We've updated this report for 2023—check out the newest version here.
When it comes to investing in a vacation rental property, there are many things to consider, but one thing is for certain: beachfront properties, or those near the ocean, never go out of style. Before you start scanning coastlines, there are a few things to think about—especially if you plan to use your new home as a short-term vacation rental.
In this report, we rank vacation rental markets based on aggregate cap rate, the ratio of a property’s net operating income over its cost.
To determine net operating income for this study, we first calculated gross rental income for each market. From there, we subtracted each market’s average operating costs—factoring in things like management fees and property tax rates. Finally, we divided those figures by the historical costs of buying a vacation rental to determine cap rates for each market.
Familiarizing yourself with cap rate will help you make a more informed choice when deciding where to buy a beach house. If you already have your sights set on a specific property.
Need help with the search? Vacasa Real Estate is here to help you find the right vacation home. For now, here’s where we think you should start searching:
Market |
Cap rate |
Median home cost |
|
---|---|---|---|
1 | Ocean Shores, WA |
7.6% |
$239,460 |
2 | Myrtle Beach, SC |
7.4% |
$257,000 |
3 | Panama City Beach and Santa Rosa Beach, FL |
6.1% |
$419,900 |
4 | Gulf Shores, AL |
5.8% |
$409,900 |
5 | Galveston Island and Port Bolivar, TX |
5.6% |
$350,000 |
6 | Kauai, HI |
5.4% |
$696,028 |
7 | Ocean City, MD |
5.4% |
$285,000 |
8 | Key West, FL |
5.0% |
$817,000 |
9 | Marathon to Long Key, FL |
4.9% |
$698,000 |
10 | Cocoa Beach, FL |
4.7% |
$339,000 |
Topping our list is a small town on the coast of Washington State. If that doesn't immediately conjure up images of tropical breezes and suntanned skin, you’re right. Known as the Razor Clam capital of the West, Ocean Shores is perfect for those seeking outdoor adventure on its stretch of beaches and waterways. If all this wasn’t enough, Ocean Shores’ strong cap rate of 7.6% earns it the #1 spot on our list.
Explore Ocean Shores vacation rentals and learn about buying a vacation home in Ocean Shores.
Market size |
680 |
Median annual gross rental revenue |
$32,383 |
Median home price |
$239,460 |
Cap rate |
7.6% |
This Atlantic coast gem is a popular Southeast vacation rental destination for its natural beauty and variety of activities. Myrtle Beach calls for swimming, sandcastles, deep-sea fishing, and dolphin cruises, so the region truly has something for everyone. Even those who prefer to stay on the green can find a bounty of golf courses engineered by some of the world’s top golfers and architects, including Robert Trent Jones and Arnold Palmer. When searching in Myrtle Beach, look for vacation rental properties that are near water of any kind; oceanfront and channel-front homes are going to generate the most income. A boat dock is also a major plus for potential renters who want to take full advantage of the ocean blue.
Explore Myrtle Beach vacation rentals and learn about buying a vacation home in Myrtle Beach.
Market size |
10,124 |
Median annual gross rental revenue |
$32,546 |
Median home price |
$257,000 |
Cap rate |
7.4% |
Turquoise waters and 27 miles of sugar-white sand beach… We need not say more, but we will. Panama City Beach in Northwest Florida is a popular vacation destination for those in the South and the Midwest, ensuring a steady stream of vacationers throughout the year—especially around spring break. A surge of development means fewer historic homes and more high-rises, but PCB remains high on the real estate investment list. Roughly 30 miles northwest lies one of Travel + Leisure’s top five favorite towns in America, Santa Rosa Beach. Known for its classic appeal and access to nature, families seeking a coastal Americana experience will be at your vacation rental door.
Explore Panama City Beach and Santa Rosa Beach beach houses and cottage rentals, and learn about buying a vacation home.
Market size |
13,267 |
Median annual gross rental revenue |
$44,555 |
Median home price |
$419,900 |
Cap rate |
6.1% |
Positioned on the Florida/Alabama state line, Gulf Shores has a variety of features that draw potential vacation rental guests to the area. Popular day trip destinations are within miles, unique yet family-friendly activities abound, and popular concerts and food festivals beckon the millennial traveler. For these reasons and more, Gulf Shores is a year-round destination and vacation rental bookings remain high. In this area, there’s a vacation home for everyone. While median home price sits around $400,000, explore your options—a condo property could yield the returns you are seeking, but so could a three-bedroom home.
Explore Gulf Shores vacation rentals and learn about buying a vacation home in Gulf Shores.
Market size |
10,461 |
Median annual gross rental revenue |
$39,045 |
Median home price |
$409,900 |
Cap rate |
5.8% |
When buying a vacation rental on Galveston Island, you better learn the lingo. Both “BOI” (born on the island) residents and “IBC” (islander by choice) residents take pride in living on the island. In both cases, locals welcome tourists, and while there are plenty of hotels on the island, vacation rentals reign supreme. With a median home price hovering around $300,000, vacation home buyers should not only act on available properties quickly, but come check them out for themselves. Galveston homes bring bright colors and interesting architecture, which make for great vacation rental listing photos. The same goes for Port Bolivar, which lies just north across the water. A laid-back, drive-on-the-sand community awaits.
Explore Galveston and Port Bolivar beach house rentals, and learn about buying a vacation home.
