Where to look for vacation rentals (Short-term rentals) for 1031?

[Stacy P.]

Hi friends!

We may sell a current STR (vacation) property we own and take the profits to purchase 2-3 more properties under a 1031. I can do the research as far as ADR and occupancy, but I'd like so suggestions from you guys of growing vacation markets I should look at (I'd like to diversify). The market we are currently in is crazy hot (but I'm seeing signs of a coming cooldown) so I am still debating whether to just re-invest there. My hesitancy there is buying high in that market when I'm not sure that area will sustain the growth it's been seeing. I'd love to find something up and coming. I'd really like a year-round destination, preferably near a lake and mountains (not really interested in beach properties). Any ideas of where to look would be appreciated!! Thanks!

[Dave Foster]

@Stacy P., my first choice always for purchasing vacation rentals has always been - places i like to vacation :) !!!

Sounds trite but here's the logic

1. A free vacation place for you to use every year accomplishes the same thing as an additional several thousand dollars of rent income.

2. If i like to vacation there so do other people.

3. If we all like to vacation there then the real estate market will be robust and active.  And an active market always appreciates more.

For you there is a huge added bonus of confining your search to tax free states.  Since you're already living in one you'll complete avoid the 5% - 10% state tax on income if you look in places like your backyard in TX, anywhere in FL or the Smoky Mountains of TN.