Leading vacation rental management platform reveals which beachy markets yield the highest cap rates for vacation rental buyers
Vacasa (NASDAQ: VCSA), North America’s leading vacation rental management platform, has released its annual Best Places to Buy a Beach House report, highlighting the waterfront destinations on oceans, gulfs and lakes that boast the best cap rate (or annual rate of return on investment).
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A Vacasa vacation home in North Topsail Beach, North Carolina. (Photo: Business Wire)
For buyers looking to make a splash in 2023, look no further than Lake Anna, Virginia, which ranked highest on this year’s list with a whopping 12.1% cap rate, followed by the Atlantic Coast’s Hatteras Island, North Carolina (9.5%) and Navarre Beach, Florida (8.1%) on the Gulf of Mexico, to round out the top three markets.
Lake Anna is no stranger to the #1 spotlight—it also ranked first on Vacasa’s Top 25 Best Places to Buy a Vacation Home in 2022. Guests love Lake Anna for its 17 miles of sparkling water and sandy beaches, and vacation rental homeowners enjoy the benefits of a multi-season destination that keeps their homes occupied throughout the year.
Traditional beach markets that made the list may experience more seasonal occupancy tied to the warmer months, but with destinations throughout the Southeast in Alabama and Florida sliding into many of this year’s top slots, sunshine is year round, expanding the opportunity for sun-seeking guests to book their vacations.
However, beach-bound buyers should be aware of the fluctuating real estate market and understand how to optimize their investment to offset rising real estate costs:
“The real estate market has changed significantly since we published this report last year. Interest rates are higher, mortgage applications have slowed and generally the market has cooled,” said Daned Kirkham, senior director of real estate for Vacasa. “The bidding wars keeping some second home buyers out of the market a year ago may be less of a headwind today, which can open up the right opportunity to purchase if buyers are comfortable with some level of increased costs to purchase.”
Vacation rental buyers are encouraged to seek the assistance of a licensed real estate professional to navigate the nuances of purchasing a second home, especially if it is to be used as a vacation rental. Not only will a real estate agent be able to steer buyers toward locations and amenities that are in high demand, they can also provide guidance on local regulations that are becoming more prevalent in vacation rental dense communities.
Vacasa’s Best Places to Buy a Beach House Methodology
To determine its ranking of top vacation rental markets, Vacasa analyzed home sales and vacation rental performance data from the last 12 months for vacation destinations throughout the country where Vacasa and its licensed subsidiaries manage vacation rentals. To determine average gross rental income (homeowner revenue made from bookings, excluding any fees) for a market, we used actual performance data for the market as a whole, where available, except that Vacasa-only data was used for markets where Vacasa manages more than 50 units and actual Vacasa rental performance beats the market average by at least 25%. To calculate average cap rate, we considered the averages of the following in each market: property taxes, utilities, homeowners association fees, insurance, and property management fees.
Local regulations vary by jurisdiction and the transfer of a property to a new owner may affect its ability to be used as a vacation rental. Generally, all vacation rental regulations are subject to change, which may affect your ability to use a property as a vacation rental in the future. Buyers should always check current local regulations prior to making an investment decision.
Vacasa is the leading vacation rental management platform in North America, transforming the vacation rental experience by integrating purpose-built technology with expert local and national teams. Homeowners enjoy earning significant incremental income on one of their most valuable assets, delivered by the company’s unmatched technology that is designed to adjust rates in real time to maximize revenue. Guests can relax comfortably in Vacasa’s 40,000+ homes across more than 500 destinations in the United States, Belize, Canada, Costa Rica, and Mexico, knowing that 24/7 support is just a phone call away. In addition to enabling guests to search, discover and book its properties on Vacasa.com and the Vacasa Guest App, Vacasa provides valuable, professionally managed inventory to top channel partners, including Airbnb, Booking.com and Vrbo. For more information, visit vacasa.com.