Buying a vacation home is a serious investment with a whole host of factors to consider; factors that are completely different from buying traditional real estate. However, one constant remains: location, location, location.
In this article, we’ll show you the best areas to buy a vacation home.
If you’re buying a vacation home as an investment, we’ll show you some of the most promising areas for maximizing your returns.
If you’re looking into buying a vacation home as a second residence, you probably already have your favorite vacation destination in mind – but we urge you to determine exactly why you want to settle down there. Is it a legitimately fantastic vacation spot or just childhood nostalgia? Because you can probably find somewhere similar with better prospects for growth.
Let’s say you want to buy a place in NYC, for example, but the ~$700k average home value is a little out of your price range. We’ll show you other alternatives that match the lively nightlife, jaw-dropping skyline, and city-never-sleeps vibe of New York so you can weigh your other options before making a final decision.
And, since people usually make their decisions to buy a vacation home based on one of these three factors: beaches, mountains, and city living, we’ll look at the top two options for each.
Owning a Vacation Home by The Beach
The #1 Best Place to Buy a Vacation Home for By-the-Beach Living: Myrtle Beach, South Carolina
As an Investment…
Current average home price in Myrtle Beach, South Carolina: ~$205k
A report from Evolve Vacation Rental shows that, in 2018, the median income for two-bedroom vacation rental was $18,400, and the median income for a three-bedroom vacation rental was $23,700. If you manage to buy a property for ~$200k and pull in $25k/year, you could potentially completely pay off the property in ten years, at which point it will likely have grown in value.
For Pleasure…
Myrtle Beach has over 60 miles of beaches. That’s over 60 miles of opportunities for sand castles, surfing, boogie boarding, tossing a frisbee, or just plain old feet-in-the-sand, no-care-in-the-world relaxation. From beach homes to campgrounds, you can find somewhere to buy in Myrtle Beach that’s pleasurable and affordable.
The #2 Best Place to Buy a Vacation Home for By-the-Beach Living: Fort Bragg, California
As an Investment…
Current average home price in Fort Bragg, California: $439.5k
Today, if you look at the average AirBnB rental price in Fort Bragg, you’ll find that, out of the 191 places to stay, the price per night is about $182.
The average vacancy rate on AirBnB is around ~45%, but cities in California tend to exceed that average rate by anywhere from 10-15%. To stay on the safe side, let’s imagine you have a 50% vacancy rate and a flat-rate fee of $182 (even though it’s likely to go up in the months with higher demand).
182.5 days of occupancy (half the year) multiplied by $182 = $33,215.
That’s pretty decent revenue for a ~$450k investment.
For Pleasure…
Fort Bragg, California, as a city that was founded prior to the Civil War to be used as a military garrison, is listed as a “California Historical Landmark.” As such, it has a vast array of art galleries and fascinating museums to visit, not to mention breathtaking views of the Pacific Ocean. If you’re looking for a vacation home somewhere that’s rich in American history and natural landscapes, Fort Bragg should be your go-to.
Honorable Mention: Amelia Island, a beautiful historic town in Northeast Florida. It has a quaint walkable downtown area, with beatiful single family homes, condos, and other options — it would also make our list of vacation home locations because they offer many long term rental options.
Owning a Vacation Home in the Mountains
The #1 Best Place to Own a Vacation Home in the Mountains: Deer Valley, Utah
As an Investment…
Current average home price in Upper Deer Valley, Utah: $3.3 million, and an average home value of $1.8 million.
In March 2018, the average sale price for a home in Deer Valley peaked at $2.1 million, and now it appears that the market is cooling down. For seasoned investors, this is great news. As Warren Buffett said, “be fearful when others are greedy, and greedy when others are fearful.”
Oftentimes, when you’re looking at lists of the best places to buy vacation homes, they’ll list homes in places where it’s too late to be early. Not so with Deer Valley.
For Pleasure…
Deer Valley is perfectly located for anyone interested in mountain sports. The Deer Valley resort was used for two Skiing World Cup events in 2003 and 2011, and in 2002 it hosted multiple events for the Winter Olympics. It’s truly a world-class resort, and it has consistently ranked first overall in SKI Magazine’s reader surveys.
But it’s also close to Alta, Snowbird, Brighton, Solitude, Snowbasin, and Powder Mountain – all world-class skiing and snowboarding resorts. If you’re looking for a place in the mountains, it’s hard to argue against buying a vacation home in Deer Valley, especially when – unlike some of the others in this list – the prices are falling.
The #2 Best Place to Own a Vacation Home in the Mountains: Sevierville, Tennessee
As an Investment…
Current average home price in Sevierville, Tennessee: ~$280k, with an average sale price of ~$267k.
If you don’t have the capital to look into properties in Deer Valley, Sevierville is another good, rising option. Vacasa estimates that the average nightly rate for a vacation rental property in Sevierville is about $274/night, with a potential cap rate of roughly 10.3%.
For Pleasure…
Sevierville markets itself as “Where Smoky Mountain Fun Begins.” It has exotic petting zoos, “Forbidden Caverns,” and plenty of wineries and distilleries – a perfect fit for the whole family.
The Best Vacation Rentals for City Living
The #1 Best Vacation Rental for City Life: Boston, Massachusetts
As an Investment…
According to Zillow, the average home value for a property in Boston is about $592k, and the average price at time of sale is $656k.
According to Forbes, Boston has one of the highest occupancy rates for AirBnB rentals at ~61%. The gross monthly rental income is about $4k. That means most AirBnB rentals are bringing in over $48k annually, and that’s not taking into consideration that most people who use AirBnB are only renting out a room of their primary residence. If you have multiple rooms to rent out, your potential revenue could double.
For Pleasure…
Boston is one of the most historic cities in America. As home to the Boston Tea Party, the Constitution, and the Paul Revere House, people from every corner of the world come to the “Cradle of Modern America” to learn about American history.
But Boston’s appeal isn’t limited to its rich history. The Travel notes that 15 million people visit the Faneuil Hall Marketplace every year to go shopping and partake in a bustling nightlife full of street performers.
The #2 Best Vacation Rental for City Life: Miami, Florida
As an Investment…
The average home value in Miami, according to Zillow, is $336k; the median price of homes sold is $332k.
Similarly to the AirBnBs in Boston, Miami has an astonishing occupancy rate of 59%. The gross monthly rental income is $3.5k.
For Pleasure…
Miami is the cultural and financial center of Florida. Lately, it seems that every year there are more and more people visiting Miami. According to the Miami Beach Convention Center, there has been continuous, steady growth over the past decade.
And that’s for good reason: Miami is home to the iconic Miami Beach (so it could also be counted as a contender for the best vacation rental for by-the-beach living, as well), but there are also lively city culture – shops, restaurants, etc – in the Bayside Marketplace and Art Deco District.
Conclusion
If you’re looking to own a vacation home, these are some of the best places to buy one based on the main things that people look for in vacation homes: something by the beach, something in the mountains, or a city with a unique vibe.
Now you also know the financials of buying a rental property in each area to give you a better idea of how much capital you’d have to raise, and also about you about things to do in each area in case you just want the vacation property for fun, not business.