Best Markets for Vacation Rentals in 2023

Wilmington, NC

- Wilmington, North Carolina is a coastal city in North Carolina and a long-time vacation rental destination. Nestled on the Atlantic Ocean, it is known for its beaches and family-friendly attractions. However, Wilmington is not just a beach town. It has a population of approximately 115,000, making it one of the largest cities in the North Carolina.
- Vacation Rental Investors have a lot to like about Wilmington. While many investors target Outer Banks community beach homes in near by Surf City or North Topsail Beach, Wilmington is a strong alternative. The city is close to multiple beaches and has diversified options outside beach days. Many families that lease vacation rentals will want more than just a beach day. The historic sites and downtown areas of Wilmington will attract these families for variety.
- Additionally, while AirDNA shows an Occupancy Rate of just 60% as of September 2023, that doesn’t tell the whole story. Wilmington is home to the University of North Carolina Wilmington, sometimes known as UNCW, with approximately 17,500 students. Wilmington is a “Coast Guard City” with a sizable military presence. Finally, it is home to Screen Gems Studios, the largest US TV and Movie production facility outside California!

Park City, UT

- Park City, Utah, is a renowned vacation destination nestled in the heart of the picturesque Rocky Mountains. Situated against a backdrop of stunning mountain landscapes, it is celebrated for its world-class ski resorts and family-friendly attractions.

- Why is Park City a great vacation rental market? While famous for its skiing attractions, there are many additional demand drivers for visitors. Hiking and biking is popular in the summer months and Park City offers great options. The city was named a “Gold-Level Ride Center” by the International Mountain Bicycling Association in 2011! In addition, Park City is home to the Sundance Film Festival, a major festival attracting many visitors from the entertainment industry. Many willing to pay top dollar for vacation rental properties.

Annapolis, MD

- Annapolis, Maryland is the capital city of Maryland and an underrated market for vacation rentals. It sits on the beautiful Chesapeake Bay and is known as “America’s Sailing Capital.”
- As a waterfront city, many of the demand drivers for vacation rentals revolve around the bay. There are plentiful activities including sailing, paddleboarding, kayaking and breakwater adventures! While the spring and summer seasons are undoubtedly the business, there are plenty of events in the fall that attract tourists.
- Per AirDNA as of September 2023, the Occupancy Rate is a solid, but below average 63%. However, the other metrics are rock-solid. It projects vacation rental operators to earn an average of $5,250 per month in revenue (peaking in October) with a $418 average daily rate. The sub-65% occupancy rate may scare some lenders away for vacation rental loans. However, Annapolis appears to be a great market for short term rentals in 2023.

Stowe, VT

- Stowe, Vermont is a popular vacation area in New England. It features world-class ski resorts, including Stowe Mountain Resort and Smugglers’ Notch Resort. While those resorts bring in many visitors, there are plenty of vacationers that prefer Airbnb or vacation rental options, either for space or affordability.
- Beyond skiing, Stowe also offers a wide range of outdoor activities throughout the year. These include hiking, mountain biking, golfing, fishing, and kayaking in the warmer months. In addition to outdoor activities, Stowe hosts various events and festivals that bring in tourists. These include the Stowe Winter Carnival, Stowe Arts Festival and the Stowe Mountain Film Festival. Finally, Stowe is popular for weddings and other special events. The culinary scene, with nice restaurants and craft breweries, is also popular.

Southampton, NY

- Southampton, New York, is a small vacation town in The Hamptons on Long Island. This area of New York is famous for its seasonality, with AirDNA verifying this aspect of the market with just a 52% average annual occupancy rate for short term rentals as of September 2023. The Hamptons are known for attracting wealthy and high-paying visitors in the summer months. Often, these are high-earning professionals from nearby New York City that will pay high rates.
- Despite the low occupancy rate, vacation rental investors can still earn great returns in Southampton. Smart investors can maximize earnings through the summer even with lower returns in the winter months. There are numerous vacation demand drivers in the summer season. These include beach access, including Cooper’s Beach. Beyond the beach, there are world-class golf courses and other activities such as tennis and boating. Social events and parties such as the Southampton Hospital’s Annual Gala also bring in many visitors.

