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.
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.
Top 10 Places to Buy a Beach House
- Ocean Shores, WA
- Cap rate: 7.6%
- Median home cost: $239,460
- Myrtle Beach, SC
- Cap rate: 7.4%
- Median home cost: $249,999
- Panama City Beach and Santa Rosa, FL
- Cap rate: 6.1%
- Median home cost: $419,900
- Gulf Shores, AL
- Cap rate: 5.8%
- Median home cost: $409,900
- Galveston Island and Port Bolivar, TX
- Cap rate: 5.6%
- Median home cost: $329,900
- Kauai, HI
- Cap rate: 5.4%
- Median home cost: $696,028
- Ocean City, MD
- Cap rate: 5.4%
- Median home cost: $285,000
- Key West, FL
- Cap rate: 5.0%
- Median home cost: $788,500
- Marathon to Long Key, FL
- Cap rate: 4.9%
- Median home cost: $619,900
- Cocoa Beach, FL
- Cap rate: 4.7%
- Median home cost: $339,000
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.
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!