Landlording & Rental Properties

The 10 Best Places to Buy a Beach House in 2019

Expertise: Landlording & Rental Properties
14 Articles Written
four people on beach in colorful clothing facing ocean with arms in air

As we look toward the summer months ahead, many people will flock to coastlines both east and west in search of sun and sand. If you’re one of those people and are considering buying a beach house as an investment property, it’s a great time to have your head on a swivel.

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While there are many great beach towns to choose from across the country, there are markets that will have a better return on your investment (ROI) if you plan to use the home as a short-term rental. I’ve pulled together a list of the best places to buy a beach house in 2019 based on aggregate cap rate, and its findings may aid your search.

Cool Calculations: The Numbers Behind the Hottest Locations

First, it’s important to understand cap rate and how it will impact your short-term rental. Cap rate is the ratio of a property’s net operating income over its cost.

To determine net operating income for the report, I first calculated gross rental income for each market. From there, I subtracted each market’s average operating costs—factoring in things like management fees and property tax rates. Finally, I divided those figures by the cost of buying a vacation rental to determine cap rates for each market.

Below are the best places to buy a beach house this year. Everything from Washington state to the Gulf Coast made an appearance on the list—and for good reason. While cap rate was a major factor, other data that influenced the list included buying opportunity in the market, median home cost, and median annual gross rental revenue. Of course, regulations played a key role, as well, and only vacation rental-friendly beach towns are included.

vacation-home-upgrades

Related: 5 Simple Ways to Maximize Your Vacation Rental Profits

Top 10 Places to Buy a Beach House

  1. Ocean Shores, WA
    • Cap rate: 7.6%
    • Median home cost: $239,460
  2. Myrtle Beach, SC
    • Cap rate: 7.4%
    • Median home cost: $249,999
  3. Panama City Beach and Santa Rosa, FL
    • Cap rate: 6.1%
    • Median home cost: $419,900
  4. Gulf Shores, AL
    • Cap rate: 5.8%
    • Median home cost: $409,900
  5. Galveston Island and Port Bolivar, TX
    • Cap rate: 5.6%
    • Median home cost: $329,900
  6. Kauai, HI
    • Cap rate: 5.4%
    • Median home cost: $696,028
  7. Ocean City, MD
    • Cap rate: 5.4%
    • Median home cost: $285,000
  8. Key West, FL
    • Cap rate: 5.0%
    • Median home cost: $788,500
  9. Marathon to Long Key, FL
    • Cap rate: 4.9%
    • Median home cost: $619,900
  10. Cocoa Beach, FL
    • Cap rate: 4.7%
    • Median home cost: $339,000

Related: 7 Tips for Financing Your First Vacation Rental Property

Tips for Investing in a Beach House

As you start your search for the best places to buy a beach house, also keep the following tips in mind.

Define Your Purpose

There are two primary reasons to invest in a beach house: for personal use or for investment purposes.

If you are more focused on ROI, choosing the market with the best cap rate is more likely to garner the returns you’re seeking. If you want to use the home for family vacations, take a look at markets within a two-hour drive from home.

Water Wins

Not everyone has the means to purchase oceanfront real estate, and that’s okay! But, travelers headed to the coast are likely in search of the sea.

Share the pathways and shortcuts to the beach, so guests know it won’t be a hassle to get there. Beach still out of reach? Consider a home or condo with a pool.

Find an Investment-Focused Real Estate Agent

When it comes to buying a beach house, not all real estate agents are created equal. If you plan to use the home as a vacation rental, find an agent who has knowledge of vacation rental regulations, short-term rental markets, and the necessary investment return data to support your purchase. That way you can make the most informed decision.

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Which beach are you considering investing near? Why?

Let’s talk in the comment section!