- Despite the low occupancy, AirDNA projects huge returns when Southampton vacation rental properties are booked. Annualized (even including off-season months), it projects an average monthly revenue of $9,875 per rental property. This includes an average daily rate over $1,000!

cant agree on Park City. if i remember correctly, only 2 zip codes in Park city allow short term rentals. they require inspection for license and STR responsible party available by phone 24 hours a day. and prices there are pretty crazy. im sure there are better markets than that one.

2 Reply

Michael BaumPro Member

Olympia, WA · Member since 2016 · 8k+ posts · 7k+ votes

3y

The Park City, UT median home price is 1.8m. Lots of regs. I can't see that being a place to cashflow. Cool place though.

Stowe VT. There is a STR ordinance topic in the city council meeting today. Median home price is 800k.

4 Reply

Melissa Nash

Rental Property Investor · Orange County, CA · Member since 2016 · 740 posts · 529 votes

3y

I did the same as you, but took it a step further and put together a list of top 75 US cities (I did it because everyone kept asking me so I finally succumbed to the pressure LOL), I included average market price for the area so that you can see where the returns might be. It is really hard to just throw out this info because there are a A LOT of variables like amenities, marketing strategies, architecture and design, photography, location, etc.

BUT I think its a good starting point for research, but remember the variables come into play for overall success.
For example: I have 2 cabins in the same area- one has a hot tub and one doesn't. The one with the hot tub makes more $ and is more booked. So that alone would skew any numbers on a chart.

Also another thing that is interesting- when I put together my list, I found that one of the cities is a random city in Alabama that I already own a few long term rentals in and I could make 3X if I turned one of them into a short-term rental. I haven't done it yet bc I have good tenants, but it is interesting to see towns that are not your typical "vacation" area make the list.

4 Reply

Nancy Bachety

Rental Property Investor · North Fork, NY · Member since 2016 · 1k+ posts · 631 votes

3y

The biggest overlooked and unspoken factor is the investor goals. Can’t put a value on it.

We invest near Southampton on LI in NY. We only rent a small cottage on the property where our summer home is and we only rent it for 3-4 nights a week during the 14 prime summer weeks. (IOW low occupancy) We have little of our own money invested and have yet to pay a dime towards expenses while the property has doubled in value in under four years. Maybe there are other markets like this (in fact, we have another one in FL and one in the Smokey mountains like this but with higher occupancy by choice) but unless the investor goal includes deriving personal value from one's STR property, raw data looks and feels different. Of course the other FL ocean front STR is at 90% occupancy and is where I'd buy others for tremendous ROI if I wanted to take on more. Doesn't fit into our goals right now. And it didn't make this AI list.

I got into the game to finance my interest in living in a few homes and stayed in it because it’s very lucrative, by our definition.

0 Reply

Zach Edelman

OP

Lender · New York, NY · Member since 2022 · 1k+ posts · 1k+ votes

3y

Quote from @Melissa Nash:

I did the same as you, but took it a step further and put together a list of top 75 US cities (I did it because everyone kept asking me so I finally succumbed to the pressure LOL), I included average market price for the area so that you can see where the returns might be. It is really hard to just throw out this info because there are a A LOT of variables like amenities, marketing strategies, architecture and design, photography, location, etc.

BUT I think its a good starting point for research, but remember the variables come into play for overall success.
For example: I have 2 cabins in the same area- one has a hot tub and one doesn't. The one with the hot tub makes more $ and is more booked. So that alone would skew any numbers on a chart.

Also another thing that is interesting- when I put together my list, I found that one of the cities is a random city in Alabama that I already own a few long term rentals in and I could make 3X if I turned one of them into a short-term rental. I haven't done it yet bc I have good tenants, but it is interesting to see towns that are not your typical "vacation" area make the list.

