"_blank\" rel=\"noopener\"><span data-preserver-spaces=\"true\">five most profitable vacation rental locations<\/span><\/a><span data-preserver-spaces=\"true\">\u00a0in an episode of our\u00a0<\/span><em><span data-preserver-spaces=\"true\">On The Market<\/span><\/em><span data-preserver-spaces=\"true\">\u00a0podcast. In this article, we\u2019ll cover the key metrics that make these short-term rental locations unmissable.\u00a0<\/span><\/p>\n<p><span data-preserver-spaces=\"true\">The data comes in courtesy of the\u00a0<\/span><a class=\"editor-rtfLink\" href=\"https:\/\/www.vacasa.com\/top-markets\/2023-best-places-to-buy-a-vacation-home\" target=\"_blank\" rel=\"nofollow noopener\"><span data-preserver-spaces=\"true\">Top 25 Best Places to Buy a Vacation Home<\/span><\/a><span data-preserver-spaces=\"true\">\u00a0list compiled by Vacasa.<\/span><\/p>\n<h2 class=\"wp-block-heading\"><span data-preserver-spaces=\"true\">What Is a Good Cap Rate on a Short-Term Rental?<\/span><\/h2>\n<p><span data-preserver-spaces=\"true\">But first,\u00a0<\/span><a class=\"editor-rtfLink\" href=\"https:\/\/www.biggerpockets.com\/blog\/cap-rate-real-estate\" target=\"_blank\" rel=\"noopener\"><span data-preserver-spaces=\"true\">what is a cap rate<\/span><\/a><span data-preserver-spaces=\"true\">, and what is a good one if you\u2019re buying a short-term rental?\u00a0<\/span><\/p>\n<p><span data-preserver-spaces=\"true\">Quite simply, the cap rate is the number you get (in percentage) when you divide a property\u2019s net operating income (including insurance and maintenance costs) by its current market value. The number you get is the property\u2019s annual yield or return you will generate as an investor.\u00a0<\/span><\/p>\n<p><span data-preserver-spaces=\"true\">Obviously, the higher the cap rate, the better the return on your investment. As a general rule, a cap rate of under 5% is considered low in real estate. Anything between 5% and 10% is the ideal cap rate. Cap rates of over 10% are relatively rare, but they do exist, as some of our top vacation rentals will prove.\u00a0<\/span><\/p>\n<p><span data-preserver-spaces=\"true\">They might not be where you expect, though. As we all know, the pandemic housing market boom caused home prices to go through the roof in many locations. When home prices appreciate dramatically, the cap rate is automatically lowered, which can make an investment too expensive to be worth it.\u00a0<\/span><\/p>\n<h2 class=\"wp-block-heading\"><span data-preserver-spaces=\"true\">Top 5 Best Places to Buy a Short-Term Rental<\/span><\/h2>\n<p><span data-preserver-spaces=\"true\">Instead of chasing the most popular vacation destinations, consider making a savvier choice that will deliver better\u00a0<\/span><a class=\"editor-rtfLink\" href=\"https:\/\/www.biggerpockets.com\/blog\/what-is-roi-in-real-estate\" target=\"_blank\" rel=\"noopener\"><span data-preserver-spaces=\"true\">ROIs<\/span><\/a><span data-preserver-spaces=\"true\">. Here are some of these savvy choices.<\/span><\/p>\n<h2 class=\"wp-block-heading\">1. <span data-preserver-spaces=\"true\">Lake Anna, Virginia<\/span><\/h2>\n<ul>\n<li><strong><span data-preserver-spaces=\"true\">Cap rate:<\/span><\/strong><span data-preserver-spaces=\"true\">\u00a010.32%\u00a0<\/span><\/li>\n<li><strong><span data-preserver-spaces=\"true\">Median home sale price:<\/span><\/strong><span data-preserver-spaces=\"true\">\u00a0$405,500<\/span><\/li>\n<li><strong><span data-preserver-spaces=\"true\">Annual gross rental revenue:\u00a0<\/span><\/strong><span data-preserver-spaces=\"true\">$64,121<\/span><\/li>\n<\/ul>\n<p><span data-preserver-spaces=\"true\">The cr\u00e8me de la cr\u00e8me of vacation rental destinations in 2023 is the charming lakeside destination in Virginia. Lake Anna is the state\u2019s third-largest lake, with 200 miles of sandy beaches.\u00a0<\/span><\/p>\n<p><span data-preserver-spaces=\"true\">Why is this such a popular destination? Its location right between Fredericksburg and Richmond is one reason, but we bet that the pristine beaches, clean water, and overall high-end feel of this vacation destination is what makes it so desirable, especially in the summer.