The latest annual report from Rented.com takes 150 locations in the US and ranks them in terms of their best potential for short-term rental income. Destinations in the southeast of the country take the lion’s share with locations in Florida featured almost three times as often as the next most popular state. Read on to discover the best places to buy a US holiday let in 2018.
To compile the list, Rented.com use two criteria. Firstly, they look at the cost of homeownership including the purchase price, property taxes, insurance and maintenance costs. They then take into consideration figures for short-term rental potential such as demand and occupancy rates. The final factor in determining the best locations to buy a US holiday let weighs up local rental regulations.
Florida rules supreme
Unsurprisingly, given its long-term standing as a favourite winter destination, Florida cities feature the most in the top 150 locations. Panama City Beach in the northwest of the state ranks as the best place to buy a US holiday let of all with the highest rating of 98.9 out of 100.
Other Florida holiday spots in this year’s rating include Navarre, Cocoa Beach, Kissimmee, Orlando and Destin. Rented.com points out that in the three annual reports since 2016, there are almost three times as many locations in Florida as the next most popular state.
“States like Florida have embraced the short-term rental market at state level,” says the report. “In addition, because short-term and vacation rentals inject funds into the community, local regulations are less harmful to short-term rentals than in other markets.”
In the top five best places to buy a US holiday let this year, Panama City Beach is joined by several surprises. Chicago takes second place with a score of 95.3, followed by Napa in California, Tulsa in Oklahoma and Memphis.
Rented.com points out that Chicago, Tulsa and Memphis are not generally known as typical holiday destinations. However, the city destination trend also appeared in the 2017 and could be due to the impact of business tourism. Chicago and Napa also both have very strong demand for short-term rentals but low supply, which in turn pushes rental rates (and income) upwards.
The bottom end of the table may come of something of a surprise. Some of the most well-known holiday destinations in the US such as Martha’s Vineyard and Nantucket rank among the worst places to invest in a vacation rental. Right at the bottom are Aspen in Colorado and Palo Alto in California, proving that popular vacation spots aren’t always the best places to buy a US holiday let.
Rented.com attributes their poor scores to a number of factors: the high costs of living in states such as California, Delaware, New York, Utah and Virginia; and housing shortages in the same states. In addition, some locations such as the Hamptons and New York have stringent rental regulations and/or high property taxes.
Where to buy the best US holiday let
The Rented.com report ends with some general pointers on how to choose a location when buying a vacation rental in the US. Top of their recommendations is to buy in a market with lower prices and to “have a clear understanding of necessary improvements”. This means you avoid unexpected hits to your refurbishment budget. Better still, buy a property that is ready for rental.
They also suggest buying in markets that have proven demand for holiday rentals. And lastly, to check out the regulations regarding holiday lets in your chosen community. Not all homeowner associations allow owners to rent out their property as vacation rentals.