Texas markets

These vacation home markets have the highest demand

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Judi Bottoni

AP file

While the old saying on location and real estate can to be changing for those who work remotely, this has never been truer for those who to rent out vacation properties – a house just steps from South Beach or a condo in West Hollywood can fetch hundreds of thousands of dollars a year in rentals.

It is of course the top of the range. There are currently over 1.1 million vacation properties to be praised in the United States and for many, it is a regular but modest source of additional income.

A recent study by a rental research firm AirDNA found that by the end of 2021, the average vacation home was generating $56,000 per year in profit after all expenses.

But when it comes to knowing where to invest, a recent roundup by LawnStarter found Miami to be by far the most cost-effective city to own a vacation home. Of the 190 largest markets in the country, it had the best ratio of ROI on the initial investment needed to secure a place.

Where should I buy this vacation property?

Despite the fact that rentals of less than 30 days are not allowed in the city, New York is still ranked as the most profitable place in the country in this sector. Due to Decades-long shortage long-term and short-term housing, housing that is set up for two or three months will still be taken up very quickly.

New Orleans in Louisiana, Cincinnati in Ohio and Las Vegas in Nevada round out the top five while the top ten have more surprising cities – Dayton in Ohio, Knoxville in Tennessee and Augusta in Georgia.

Six of the top ten cities on the list were in the South.

“While not your typical vacation hotspots, nightly rates are competitive here,” the study authors write. “Hospitality expenses in Augusta are particularly low, allowing you to recoup more money, but Tampa and Knoxville are relatively safer for tourists.”

California, meanwhile, filled the bottom of the list with seven of the spots. But while Los Angeles was relatively high at 24 out of 190, Fremont, Sunnyvale and San Jose were the three worst cities to rent a vacation home in the country.

What is the return on investment (and what will I have to spend)?

The reasons for this range from everything from being suburban and too far from any tourist destination to, in the case of San Jose, low safety ratings.

Many cities ranked at the bottom of the rankings also rank at the bottom of the rankings in terms of number of attractions. While New York, Los Angeles and Chicago led in this regard, Modesto and San Bernardino in California had the lowest.

“Invest in property in Miami, Boston, New Orleans, and Los Angeles, and you’re almost guaranteed to see money rolling in,” the study reads. “Many tourists envision themselves staying in a seaside (or near water) retreat for their vacation, so it’s no surprise that these towns get the most returns from their short-term rentals.”

Irving in Texas and Lancaster in California had the highest average housekeeping costs, while Cleveland in Ohio and Bridgeport in Connecticut had the lowest. Rental occupancy rates were highest in Garland, Texas, and Fresno, California, while Lakewood, Colorado and Garden Grove, California had the highest number of empty vacation listings.

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This story was originally published August 22, 2022 2:06 p.m.