Now is a great time to be in the vacation rental business. Travelers are spending a lot of money on luxury vacation rentals — the more exclusive, the better — with recent occupancy rates for fully furnished homes increasing from 49.1% to 55.9% between 2019 and 2023, according to short-term rental data and analytics site AirDNA , by 2023, the revenue of the entire STR market will reach a breakthrough US$64 billion.
While long-term rental landlords may balk at these occupancy rates, it’s worth remembering that vacation rentals often double as mid-term rentals in the off-season, and mid-term rentals may not register on vacation rental websites.
The East Coast is full of investment hotspots
Skift, a travel news website, analyzed AirDNA data and found that beaches along the east coast of the Atlantic Ocean will see strong business this summer, with 1.63 million nights booked, up 7.7% from last year.
“New York used to be among the top ten markets for July 4th, but has now dropped out, replaced by Delaware/Maryland beaches. This shift continues the growing popularity of Atlantic beaches, led by Myrtle Beach, South Carolina. A welcome trend,” said a spokesperson for the short-term rental data provider.
With that in mind, for investors looking to maximize profits throughout the summer without spending more than $500,000 on a vacation rental, these are the best places across the country to own a STR (based on AirDNA, short-term rentals, and Hotel website) Avantstay and expert real estate agent opinions, taking into account the location’s attractiveness, potential rental income, property management costs, and long-term appreciation and short-term rental income.
Columbus, Georgia
- Typical home value: $161,000
- Occupied: 60%
- Average daily rate: $178
- average income: $29,000
Priced at $161,000, Columbus is located along the Chattahoochee River and features whitewater rafting, making it a great place to invest, visit and consider expanding your investment portfolio. Columbus ranks No. 1 among AirDNA’s Best Places to Invest in 2024.
Oneonta, New York
- Typical home value: $211,000
- Occupied: 60%
- Average daily rate: $356
- average income: $27,000
With a typical room rate of $211,000 and daily rates as high as $356, there’s nothing to argue with. This charming little city in upstate New York has been included on AirDNA’s list of hidden gems. Robert V. Riddell State Park is located in the Susquehanna River Valley and has more than 2,000 acres of fields and forested lands.
Oneonta vacation rentals also double as winter wonderland getaways, with plenty of fun cold-weather activities nearby.
Fairbanks, Alaska
- Typical room rates: $239,000
- Occupied: 65%
- Average daily rate: $225
- average income: $32,000
Alaska is a great place to visit in the summer, with short-term rentals earning up to $32,000 per year, mostly during the warmer months. The typical home price of $239,000 has increased since Fairbanks became a popular vacation rental town.
Fennville, Michigan
- Typical home value: $309,000
- Occupied: 56%
- Average daily rate: $595
- average income: $63,000
With its sprawling orchards, vineyards and stunning lakeside views, Fennville’s healthy income of $63,000 per year is a good deal for an affordable investment of $309,000. If an investor purchases a home as a personal residence in the first year and moves out after renovations, they can qualify for a Federal Housing Administration (FHA) loan and purchase the property for less than $10,000.
Ashford (Washington State)
- Typical home value: $323,000
- Occupied: $67%
- average daily rate: $242
- average income: $44,000
Affordable and pristine wilderness, this popular STR haven offers an investment of $323,000 and an average annual income of $44,000. Mount Rainier National Park is very attractive. In keeping with the landscape, STR can only operate with a maximum of 5 rooms and a maximum of 10 guests.
Beaufort, South Carolina
- Typical home value: $347,000
- Occupied: 61%
- Average daily rate: $234
- average income: $40,000
Laid-back southern coastal charm, quaint historic neighborhoods, Lowcountry cuisine, and stunning waterfront parks make this a great place to invest at an affordable price.
Kitty Hawk, North Carolina
- Typical room rates: $350,000
- Occupied: 64%
- Average daily rate: $434
- Annual income: $38,800
Although there aren’t many new listings for sale in Kitty Hawk on the Outer Banks, and prices vary widely, it’s still possible to find a great home for under $500,000. Those indicators make sense, as do the lighthouses, wild horses and miles of beaches that draw visitors here every year.
Logan, Ohio
- Average house price: $233,000
- Occupied: 57%
- Average daily rate: $343
- Annual income: $57,000
Get away from it all and head to a rural paradise in the Hocking Hills area of Logan, Ohio. There are many summer activities here, including hiking, horseback riding, and zip lining, and there are many state parks, rivers, lakes, and caves that draw visitors to the area.
Pocono Mountains, Pennsylvania
- Typical house price: $439,000
- Occupied: 47%
- Average daily rate: $312
- Annual income: $45,300
With its proximity to Philadelphia, New York, and New Jersey, the Poconos’ lakes, rivers, and woodlands have been a favorite for years, and demand has been increasing recently.
final thoughts
The advantage of having a seasonal short-term rental that attracts a lot of summer customers is that if purchased correctly, one season can support an entire year, especially during peak holidays like Memorial Day, Independence Day, and Labor Day, allowing you to offer mid-winter rent.
Summer rentals can be labor-intensive, so be sure to find a good management company and take advantage of the tax benefits associated with owning a rental property – deduct all fees and maintenance costs, which can be written off as legitimate costs.
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Notes on BiggerPockets: These are the opinions written by the author and do not necessarily represent the views of BiggerPockets.