@Melissa Nash, where can I access this list?

1 Reply

Zach Edelman

OP

Lender · New York, NY · Member since 2022 · 1k+ posts · 1k+ votes

3y

Quote from @Michael Baum:

The Park City, UT median home price is 1.8m. Lots of regs. I can't see that being a place to cashflow. Cool place though.

Stowe VT. There is a STR ordinance topic in the city council meeting today. Median home price is 800k.

Michael - makes sense regarding Stowe. I was honestly unaware of this. I guess a potential trend for the STR space with hotels coming down on STRs in major cities (i.e Dallas) could be hotels coming down on STRs in ski towns.

8 Reply

Zach Edelman

OP

Lender · New York, NY · Member since 2022 · 1k+ posts · 1k+ votes

3y

Quote from @John Underwood:

Nice AI term paper.

No AI was used in the making of this post. Online research, yes, AI, no.

7 Reply

Logan M.

Investor · Provo, UT · Member since 2016 · 759 posts · 626 votes

3y

Quote from @Michael Baum:

The Park City, UT median home price is 1.8m. Lots of regs. I can't see that being a place to cashflow. Cool place though.

Stowe VT. There is a STR ordinance topic in the city council meeting today. Median home price is 800k.

But if you do want to buy there, give me a call :)

0 Reply

Logan M.

Investor · Provo, UT · Member since 2016 · 759 posts · 626 votes

3y

Park City Utah made the list but I would like to see it compared to St.George Utah. Most people in the Salt Lake area are buying short-term rentals in St.George vs. Park City.

0 Reply

Calvin Pringles

Real Estate Agent · St. Petersburg, FL · Member since 2020 · 46 posts · 36 votes

3y

I'd add Manatee County, FL to the list.

0 Reply

Melissa Nash

Rental Property Investor · Orange County, CA · Member since 2016 · 740 posts · 529 votes

3y

Quote from @Zach Edelman:

Quote from @Melissa Nash:

I did the same as you, but took it a step further and put together a list of top 75 US cities (I did it because everyone kept asking me so I finally succumbed to the pressure LOL), I included average market price for the area so that you can see where the returns might be. It is really hard to just throw out this info because there are a A LOT of variables like amenities, marketing strategies, architecture and design, photography, location, etc.

BUT I think its a good starting point for research, but remember the variables come into play for overall success.
For example: I have 2 cabins in the same area- one has a hot tub and one doesn't. The one with the hot tub makes more $ and is more booked. So that alone would skew any numbers on a chart.

Also another thing that is interesting- when I put together my list, I found that one of the cities is a random city in Alabama that I already own a few long term rentals in and I could make 3X if I turned one of them into a short-term rental. I haven't done it yet bc I have good tenants, but it is interesting to see towns that are not your typical "vacation" area make the list.

@Melissa Nash, where can I access this list?

message me- happy to share!

0 Reply

Patrick Nolan

Member since 2018 · 11 posts · 6 votes

3y

@Nancy Bachety

Love what you said about buying property around places you want to be. I’ve just begun doing that with a land buy and development in the Hudson Valley.

Ok if I DM you to pick your brain a little?

0 Reply

Nancy Bachety

Rental Property Investor · North Fork, NY · Member since 2016 · 1k+ posts · 631 votes

3y

Quote from @Patrick Nolan:

@Nancy Bachety

Love what you said about buying property around places you want to be. I’ve just begun doing that with a land buy and development in the Hudson Valley.

Ok if I DM you to pick your brain a little?

Sure, it’s a lifestyle investment and a financial investment. Whatever I can offer, Patrick.

0 Reply

Travis TimmonsPro Member

Rental Property Investor · Ellsworth, ME · Member since 2021 · 1k+ posts · 2k+ votes

3y

Quote from @Zach Edelman:

Quote from @John Underwood:

Nice AI term paper.