\u00a0<\/span><\/p>\n<p><span data-preserver-spaces=\"true\">And for a lakeside destination, home prices are very reasonable. Compare it with the median home price at Lake Tahoe, for instance\u2014an eye-watering $907,000.<\/span><\/p>\n<h2 class=\"wp-block-heading\">2. <span data-preserver-spaces=\"true\">Okaloosa Island, Florida<\/span><\/h2>\n<ul>\n<li><strong><span data-preserver-spaces=\"true\">Cap rate:<\/span><\/strong><span data-preserver-spaces=\"true\">\u00a09.08%<\/span><\/li>\n<li><strong><span data-preserver-spaces=\"true\">Median home sale price:<\/span><\/strong><span data-preserver-spaces=\"true\">\u00a0$360,000<\/span><\/li>\n<li><strong><span data-preserver-spaces=\"true\">Annual gross rental revenue:\u00a0<\/span><\/strong><span data-preserver-spaces=\"true\">$53,832<\/span><\/li>\n<\/ul>\n<p><span data-preserver-spaces=\"true\">It\u2019s unsurprising to find a Florida location among the most popular vacation locations, but if you\u2019re looking at Florida as an investor, look away from the obvious destinations (e.g., Miami, West Palm Beach, and Tampa) and toward the hidden gem that is Okaloosa Island.\u00a0<\/span><\/p>\n<p><span data-preserver-spaces=\"true\">Located on Santa Rosa Island and boasting three miles of ultra-white sandy beaches, it\u2019s not an off-the-beaten-track destination by any means, but it does offer a somewhat more relaxed feel thanks to its location in northwestern Florida. A big draw for tourists is how small and cozy this place is, with everything within an easy walking distance. And a median home price of just $360,000 is affordable for such a great location.<\/span><\/p>\n<h2 class=\"wp-block-heading\">3. <span data-preserver-spaces=\"true\">Sandbridge, Virginia<\/span><\/h2>\n<ul>\n<li><strong><span data-preserver-spaces=\"true\">Cap rate:\u00a0<\/span><\/strong><span data-preserver-spaces=\"true\">6.47%<\/span><\/li>\n<li><strong><span data-preserver-spaces=\"true\">Median home sale price:<\/span><\/strong><span data-preserver-spaces=\"true\">\u00a0$928,900<\/span><\/li>\n<li><strong><span data-preserver-spaces=\"true\">Annual gross rental revenue:<\/span><\/strong><span data-preserver-spaces=\"true\">\u00a0$88,702<\/span><\/li>\n<\/ul>\n<p><span data-preserver-spaces=\"true\">Sandbridge, Virginia, is very close to Virginia Beach, but it couldn\u2019t be more different. There are no hotels here, which means visitors enjoy a relaxed and secluded vibe, with sand dunes, beaches, and a wildlife refuge to explore.<\/span><\/p>\n<p><span data-preserver-spaces=\"true\">It\u2019s not a cheap destination, but guests are prepared to pay premium prices for the exclusive vacation atmosphere this place offers\u2014hence the excellent cap rate.\u00a0\u00a0<\/span><\/p>\n<h2 class=\"wp-block-heading\">4. <span data-preserver-spaces=\"true\">Rehoboth Beach, Delaware<\/span><\/h2>\n<ul>\n<li><strong><span data-preserver-spaces=\"true\">Cap rate:<\/span><\/strong><span data-preserver-spaces=\"true\">\u00a06.46%<\/span><\/li>\n<li><strong><span data-preserver-spaces=\"true\">Median home sale price:<\/span><\/strong><span data-preserver-spaces=\"true\">\u00a0$618,000<\/span><\/li>\n<li><strong><span data-preserver-spaces=\"true\">Annual gross rental revenue:<\/span><\/strong><span data-preserver-spaces=\"true\">\u00a0$58,992<\/span><\/li>\n<\/ul>\n<p><span data-preserver-spaces=\"true\">Rehoboth Beach offers a traditional coastal charm that\u2019s increasingly a rarity, which explains its popularity with vacationers. From a scenic boardwalk to narrow streets with restaurants and shops, it\u2019s a classy destination that draws tens of thousands of visitors during the summer months. The relatively high home price is worth it here because guests are willing to pay top dollar for the vintage seaside town feel.