Market size |
2,243 |
Median annual gross rental revenue |
$40,791 |
Median home price |
$350,000 |
Cap rate |
5.6% |
There’s not much mystery about why to buy a vacation home in Hawaii. Travelers flock from around the world to experience the inherent beauty of the islands and to take part in a myriad of activities and sightseeing opportunities. The Aloha State has been a dream place to invest for decades, but what makes Kauai so unique is its cap rate, which is typically around 5.4%. While there are regulations to consider, a two-bedroom vacation condo is a commonly sought-after accommodation among travelers, and most condos near the ocean are vacation-rental-friendly. If a condo doesn’t suit your buying needs, fear not. All homes on the North Shore area of Princeville are also zoned for short-term vacation rental stays.
Explore Kauai vacation rentals and learn about buying a vacation home in Kauai.
Market size |
4,151 |
Median annual gross rental revenue |
$61,117 |
Median home price |
$696,028 |
Cap rate |
5.4% |
Swimming, sunning, and socializing near the Atlantic have put Ocean City on “best beaches in America” lists for years. In addition to hitting the sand, travelers can enjoy an expansive, three-mile beachfront boardwalk that’s home to local shops, restaurants, amusement parks, and arcades—all accessible by foot or bike. Those who are seeking a bit more action will find it. Surfing, fishing, kayaking, and canoeing are all available in Ocean City. Vacation home buyers in this market should keep one thing in mind: water. While Ocean City has a diverse inventory of vacation homes, being near the ocean or the bay is key in driving bookings. Can’t swing it? A pool or boardwalk access will help increase your stays.
Explore Ocean City oceanfront vacation rentals and learn about buying a vacation home in Ocean City.
Market size |
3,805 |
Median annual gross rental income |
$30,769 |
Median home price |
$285,900 |
Cap rate |
5.4% |
While each vacation rental market has a distinct personality, Key West might have one of the most memorable. The area’s architecture and laid-back feel bring travelers back to a simpler time. This tropical paradise, known for breathtaking sunsets and spectacular reefs, is also home to world-class kayaking and scuba diving. The vibrant nightlife and local fare also add to the draw of the area, and after-dinner walks on the beach are a must. The vacation home inventory in Key West is diverse but holds a steady cap rate at 5%. Whether you settle on an old Victorian, a conch house, or an upscale condo, Key West delivers on vacation rental revenue.
Explore Key West vacation rentals and learn about buying a vacation home in Key West.
Market size |
1,890 |
Median annual gross rental revenue |
$67,204 |
Median home price |
$817,000 |
Cap rate |
5.0% |
The Florida Keys are the perfect place to unwind, umbrella cocktail in hand. Sunny and spectacular, the Keys have a variety of things to offer. But, if you’re looking to invest in a vacation rental, look no further than Marathon. Located square in the middle of the island chain, you can find Marathon on the other end of the famous Seven Mile Bridge. There, travelers can indulge in every water sport imaginable—from paddleboarding and fishing to diving and snorkeling. Vacation rentals between Marathon and Long Key are plentiful, so if you’re looking to stand out and get the most on your vacation home investment, look for a pool, a deck, or a dock.
Explore Marathon and Long Key vacation rentals, and learn about buying a vacation home.
Market size |
889 |
Median annual gross rental revenue |
$57,918 |
Median home price |
$698,000 |
Cap rate |
4.9% |
Cocoa Beach hangs its (sun) hat on being one of the most affordable beach destinations in Florida. Located on the Space Coast and just an hour east of Orlando, Cocoa Beach lures travelers with unique activities and experiences. Into nature? Hop on a kayak or an airboat and get in touch with the area’s wildlife. History buff? Check out Kennedy Space Center, the U.S. Space Walk of Fame and Museum, and the Air Force Space and Missile Museum, which are all nestled in Cocoa Beach and ripe for exploring. With these activities and Disney World just an hour away, search for homes with multiple bedrooms and large spaces for families to relax after a day of exploring.
Explore Cocoa Beach vacation rentals and learn about buying a vacation home in Cocoa Beach.
Market size |
1,077 |
Median annual gross rental revenue |
$31,082 |
Median home price |
$339,000 |
Cap rate |
4.7% |
Our Best Places to Buy a Beach House report spans coast to coast, but no matter where you buy, keep these top tips in mind:
As the largest vacation rental manager in North America, Vacasa cares for more vacation homes than any other company. We host millions of guests per year—and we do it through the support of our local teams, all active community members in the vacation destinations where we operate.
For this guide, we combined local expertise with national performance data to provide you the best possible resource for buying a beach town vacation rental home that’s set up to generate optimal revenue. Click any links to get a local look at vacation rental real estate.
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*This document is for information and illustrative purposes only. It is not intended to provide “investment advice” or a “recommendation” regarding a course of action. The discussion is general in nature and has not taken into account your personal financial position or objectives. You should consult a licensed financial advisor or other professional to discuss your specific situation.
Estimated rental income figures and home sale prices are based on historical averages; for any specific property, the actual revenue, purchase price, and cap rate may differ materially from estimated amounts and depend on a wide range of factors outside Vacasa's knowledge or control, such as the property's condition, layout, and furnishings; expenses associated with the acquisition and ownership of the property (such as property taxes, utility fees, HOA fees, insurance fees, and mortgage-related expenses); rental calendar availability; existing and future regulations; current and future economic, social, and political trends and conditions; and weather and environmental factors. These estimates do not take into account the potential impact of state income taxes. Home costs last updated May 15, 2019.
Vacasa makes no representations or warranties, express or implied, about the accuracy of this document. Furthermore, Vacasa has no obligation to update, modify or amend this document or to otherwise notify users in the event that any opinion, assumption, forecast or estimate set forth herein changes or subsequently becomes inaccurate. Therefore, you should not place undue reliance on statements in this document.