No AI was used in the making of this post. Online research, yes, AI, no.

AI would have been a preferable answer bc your research is not very good. You're mostly picking very expensive, 2nd home markets that have ridiculously expensive price tags for homes. I'm sure a place in Park City would do great if you didn't have to pay several million dollars for it and jump through restrictive regulatory hoops. If you wanted to title this, "Great places to have a 2nd home" then sure, it's a solid list. It feels like uninformed, spammy content from someone that has a product to sell.

I asked my 9 year old daughter "Where is a good place to invest in a short term rental?" on her way to school today. She said, "I don't know, like small national parks without a lot of hotels." I can have her come on board as a consultant if you'd like me to. I know that that is a dumb and perhaps unfair anecdote. You clearly have no experience analyzing and calculating a cash on cash return for short term rental investing, or you would have come up with a very different list.

Sorry if that was a bit much, but this type of post is not what these forums are for. There's far too much fluff and nonsensical content from folks that have something sell. This one may have been the straw that broke the camel's back for me. At least you didn't say that Pace Morby is a go giver. Maybe let AI take the next one...

3 Reply

Robin SimonBusiness Member

Lender · Austin, TX · Member since 2022 · 5k+ posts · 4k+ votes

3y

Quote from @Travis Timmons:

Quote from @Zach Edelman:

Quote from @John Underwood:

Nice AI term paper.

No AI was used in the making of this post. Online research, yes, AI, no.

AI would have been a preferable answer bc your research is not very good. You're mostly picking very expensive, 2nd home markets that have ridiculously expensive price tags for homes. I'm sure a place in Park City would do great if you didn't have to pay several million dollars for it and jump through restrictive regulatory hoops. If you wanted to title this, "Great places to have a 2nd home" then sure, it's a solid list. It feels like uninformed, spammy content from someone that has a product to sell.

I asked my 9 year old daughter "Where is a good place to invest in a short term rental?" on her way to school today. She said, "I don't know, like small national parks without a lot of hotels." I can have her come on board as a consultant if you'd like me to. I know that that is a dumb and perhaps unfair anecdote. You clearly have no experience analyzing and calculating a cash on cash return for short term rental investing, or you would have come up with a very different list.

Sorry if that was a bit much, but this type of post is not what these forums are for. There's far too much fluff and nonsensical content from folks that have something sell. This one may have been the straw that broke the camel's back for me. At least you didn't say that Pace Morby is a go giver. Maybe let AI take the next one...

Yes, it does seem like a 'bit much" - what value are you adding to this forum (besides just criticizing others posts?. Your argument seems to be "you picked markets that are too expensive" - which is nonsensical - this was not presented in any way as "affordable" vacation markets.

What exactly are these forums for? What articles or content or threads are you starting to add to the discussion? Look above in this thread, plenty of people seemed to like the value and it started a discussion on markets. What is "fluff and nonsensical" here - Where is your list if you could come up with something so much better?

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1 Reply

Michael BaumPro Member

Olympia, WA · Member since 2016 · 8k+ posts · 7k+ votes

3y

I get more irritated than most about fluff posts @Travis Timmons, but that was over the line of decorum.

@Zach Edelman posts regular, helpful posts when it comes to lending.

Yes I don't agree with some of the choices, but it isn't a waste of forum space.

1 Reply

Travis TimmonsPro Member

Rental Property Investor · Ellsworth, ME · Member since 2021 · 1k+ posts · 2k+ votes

3y

@Michael Baum That's fair...I went a bit too far. @Zach Edelman that was uncalled for, and I need walk that back. Sorry. I can disagree without being disrespectful.

@Robin Simon

The value that I add is sharing my experience as an active short and mid term rental investor and manager. You can look through my post history if you care to. It's a lot of answering questions that new investors ask. That's what I've done and know well.

And the title is "Best Markets for Vacation Rentals" - that would imply the one could make a reasonable return in those markets. The land rush is over in many markets, and the returns that make the hassle of an STR worth it are very difficult to find.