\u00a0<\/span><\/p>\n<h2 class=\"wp-block-heading\">5. <span data-preserver-spaces=\"true\">Navarre, Florida<\/span><\/h2>\n<ul>\n<li><strong><span data-preserver-spaces=\"true\">Cap rate:<\/span><\/strong><span data-preserver-spaces=\"true\">\u00a06.42%<\/span><\/li>\n<li><strong><span data-preserver-spaces=\"true\">Median home sale price:<\/span><\/strong><span data-preserver-spaces=\"true\">\u00a0$420,000<\/span><\/li>\n<li><strong><span data-preserver-spaces=\"true\">Annual gross rental revenue:<\/span><\/strong><span data-preserver-spaces=\"true\">\u00a0$47,531<\/span><\/li>\n<\/ul>\n<p><span data-preserver-spaces=\"true\">Another picture-perfect vacation rental destination that\u2019s somehow still affordable, Navarre draws in huge crowds during the summer thanks to its unbelievably beautiful beach. The beach is not actually composed of sand but quartz, which is where the dazzling white color comes from. Water sports, snorkeling, and swimming are the most popular activities here, so looking for an oceanfront property is well worth the high short-term rents you\u2019ll be able to command.\u00a0<\/span><\/p>\n<h2 class=\"wp-block-heading\"><span data-preserver-spaces=\"true\">Do Your Homework<\/span><\/h2>\n<p><span data-preserver-spaces=\"true\">It pays to do your research when looking for a short-term rental opportunity. Steer your search away from major vacation destinations that are oversaturated with hotels and have unaffordable home prices. Instead, look for smaller places with a high-end feel that are still popular with visitors but are still able to maintain a sense of identity that\u2019s different from your average resort town.\u00a0<\/span><\/p>\n<p><span data-preserver-spaces=\"true\">Pristine beaches are reliable draws for the summer, but you can also look for towns with a unique vintage feel (see Rehoboth Beach) or a lakeside charm that will save people time driving down to the coast.\u00a0<\/span><\/p>\n<p><span data-preserver-spaces=\"true\">And remember to look up those cap rates: They\u2019ll give you a good idea of whether a vacation rental investment in your chosen location is worth it.<\/span><\/p>\n<div id=\"hero-block_62df1a82bfc88\" class=\"first:mt-0 hero-block py-4 has-background has-slate-200-background-color has-text-color has-theme-gold-color\">\n<div class=\" flex flex-wrap lg:flex-nowrap max-w-screen-xl mx-auto px-4 relative lg:items-center \">\n<div class=\"relative z-30 w-full \">\n<main class=\"py-4\"><\/p>\n<p class=\"has-slate-800-color has-text-color has-large-font-size\" style=\"font-style:normal;font-weight:800\">The Most Profitable Places to Buy a Vacation Rental Property<\/p>\n<p class=\"my-3 md:my-5 lg:my-8 has-slate-900-color has-text-color\" style=\"font-size:16px\">More than half of the markets we\u2019re highlighting have vacation homes either under or around the median home price of the US, so you don\u2019t need to splurge to buy your perfect beach-side short-term rental. Learn what the top markets are and where to find the full list!<\/p>\n<p><\/main>\n<\/div>\n<div class=\" first:mt-0 relative h-full lg:flex lg:items-center\">\n<img decoding=\"async\" class=\"object-cover w-full relative z-20 my-0 shadow-xl rounded-md hidden lg:block\" src=\"https:\/\/bpimg.biggerpockets.com\/https:\/\/www.biggerpockets.com\/blog\/wp-content\/uploads\/2022\/05\/On-The-Market-scaled-e1660859845837.jpg\" alt=\"On The Market scaled e1660859845837\" title=\"Top 5 Short-Term Rental Markets For High Returns and Growth 2\"\/>\n<\/div>\n<\/div>\n<\/div>\n<p class=\"italic\"><b>Note By BiggerPockets:<\/b> These are opinions written by the author and do not necessarily represent the opinions of BiggerPockets.<\/p>\n<\/div>\n<p><br \/>\n<br \/><a href=\"https:\/\/www.biggerpockets.com\/blog\/best-short-term-rental-markets-for-high-returns-and-growth\">Source link <\/a><\/p>\n","protected":false},"excerpt":{"rendered":"<p>In this article A vacation home or\u00a0short-term rental\u00a0(STR) can be a fantastic investment opportunity\u2014 if you know where to look.\u00a0Location\u00a0truly is everything in the\u00a0short-term rental market.\u00a0 As an investor, you\u2019ll be looking for homes in areas that will deliver a good cap rate and rental revenue while still being affordable (unless you have the cash 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