Now is the best time to start a vacation rental business, according to short-term rental data and analytics website Air DNATravelers are spending big bucks on luxury vacation rentals – the more unique the better. Occupancy rates for modern, well-furnished homes are set to rise from 49.1% to 55.9% between 2019 and 2023, with groundbreaking growth expected across the STR market. Revenues of $64 billion in 2023.
While long-term property landlords may frown on such occupancy rates, it’s worth remembering that vacation rentals are often also used as medium-term rentals in the off-season and may not be listed on vacation rental sites.
The East Coast is packed with investment hotspots
Travel industry news site Skift Analysing the figures using AirDNA data, East Coast beaches along the Atlantic coast are expected to be busier this summer with 1.63 million nights booked, up 7.7% from last year.
“New York, once a top 10 market for Fourth of July, has fallen out of the running, replaced by beaches in Delaware and Maryland. This change continues a trend of Atlantic coast beaches growing in popularity, led by Myrtle Beach, South Carolina,” a spokesperson for the short-term rental data provider said.
With that in mind, for investors looking to maximize profits over the summer without having to spend $500,000+ on a vacation rental, the following locations are the best places to own an STR: Air DNAshort-term rental and hospitality sites Avanstayand Expert Real Estate Agent OpinionWe consider location, rental income potential, property management costs, long-term property appreciation and short-term rental income.
Columbus, Georgia
- Typical home values: $161,000
- Seating capacity: 60%
- Average daily rate: $178
- Average Revenue: $29,000
With a price range of $161,000, a location on the Chattahoochee River and whitewater rafting, Columbus is a great place to consider investing, sightseeing or expanding your portfolio. Columbus took the top spot in AirDNA’s “Best Places to Invest in 2024.”
Oneonta, New York
- Typical home values: $211,000
- Seating capacity: 60%
- Average daily rate: $356
- Average Revenue: $27,000
With an average home price of $211,000 and daily rent of $356, it’s hard to argue with the steep prices. This charming small city in upstate New York is already home to AirDNA. Hidden gems listRobert V. Riddell State Park offers over 2,000 acres of fields and woodland in the Susquehanna River Valley.
Oneonta vacation homes can double as winter wonderland retreats, with plenty of nearby activities to enjoy in the cold weather.
Fairbanks, Alaska
- Typical home prices: $239,000
- Seating capacity: 65%
- Average daily rate: $225
- Average Revenue: $32,000
Alaska is a great place to visit in the summer, with short-term rentals generating a healthy $32,000 a year in revenue, mostly during the warmer months. Fairbanks’ modest median home price of $239,000 has risen since it became a popular vacation rental city.
Fennville, Michigan
- Typical home values: $309,000
- Seating capacity: 56%
- Average daily rate: $595
- Average Revenue: $63,000
Fennville, with its orchards, vineyards and lakefront charm, has an annual return of $63,000 and an affordable investment of $309,000. If an investor purchases a home as a personal residence for a year, then renovates and moves in, they can qualify for an FHA loan and get into the property for less than $10,000.
Ashford, Washington
- Typical home values: $323,000
- Seating capacity: 67%
- Average daily rate: $242
- Average Revenue: $44,000
Featuring affordable prices and pristine natural surroundings, this popular STR haven generates an average annual return of $44,000 on a $323,000 investment. Mount Rainier National Park is a big draw. To match the beautiful setting, STRs can only operate with five or fewer rooms and a total occupancy of no more than 10 guests.
Beaufort, South Carolina
- Typical home values: $347,000
- Seating capacity: 61%
- Average daily rate: $234
- Average Revenue: $40,000
Its laid-back southern coastal charm, quaint historic neighborhoods, Lowcountry cuisine, and beautiful waterfront parks make it a great, affordable place to invest.
Kitty Hawk, North Carolina
- Typical home prices: $350,000
- Seating capacity: 64%
- Average daily rate: $434
- revenue: $38,800
In Kitty Hawk on the Outer Banks, there aren’t many new listings for sale and property values vary widely, but it’s possible to get a great deal for under $500,000. This makes sense, as do the attractions that draw tourists every year: lighthouses, wild horses, and miles of beaches.
Logan, Ohio
- Average home price: $233,000
- Seating capacity: 57%
- Average daily rate: $343
- revenue: $57,000
Escape the hustle and bustle of everyday life and discover the rural paradise of the Hocking Hills region of Logan, Ohio. A variety of summer activities, including hiking, horseback riding and zip lining, plus numerous state parks, rivers, lakes and caves, draw visitors.
Mount Pocono, Pennsylvania
- Typical Home Prices: $439,000
- Seating capacity: 47%
- Average daily rate: $312
- revenue: $45,300
The lakes, rivers and forests of the Poconos, close to Philadelphia, New York and New Jersey, have been popular spots for many years and have recently seen an uptick in demand.
Final thoughts
The benefit of owning a seasonal short-term rental property that attracts an active clientele in the summer months is that if purchased correctly, you can operate year-round in one season and still accommodate mid-term rentals in the winter months, especially around peak holidays like Memorial Day, Independence Day, and Labor Day.
Summer rentals can be labor-intensive, so be sure to find a good management company and take advantage of the tax benefits that come with owning a rental property (you can deduct all expenses and maintenance costs as legitimate expenses).
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BiggerPockets notes: These are opinions expressed by the author and do not necessarily represent the opinions of BiggerPockets.