And since you asked, Robin, my list is below. Places where a normal investor could afford to buy and where they would make a solid cash on cash return. You know, places where one could find a property that actually covers its expenses.

A monthly revenue of $9,875 in Southampton would be great if the median price of a sold home in August 2023 was not $1.5-1.6M. By my calculations, that would lose about $50k per year assuming 20% down and an investor loan rate in the 8s. You would have to have $300k in cash sitting around to make the down payment, $20-40k to furnish and get the property rent ready, and another pile of cash reserves set aside to cover $50k annual operating losses. And you also have to self manage to get to those numbers. How is that a good place to invest? I could think of The other markets listed above would have a similar return.

1. Cheboygan and St Ignace, MI - near Mackinac Island - starter properties can be found under $200-250k that could generate $40-50k in gross rents. Restrictions are a bit tighter in St Ignace but not impossible to navigate. If you want to go into the next price tier, a $400-500k property done well could clear at or above $100k in gross rental income.

2. Mammoth Cave, KY - same story - entry point under $200k for a beginner that can do 20-30% of the purchase price in gross rents. There is not really a higher end tier here though...good for a beginner with a smaller budget, but not the type of place worth buying a $500-600k property.

3. Hancock County, Maine near Acadia National Park (where I own 2 short term rentals) - it has gotten a bit more expensive in the last year or two, but you can still find a 15% cash on cash return off of the MLS with limited work. If you're willing to renovate, you can still get a cash on cash of 25-30%+.

4. Munising, MI near Pictured Rocks National Lakeshore - 15-20% cash on cash returns can still be found on the MLS with a low entry price point. There is restrictive zoning in Munising, but if you get into the township, it's a free for all.

Honorable Mentions - Baraboo and Wisconsin Dells, WI, New River Gorge, WV

2 Reply

Ryan MoyerBusiness Member

Property Manager · Orlando Kissimmee Davenport Salt Lake City, Park City · Member since 2019 · 996 posts · 1k+ votes

3y

I live 45 minutes from Park City and vacation there 3+ times per year and I don't invest there. If I were to make a list of "Markets to have the highest likelihood of negative cashflow in 2023" or "Markets where you're most likely to have your STR banned due to regulation in 2023" Park City would probably be near the top of those lists. So for it to end up on a "best markets for STR in 2023" list to me shows either an extreme lack of knowledge of STR in the area or someone pushing an agenda (like a Park City realtor trying to convince people to buy with them there). While this forum is LITTERED with the latter, it doesn't appear to be the case here.

What it does appear to be is simple reputation management, putting a bunch of big posts out there to appear as a general subject matter expert so when someone is looking for a lender they see them as reputable. Which is totally fine.....IF YOU'RE ACTUALLY PROVIDING HELPFUL INFO.

In this case, the info just appears to be a hodgepodge of random markets with random tourism website quotes alongside some quick broad AirDNA metrics pasted in that don't really mean much in a vacuum. Again, that wouldn't so bad except that, at least given the market that I'm familiar with on the list, it's not only not helpful, it can actually be harmful. And directing people to Park City as a "top market" is harmful to the people who listen to it. Because it's only a very specific kind of buyer (particularly someone who likes to vacation there and doesn't really care too much about returns) that the area makes sense for.

We see all these posts on this forum about whether the STR market has taken a big downturn or not, and the prevailing theme we see in the answers to those threads is that the only people struggling are the ones who were stupid enough to buy a bad deal in a bad market at the peak. The thing that grinds my gears about those replies is that, while the buyer certainly deserves some of the blame for putting too much trust in people, it's posts like these and many of the people that post on these forums that pushed people into those deals in the first place. This forum has a bad habit of preying on people that don't know any better and then blaming them for listening to them in the first place.

