There are so many amazing destinations to choose from for a vacation rental! Florida tends to be the most popular state for them overall, but that doesn’t necessarily mean that it is the most profitable!
Don’t get me wrong, I LOVE Florida! That is why we owned one there (our very first one) but realized over time that we could buy other properties, at sometimes half of the price and make double the money! Yes, double the money or more even, with half of the expense, from the initial down payment to monthly overhead to keep. For example, our Florida property was a $430k property when we purchased it and did have an in-ground pool, canal access and was in great condition, but only grossed between $30k-$40k/year. That doesn’t leave much left over at year’s end for a net income (which is partially why we sold it, and mostly because the prices went up so high).
I do think that beach area vacation rentals are a great buy but would highly recommend that you are sure of your projections, especially in very seasonal areas, so that you are not in over your head. So many folks in the beach areas use them primarily as second homes, and if that is the case, that is awesome because any extra income is just icing on top. If that is the sole reason that you are buying one there, do your due diligence and possibly try to find an area that has year-round vacationers so that you can sustain the annual steady flow of guests. I also do know that there are properties that are VERY profitable and that make a ton of money, but for newbies, those properties may not be attainable, depending on your finances and willingness to take risk.
Our Florida home had a steady flow year-round, but the nightly rate was dramatically different. Winter months, we could charge $300+ a night, while in the “off-season” summer months we were down into the $100’s/night. That is a HUGE difference when it comes to the monthly breakdown. The summer was also tough because of it being so warm and the electric bill being so high from the air conditioning. I LOVE the beach and do plan on an ocean front property someday, but for those starting out, it’s ok if that isn’t for you!
The mountains on the other hand offer an entirely different angle of potential expense, income, and seasons. They can be very “seasonal” also, especially if it’s in an area that doesn’t offer winter sports like skiing, snowmobiling, or isn’t close to attractions. Our properties in more rural, mountainous areas have blown the others out of the water. The area and average list price of the properties still do play a factor into it all of course. In our area for an example, you can pay anywhere from $200k-$400k for a great mountain home/cabin with seclusion and possible views and expect for it to gross anywhere from $45k-$90k/year depending on amenities, location, views, access etc. The same goes for our cabin in Gatlinburg, Tn. Both areas offer year-round opportunities for guests and a steadier flow of monthly income.
Now to circle back around, I am not saying that you must do either to start. You can start very small and wherever you are (if they are allowed there) and scale up over time. I do offer a module in my Vacation Rental Academy Course that teaches you how to find the perfect property, so if you haven’t taken that yet, please make sure that you do! It will offer you valuable insight regardless of what area you happen to choose, from location, to features, attractions, and so much more. Make sure that it is affordable and that the projections will be profitable, so that it can be a long-term fun investment! My course will give you all of the tips from how to buy, where to buy, how to furnish, market, customer service, how to find a property manager, and how to grow it so that you can have more eventually!
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