When you invest in real estate, you should ensure you are doing it in the right market. This is especially important when you are investing in a location-sensitive asset, such as a vacation rental.
Now, if you are new to this kind of investment, you may be wondering where the best cities for short term real estate are. Well, you are in luck!
Here, we will help you decide where to put your money and give you some tips to ensure you are making a sound decision that will offer you a good return on your investment.
Top Vacation Rental Markets in the US: 10 Cities to Look Into
Generally speaking, the best cities for short term real estate investments are those which have strong economic indicators and are growing rapidly. Of course, they also have some popular tourist attractions and activities, which are the main drivers of demand for vacation rental properties.
So, without further ado, here are the markets that you should look into.
1. Austin, Texas
This city's event focus, coupled with its rapidly increasing business opportunities, has made it a top destination for tourists and entrepreneurs alike. It is home to some of the most popular events that people flock to, such as South by Southwest, the Austin Film Festival, and the Circuit of the Americas Grand Prix.
Apart from its tourist attractions, the rental rates in Austin are quite attractive. And, these prices are still increasing over the years. This means that, as an investor, you can expect to get a good return on your investment in this market.
Median Home Price: $640,000
2. Orlando, Florida
While this city's vacation rental market is fiercely competitive, you can thrive in it as an investor if you know what you're doing. After all, it is one of the most popular tourist destinations in the world, with millions of people visiting its theme parks and other attractions every year.
For example, you could purchase a vacation investment property near the Walt Disney World Resort, Universal Resort, or SeaWorld Orlando. Or, you could go for a more central location that would give guests easy access to all the attractions the city has to offer.
What's more, the median home price in Orlando is quite affordable, making it an ideal market for first-time investors.
Median Home Price: $395,000
3. Denver, Colorado
With the Rocky Mountains as a backdrop, this culturally rich city is a top destination for tourists who love the winter outdoors. In fact, it is one of the best cities in the country for skiing and snowboarding.
Apart from its winter sports scene, Denver is also home to a thriving arts and culture scene. It has a number of popular museums, such as the Denver Museum of Nature & Science and the Denver Art Museum.
If you are someone who is targeting vacationers looking for action-packed adventures, then this market is definitely worth considering.
Median Home Price: $585,000
4. Seattle, Washington
It is called the Emerald City for a reason. With its evergreen trees, picturesque setting, and lively culture, Seattle is a place for avid adventurers.
Some of its top attractions include the Space Needle, Pike Place Market, and the Museum of Pop Culture. And, if you are looking to purchase a vacation rental property near these attractions, you would be wise to consider Queen Anne or Belltown. These are two of the most popular neighborhoods for tourists in this city.
Median Home Price: $850,000
5. Portland, Oregon
Portland is a rapidly growing city with a lot to offer tourists and locals alike. It has a vibrant food and drink scene, as well as a number of popular attractions, such as Washington Park, the International Rose Test Garden, and the Oregon Museum of Science and Industry.
Also, there is a wide variety of vacation rentals to choose from in this city, from bed and breakfasts that are centrally located to mountain cottages that are situated in the stunning Cascade Range. So, you will definitely find something that fits your preferences here.
Median Home Price: $550,000
6. Maui, Hawaii
Also known as the Valley Isle, this wonderful island paradise is loved by travelers from around the world for its stunning beaches, lush rainforests, and active volcanoes. That is why Maui is sought after by investors wanting to buy vacation rental property assets to expand their portfolios.
The median home price on the island is quite high, but this is to be expected given its popularity. However, you can still find affordable properties if you know where to look. For example, Kihei is a popular town that offers a number of more budget-friendly vacation rental options.
Plus, Maui has some of the lowest property taxes in the US, which is always a bonus for investors.
Median Home Price: $1,200,000
7. Miami, Florida
No beach conversation would be complete without mentioning Miami. This Floridian city is well-known for its sandy beaches, turquoise waters, and year-round sunny weather. Not to mention that it is just a short drive away from the Everglades National Park, which is another popular tourist destination. So, it comes as no surprise that it is a top vacation destination for travelers from around the world.
When it comes to investing in the Miami vacation rental market, you have a number of different options. For example, you could purchase a condo near Miami Beach or choose a more family-friendly location, like Key Biscayne. Whichever your preference, you are sure to find what you are looking for in this vibrant city.
Median Home Price: $590,000
8. Los Angeles, California
This city is also home to some of the most popular beaches in the US, such as Santa Monica Beach, Venice Beach, and Manhattan Beach. And, it is also the perfect place to people-watch, as you are sure to spot a celebrity or two while strolling along the boardwalk.
Despite its size and popularity, the city is a relatively safe destination to visit. In fact, its crime rate is lower than the national average. That is why many families choose to vacation here.
Moreover, there is no shortage of things to do in Los Angeles. From shopping on Rodeo Drive to visiting the Hollywood Sign, you and your guests will definitely be kept entertained here.
Median Home Price: $1,000,000
Read next: Why Is Everyone Leaving California?
9. Gatlinburg, Tennessee
This city is a gateway to the Great Smoky Mountains, which is the most visited national park in the US. In fact, over 11 million people visit this place each year.
Gatlinburg is also home to a number of popular attractions, such as Ripley's Aquarium of the Smokies, Ober Gatlinburg, and Anakeesta. Plus, there are plenty of outdoor activities to enjoy in the area, such as hiking, fishing, and white-water rafting.
All of this makes Gatlinburg an excellent choice for investors looking to purchase vacation rental property.
Median Home Price: $680,000
10. Savannah, Georgia
Last but not least, we have Savannah, Georgia. This city is an ideal market for short-term vacation rental investors for several reasons.
