Best places for US vacation rentals
A recent report reveals the best places for return on investment from US vacation rentals. Florida dominates the top ten ranking with four resorts offering the best ROI on holiday lets while some of the most popular places for a holiday in the US rank surprisingly low.
The Short-term Rental Income Report 2016, published in August by the US vacation rentals portal rented.com, takes a look at the locations offering the best ROI. The survey focuses on 120 markets across the US and examines both the cost of homeownership and their short-term rental potential.
Vacation rentals market boom
Rented.com reports an increase across the board in US holiday lets generally over the last few years. They attribute this to the rise of rental portals such as Airbnb and to the growth in the number of short breaks taken throughout the year. People are no longer limiting their holiday to their summer vacation or the Christmas period but taking advantage of cheap airfares and vacation rentals to travel at weekends too.
This surge in travel has led to a boom in US vacation rentals and by extension, in investment in properties suitable for holiday lets. The 2016 Investment and Vacation Home Buyers Survey published by the National Association of Realtors (NAR) earlier this year pointed to an increase of 7 per cent in sales of investment homes in the US.
“Investment purchases reversed course in 2015 after declining for four straight years,” said Lawrence Yun, NAR Chief Economist. The survey found strong investor interest in long-term rentals and a surge in the likelihood of investors renting their properties for less than a month to make the most of the US vacation rentals market.
Tapping into the best returns
In the 120 markets, rented.com took the costs of homeownership into account. These included factors such as the cost of the property, annual taxes, property management and home insurance. They also looked at criteria boosting short-term rental potential such as demand, occupancy rates and local restrictions on vacation rentals.
It turned out that the most popular places to holiday in the US – such as the ski resort of Aspen or Nantucket – were not the markets providing the best vacation rental returns. And that lesser-known markets and those where the authorities are keen to encourage vacation rentals as a vital pillar to the local economy offer the best ROI.
Florida best for returns on US vacation rentals
Taking its dual criteria, rented.com compiled its top ten ranking, markets “bringing together a killer combination from an investor’s perspective: attractive purchase price, relatively high rental demand and typically light regulation”. Dominating the best spots for US vacation rentals is Florida with a total of four resorts in the top ten offering that “killer combination”.
Top of the national ranking is Panama City Beach in Bay County in north-west Florida. This small resort offers the best ROI of all US vacation rentals in the survey and achieves a score of 94.5 out of a total 100. The resort is joined by Palm Coast, just south of Jacksonville, in fourth position with 90.7 points; Kissimmee, near Orlando – the most popular place in the US for a holiday – in sixth; and Daytona Beach (south of Palm Coast), whose eighth position completes the Florida quartet. Other locations in the Sunshine State also feature in the top 30 US vacation rentals – Miami comes in in 24th position, closely followed by Key West in 26th.
Rented.com cites two main reasons for Florida’s high rankings for returns on holiday lets. One of these are the good value property prices to be found throughout the state. The second are state regulations regarding holiday lets, currently some of the friendliest in the country.
At the other end of the scale and providing the worst returns on US vacation rentals sits Nantucket in Massachusetts with just 8.1 points. Hard on its heels are Beaver Creek and Aspen, both in Colorado. Despite their huge popularity as holiday destinations, the high costs of ownership and rental potential limitations mean that returns on investment are low.
“Property in Florida offers a win-win scenario for investors looking to rent,” says Dies Poppeliers, Managing Director of BRIC Group. “On the one hand, demand for long-term rentals is at an unprecedented high in the state and on the other, vacation rentals provide the best potential for ROI in the US.”
BRIC Group, an investment company specialising in global real estate opportunities, offers US real estate investments including turnkey properties in Florida and Houston, and land plots in Florida. BRIC Group is also developing The Coral resort, in Northeast Brazil, a luxury beachfront resort with land and villa investment opportunities. BRIC Group has been creating wealth for its clients since 1996 and has offices in Brazil, Dubai (consulting office), Hungary, Spain and the US.
(Sources: rented.com, National Association of Realtors)