US study reveals best places to invest in vacation rental properties

George Sell George Sell Uploaded 14 September 2016

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US: Rented.com has published its first Short Term Rental Income Report.

The report highlights the best places to buy rental property in the US in 2016.

Looking at the costs of home ownership versus the short-term rental potential across 120 US markets, Rented.com has provided "the first publicly available objective assessment of short-term rentals from an investor's perspective".

The costs of home ownership include a variety of factors from purchase price and local property taxes, to home insurance, maintenance, and more. The short-term rental potential pulls from a variety of sources, including actual Rented.com demand from management companies in these markets, Everbooked occupancy and rental rate projections, and the current legal situation in each market.

As all of these factors are subject to change, Rented.com will update the report at least annually.

Surprisingly, well-known vacation rental markets such as Aspen, Nantucket and the Hamptons feature towards  the bottom of the list, while lesser known locations like Panama City Beach, Gatlinburg, and Galveston take the top spots.

Rented.com says: "It is not the flashy markets with the highest nightly rates (and also many of the toughest HOA and rental restrictions) that are necessarily the best investments. If they are popular with everyone, the purchase price is also high, diminishing any potential returns. On the other hand, less well known markets that are still popular with travellers (markets like Gatlinburg where you can find a five-bedroom house for less than $300,000) can make great investments. Because these markets are often highly dependent on vacation rentals to drive visitors and bring money into the coffers of the local government, they also tend to be some of the most friendly towards short-term renting. These markets bring together a killer combination from an investor's perspective: attractive purchase price, relatively high rental demand, and typically light regulation."

Florida features four out of the report's top ten spots "given the state government has explicitly recognised and embraced the positive economic benefits from short-term rentals, and thus has banned local governments from restricting them".

The 10 best performing markets in terms of ROI were:
Panama City Beach, Florida    
Gatlinburg, Tennessee    
Galveston, Texas    
Palm Coast, Florida
Savannah, Georgia    
Kissimmee, Florida    
Snowshoe, West Virginia    
Daytona Beach, Florida    
Fort Myers, Florida    
Los Angeles, California    

And the 10 worst were:
Nantucket, Massachusetts    
Beaver Creek, Colorado    
Aspen, Colorado    
Telluride, Colorado    
Palo Alto, California    
Naples, Florida    
Hamptons, New York    
Crested Butte, Colorado    
Bar Harbor, Maine    
Truckee, California

To get an insight in to the rise of the short-term rental phenomenon, click here to see a presentation by Tom Caton of Airdna on the growth of Airbnb.   

www.rented.com

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