Buying a home near the beach for its rental income potential can often be a risk/reward investment. After all, there are so many factors to consider and never any guarantee that beach house renters will come knocking at your door. While the risks can be great, the rewards can be even greater, and buyers who do their homework can reap substantial benefits in terms of average annual gross rental income.
According to a recent report from Redfin, demand from second home buyers increased by 87% at the start of 2022. And while other sectors of the real estate market may begin to normalize, second home sales are expected to remain stable. The newest from Vacasa vacation-rental-buyer-report”>Vacation Buyer Report shows that 42% of buyers are looking to buy a vacation home in a beach destination.
Vacasa (NASDAQ: VCSA), a leading vacation rental management platform, manages more than 35,000 vacation homes in North America, Belize and Costa Rica. They leverage this industry expertise to offer specialized real estate services and tools to potential second home buyers. Post-purchase, Vacasa supports the end-to-end vacation rental experience with local on-the-ground teams to expertly clean and maintain homes, along with a robust technology suite to ensure owners earn the most on their investment.
Vacasa recently published its report on the Best places to buy a beach house 2022. Vacasa’s annual report ranks the best US destinations to buy a vacation rental property on average capitalization rateor annual rate of return, as second home sales remain strong in the first quarter.
Popular vacation destination Gulf Shores, Alabama tops the list of profitable beach markets this year. The top markets on this year’s list include:
The following data is based on: Market; Capitalization rate; median home selling price; Annual average gross rental income.
Gulf Shores, Alabama; 10.20%; $402,905; $56,198
Corolla, North Carolina; 9.50%; $608,953; $77,971
Navarre Beach, Florida; 6.60%; $382,392; $43,202
New Buffalo, Michigan; 6.60%; $569,873; $58,544
Daytona Beach, Florida; 6.50%; $247,960; $31,913
Galveston, Texas; 6.40%; $340,559; $43,981
Hatteras Island, North Carolina; 6.40%; $482,447; $45,968
Rockaway Beach, OR; 6.10%; $384,152; $48,030
Port St. Joe, FL; 6.10%; $360,721; $39,688
Lahaina, HI; 5.80%; $725,000; $58,496
“According to our 2021 Vacation Rental Buyers Report, 42% of buyers looking to buy a vacation home chose a beach destination as the type of market they would be most interested in investing in, and for good reason,” said Daned Kirkham, Senior Director of Real Estate at Vacasa . “While beach destinations will almost always attract a steady stream of guests, buyers can also earn more on homes with the amenities guests are looking for most, such as oceanfront or adjacent beach, a private pool or a hot tub and pet friendly. Customers can work and live from anywhere, thanks in large part to remote and hybrid work environments. Owners also benefit from increased income from these longer stays, which often occur during shoulder seasons when availability tends to be greater.
To determine its ranking of top vacation rental markets, Vacasa analyzed last year’s home sales and vacation rental performance data for vacation destinations across the country where Vacasa and its licensed affiliates operate. vacation rentals. To determine the average gross rental income (landlord’s income earned from bookings, excluding fees) for a market, they used actual performance data for the market as a whole, where available, except that data from Vacasa only have been used for markets where Vacasa manages more than 50 units and Vacasa’s actual rental performance exceeds the market average by at least 25%. To calculate the average cap rate, they considered the averages of the following in each market: property taxes, utilities, homeowners association fees, insurance, and property management fees.
Local regulations vary by jurisdiction and transferring a property to a new owner may affect its ability to be used as a vacation rental. As a general rule, all vacation rental regulations are subject to change, which may affect your ability to use a property as a vacation rental in the future, and buyers should always check local regulations before taking an investment decision.