 

Shaun Greer currently serves as the senior director of real estate at Vacasa and is responsible for the in-house real estate activity and broker/agent partnerships for the company. He brings more than 12 years of experience in mergers and acquisitions, joint ventures and public and private partnerships to this role. A licensed real estate agent, Shaun leads Vacasa Real Estate, a program launched within the parent company in 2018. Vacasa Real Estate is a network connecting leading real estate agents with buyers and sellers of vacation properties. Vacasa Real Estate currently partners with agents from over 80 leading real estate companies such as Berkshire Hathaway, Century21, Coldwell Banker, Keller Williams, RE/MAX and Sotheby’s. Shaun has been with Vacasa since 2015 and has held several positions including director of corporate development and mergers and acquisitions manager. When not cultivating relationships within the vacation rental industry or using data to support decisions, he is enjoying time with his family and outdoor sports.

    Mark Knowlden from Tacoma, WA
    Replied 2 months ago
    Appreciate the article Shaun. It’d be awesome to find these types of ‘Lifestyle-related’ short-term rental investment properties. Wondering if you could share how you came up with the income numbers for these areas (if using ‘aggregate cap rates’, are they for like-properties/uses?). For instance, your Ocean Shores, WA example shows net income of $18,200 per year ($1,516 per month). That’s certainly good short-term rental income for a $239,000 house. Any additional info would be helpful … and then I probably need to run over to the coast for a better look. Thanks. MK
    Katie Rogers from Santa Barbara, California
    Replied 2 months ago
    I think I would check out whether those beachfront homes are likely to be underwater by 2045. https://ucsusa.maps.arcgis.com/apps/MapSeries/index.html?appid=cf07ebe0a4c9439ab2e7e346656cb239
    Ryan Mayes Rental Property Investor from Albion, NY
    Replied 2 months ago
    Hahahaha…..ok….wasnt half of florida suppose to be under water by around 2015 the last time this nonsense was brought up? Then last I heard earth only had 12 yrs left anyways so what the point Katie Rodgers….you should save your self the grief and give all your properties to me. With that said, I’ve seen your name quite a few times in the comments but with NOTHING of value to add….EVER….just the same nonsense..seeing how you know so much you should start your own web page, save the world from it’s natural cycles (you do know earth is constantly changing always has been always will be, how were the great lakes formed and filled, asking for a friend), and cure cancer before dinner. Then when your done saving that maybe you can come back and tell us all the stuff we dont know. Sorry to be kind of mean but if you dont have anything of value to add or constructive criticism at least maybe you shouldn’t type at all
    Katie Rogers from Santa Barbara, California
    Replied 2 months ago
    The melt from arctic ice is measurable, https://svs.gsfc.nasa.gov/4435 unlike the silly projections of the end of the world supposedly calculated from an ancient Maya calendar. As far as 2015 is concerned, near as I can tell you are alluding to a TV show called “Earth 2100” all about worst case scenarios, not most likely projections. Meanwhile, Cruz is worried about space pirates. Best to keep politics out of your real estate underwriting. Of course the world is always changing. A beach front community near my home is already raising the sea wall because these days high tide is regularly cresting the sea wall. About twice a day there is not much beach at all. The question is where is your investment during some of these changes?
    Laura Verderber from Fairhope, AL
    Replied about 2 months ago
    A beach going underwater is a valid worry. Also, hurricanes. But the only I can think of that would protect the house is having the proper insurance and making sure it’s profitable every year. That way if you lose the house, it won’t be too big of a loss. I envy some of the houses where I live. Right by the bay and beaches (5 minute walking distance), gorgeous views, but they never have to worry about being flooded because they are 100′ feet above sea level. Those houses are super expensive though.
    Huiping Sheng Real Estate Agent and RE investor from Tampa, Florida
    Replied 2 months ago
    Drive around on Treasure island and surrounding area of FL, SO many or all property along the cost are vocation rentals. The price is all so high, so i am wondering how to find the vacant rate, and wondering what is the ROI. Global warming is a typical cheating of the ‘fake scientists’ for funding only!
    Laura Verderber from Fairhope, AL
    Replied about 2 months ago
    Great article! Exactly what I was looking for. I had my eyes on Gulf Shores, good to know the numbers back it up.