These Markets Are Delivering The Best ROI on Vacation Rentals

by | BiggerPockets.com

As the country’s largest manager of vacation rentals, Vacasa has access to actual performance data for thousands of vacation rental properties across the country. We recently packaged some of that data into a buyer’s guide called the Insider’s Guide to the Top 25 Vacation Rental Markets. In this post, I’ll discuss some of the elements we used to create our guide so you can apply the thinking in your own searches.

Get Insider Knowledge

First, a note about what makes our Insider’s Guide unique. The guide, which has been featured in dozens of publications from FOX Business to USA Today, offers both a high-level view and local look at the country’s top vacation rental markets. It’s our first investment tool that combines national data with insights from our local agents. We hope you find both the guide and methodology behind it helpful.

Related: 13 Mistakes New Vacation Rental Owners Always Make

The first element we considered (and the first element we recommend you consider when choosing where to buy a vacation home) is cap rate. If you’re not familiar with the term, capitalization rate, or, cap rate, is the ratio of a property’s net operating income over its value. It’s an easy figure to determine if you have the right data, but getting accurate net operating data for entire markets can be a challenge. This is where we’re hoping to add value.

To determine net operating income for our guide, we looked at actual performance data for over half a million U.S. vacation rental properties. From there, we calculated gross rental incomes for each market, then subtracted each market’s average operating costs. Finally, we divided those figures by the historical costs of buying a home in the markets to get cap rates, which we believe provide investors the truest representation of potential ROI.

But That’s Not All

The second element you should consider when choosing where to buy a vacation home is local expertise. Having access to local metrics that you can trust is essential when shopping for investment properties. That may sound obvious, but you probably have better things to do with your time than try to identify trustworthy local sources for vacation rental-specific advice in destination markets across the country. This is another instance where we felt we can provide value with our guide.

Related: 6 Steps for Successfully Investing in Vacation Rentals

Vacasa Real Estate currently works with expert agents in vacation rental markets across the country. These partners represent leading real estate companies including Berkshire Hathaway, Century21, Coldwell Banker, Keller Williams, RE/MAX, Sotheby’s and others. After we determined our top 25 markets, we picked up the phone and asked our real estate partners and our local property management teams for their best insider advice. Clicking on any of the markets in our guide will take you to a vacation rental market page with insights from local experts.

What markets are you looking at for vacation rental investments? 

Share in the comments below!

About Author

Shaun Greer

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.

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