For starters, Savannah has some of the most favorable short-term rental property ordinances in the country. In fact, there are no restrictions on how many days you can rent out your property per year. Also, non-owner-occupied rentals are even legal in some of the city's historic districts.
And, like any other city on this list, Savannah is also a favorite among tourists. It is brimming with charm. From its cobblestone streets to its quaint Southern mansions, Savannah is sure to delight any guest who would stay in your rental.
Most importantly, the property prices here are significantly lower than in other popular destinations in the country.
Median Home Price: $335,000
There you have it! When you are looking for the best cities for short term real estate investments in the US, make sure to consider those on this list. It is important to note, however, that the median home prices can change over time. So, be sure to do your research and consult with a professional before making any decisions.
Financing Your Purchase
Before you start looking for a vacation rental property to buy, it is important to establish how you are going to finance your purchase. While you could pay in cash, that is not always possible. This is likely true for first-time investors who only have a limited amount of money to work with.
A good alternative that you could look into is taking out a mortgage loan from a reputable vacation rental financing company. These lenders offer loans specifically for the purchase of these types of properties, so you could definitely get the best deals.
Plus, this mortgage lender’s recommendations can further help you decide on which properties to buy based on your current financial situation.
Just be sure to compare different lenders before deciding on one. This way, you can find the best terms that fit your needs.
Choosing the Perfect Vacation Rental Property: Essential Factors to Consider
Once you have set your eyes on a certain market and have the financing in order, it is time to start buying a rental property. Here are some factors that you should consider to make sure that you are making the best decision for your investment.
As with any type of real estate investment, location is key. When it comes to vacation rentals, you want to make sure that your property is situated in an area that is popular with tourists. This will give you the best chance of having high occupancy rates.
One way to ensure that you are choosing a good location is by doing a market analysis. This will give you insights into the tourist traffic in the area as well as the average rental rates. With this information, you can then make an informed decision on whether or not a certain location is worth investing in.
Also, you need to do some research on neighborhood safety. After all, you want your guests to feel safe when they are staying in your vacation rental.
Existing Cash Flow
It would not be wise to invest in a vacation rental property without knowing first how much income it can generate. That is why it is important to look at the existing cash flow of the property before making an offer.
To calculate a property's annual cash flow, you will need to take into account a number of factors, such as the monthly mortgage payment, property taxes, insurance, operating expenses, and cap rate. Generally speaking, cash flow is the amount you get after subtracting all the expenses incurred in running the property from your income.
You can seek the help of the experts, such as those you will find at the Cash Flow Notepad. They will not only help calculate the cash flow of any property, but they can also help you decide whether it is a good investment or not.
Potential for Future Growth
Investing in a market that has a strong potential for growth is crucial, especially if you are planning on holding onto the property for the long term. After all, you would want to also increase your rental revenue over time and even expand your business.
One way to gauge a property's potential for growth is by looking at the trends in the local tourist market. If there is an increasing demand for vacation rentals in the area, then that is a good sign. This means that you will likely be able to raise your rates and get more bookings in the future.
Of course, you would also want to make sure that your vacation rental property can generate enough income to cover all your expenses. That is why it is important to do some research on the average rental rates in the area before making a purchase.
This information will give you an idea of how much you can charge for your own property. It is best to compare rates across different vacation rental websites to get a more accurate estimate.
The Property's Condition
Checking the condition of the property before making an offer will help you determine how much money you need to spend on repairs and renovations if necessary.
If the property is in good condition, then that is a plus. But if it needs a lot of work, then you might want to think twice about buying it. Unless, of course, you are willing to put in the time and effort to fix it up yourself.
These are just some of the factors that you need to consider before investing in a vacation rental property. By taking all of these into account, you can be sure that you are making a wise investment decision.
Management Tips for New Vacation Rental Property Owners
There are a couple of options that you can take when it comes to managing a short term rental property: self-management and hiring a property manager. Basically, your choice would depend on your location and how much time and effort you are willing to put into the business.
If you live in the same area where your vacation rental is located, then self-management would be a good option. This way, you can take care of the property yourself and even interact with your guests on a personal level.
However, if you live far away from your rental or if you simply do not have the time to manage it, then hiring a professional property manager would be best. They will be the ones who will take care of everything for you, from marketing to cleaning and maintenance.
Of course, there are also some drawbacks to both options. For instance, self-management can be quite time-consuming and stressful, especially if you have other commitments. On the other hand, hiring a property manager can be quite expensive.
The best thing to do is to weigh all your options and decide which one would be best for you and your business.
Short Term Rental Listings: The Fastest Way to Market Your Property
Apart from the management duties, it is also important to market your property, so it will be more visible to potential guests.
One of the best ways to do this is by listing your vacation rental on popular short-term rental websites. This will allow you to reach a wider audience and get more bookings.
Some of the most popular short-term rental websites include Airbnb, HomeAway, and VRBO. You can also try listing your property on vacation rental directories, like FlipKey and TripAdvisor.
There are also some other marketing strategies that you can use to promote your vacation rental. These include search engine optimization (SEO), social media marketing, and email marketing.
The best thing to do is to try out different marketing techniques and see which ones work best for you and your business.
Start Searching for Vacation Rental Properties Now!
Armed with information, you can now start searching for the best vacation rental properties in the market today. Just remember to take your time and do your research before making any purchase.
For more tips that you can use in your property search, feel free to browse our site to listen to some advice and opinions from real estate experts. Inspirations for the best short-term vacation rental investments in real estate are just a click away!