I dunno, I've had this post sitting here for like 24 hours not sure if I want to even post it or not, and if it's too brash. But I think that is needed at this point. I'm just tired of people being fake helpful on this forum to try and drive business. If you want to be REAL helpful to drive business then great, I'm all for that.

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4 Reply

Nancy Bachety

Rental Property Investor · North Fork, NY · Member since 2016 · 1k+ posts · 631 votes

3y

I’m going back to the days when I ignore posts I don’t agree with or like.

0 Reply

Zach Edelman

OP

Lender · New York, NY · Member since 2022 · 1k+ posts · 1k+ votes

3y

Quote from @Michael Baum:

I get more irritated than most about fluff posts @Travis Timmons, but that was over the line of decorum.

@Zach Edelman posts regular, helpful posts when it comes to lending.

Yes I don't agree with some of the choices, but it isn't a waste of forum space.

Thank you for the words of encouragement. If anyone wants to know further, this article was also inspired by the fact that all of the markets in my post have a below Air DNA occupancy percentage of 65%, which is commonly a hurdle that certain lenders face when trying to provide financing that needs to be qualified with Air DNA projections.

1 Reply

Jon Martin

Member since 2022 · 1k+ posts · 1k+ votes

3y

I could see Wilmington NC as a good fit in terms of COC numbers because of the modest entry point, outside of beach adjacent neighborhoods. Annapolis MD has a higher but still reasonable median as well and lots of business and government activity, so I could see vacancy being strong there as well. Both would probably work as MTR markets as well.

Otherwise I'm not sure how you can make the numbers work with the rest of the markets because the cost to entry and revenue required just to break even is high.

0 Reply

Travis TimmonsPro Member

Rental Property Investor · Ellsworth, ME · Member since 2021 · 1k+ posts · 2k+ votes

3y

Here's why @Ryan Moyer have had such a visceral reaction. New, impressionable investors buy bad deals based on advice from folks on here that have something to sell. I'll give two real examples from the last month or two. Actual, real, on the phone conversations that I have had with individuals that reached out asking for some advice.

1. I actually have the address on this one - 8801 Platten Ave, Cleveland. Go figure - it's in Ohio. A very green, first time investor posted about wanted to get started. He got the usual litany of responses - mostly from agents. I gave some basic advice, stated that I have nothing to sell, and encouraged him to reach out if he had questions. By the time he reached out, he was about to put an offer on the property above. It's a sketchy neighborhood in a city with a declining population over 2000 miles away from his primary residence. He has no business buying this. I also checked the tax records while talking to him. It was purchased 11 months ago by, you guessed it, a green, impressionable out of state investor with a BP profile. Now the same company is trying to sell it to another out of state, first time investor.

2. Same story - guy reached out based on a comment I made. Also an out of state, first time investor. He was under contract on a STR property in the Smokies that would, by my calculations, lose 10-30k per year - depending on how well he self managed it - in operating losses (that number goes to 30-50k loss if he did not self manage). After our conversation, he got out of the deal before his inspection period ended. I can promise you that his story is not unique, and many of those folks actually close on the bad deal. At that point, they're losing money following the advice of a so called subject matter expert that they connected with on BiggerPockets. Those giving "guidance" are either chasing a commission/quick dollar or they don't know any better but act like they do. In both cases, that's a problem.

Real people buy actual bad deals based on contacts and advice they get on this site. Should they be smarter? Sure, but they're not. And those that have a presence here should give sound, practical advice on a subject in which they have direct, first hand experience and success. If that leads to you getting business and setting a first time investor up for success, that's awesome. Everybody wins in the scenario.

I'll repeat what was stated above bc I can't say it any better - This forum has a bad habit of preying on people that don't know any better and then blaming them for listening to them in the first place.

4 Reply

Ian Carmany

Investor · NY · Member since 2023 · 1 post · 2 votes

3y

I have no dog in this fight (nor credibility) but that was a wicked take down Travis. Respect.

2 Reply

Best Markets for Vacation Rentals in 2023

Best Markets for Vacation Rentals in 2023

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