rented report · the worst places to buy a second home typically include multiple cities within...

The 150 Best Places to Buy a Vacation Rental Property in 2018

Rented Report

With the passage of the new federal tax law by Congress in December 2017 and multiple states debating changes to state tax laws, there are more questions than ever about buying, owning or keeping a vacation home.

These can be difficult questions to answer even in a more static economic environment. For those thinking about buying a home, those who own a home now, and those considering selling a vacation home, this report can provide some valuable answers.

Welcome to Rented.com’s Third Annual Short-Term Rental Income Report

Best Places to Buy in2018

The 2018 top five Best Places to Buy contained some surprises and include:

1. Panama City Beach, Florida2. Chicago, Illinois3. Napa, California4. Tulsa, Oklahoma5. Memphis, Tennessee

The inclusion of Chicago, Tulsa and Memphis continue the trend of more locations that are

not typically considered “vacation destinations” being represented, as noted in the 2017 report.

Chicago and Napa are somewhat surprising; given the generally high cost of home ownership

in these markets, which we suspect was outweighed by strong short-term rental potential.

For these two locations, demand and demand growth have outpaced supply and supply growth,

which pushes up occupancy and nightly rental rates. In turn, this increases ROI for both property

managers and homeowners. This is especially true for Napa, where the October fires diminished the rental supply significantly, while demand to visit

Napa decreased less.

Of the 25 Best Places to Buy list for 2018, 15 were located in the Southeastern U.S.

In the three reports issued to date, nearly three times as many Florida cities are included versus the next closest state, Tennessee with Texas following closely behind.

Best Places to Buyare Often in the South

Many of these locations have reasonable real estate prices but strong rental potential for several

reasons, such as attractiveness as a winter destination.

Also, states like Florida, for example, have embraced the short-term rental market at the state

level, and this reflects in our Best Places to Buy reports.

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.

Past Best Performing Locations (ROI/YR)

Rental conditions change from year to year, however, it is interesting to note that among the top 25 “Best Places to Buy,” eight cities were listed on both the 2017 and 2018 “Best Places” lists, and six were listed on all three annual market reports Rented.com has developed.

2016

2017

1. Panama City Beach, Florida2. Gatlinburg, Tennessee3. Galveston, Texas4. Palm Coast, Florida5. Savannah, Georgia

1. Nashville, Tennessee2. Destin, Florida3. Corpus Christi, Texas4. Denver, Colorado5. Clearwater Beach, Florida

Past Best PerformingLocations

In 2017, three of the top 25 Best Places cities was a major urban center. In this year’s study, seven urban centers made the top 25 list. Ranked by highest to lowest score, these included Chicago, Memphis, Nashville, Seattle, Atlanta, San Antonio and Savannah.

Business and Leisure Continueto Impact Destination Popularity

When comparing the 20 Worst Places to Buy a Vacation Rental Property for the past three years certain trends are seen year over year.

The worst places to buy a second home typically include multiple cities within states with housing shortages (California, Massachusetts, Utah, Colorado, and New York) and states with the highest costs of living (Utah, Delaware, Colorado, Massachusetts, New York, California, Hawaii and Virginia).

Trends to Note Within the Worst Places to Buy a Vacation Property

Five Colorado cities appear in the bottom 20 in 2018 and four states have appeared in the bottom 20 all three years: California,

New York, Massachusetts and Colorado. Differing combinations of factors are

typically responsible. In markets such as the Hamptons, New York and Nantucket,

Massachusetts, high asset prices along with tough rental regulations and generally high

property taxes drove down the ratings. In other locations, such as Oklahoma City

and Palo Alto, the abundance of attractive job opportunities depressed property

availability.

There are many reports available that outline top vacation rental and short-term rental markets based on attributes such as consumer demand and anticipated gross rental revenue. Our focus goes beyond these limited results and attempts to answer the ultimate ROI question, “When buying a rental property for investment purposes, what are the best markets?”

How We Developed the Report

The report focuses on150 U.S. markets and compares two figures, costs of home ownership and short-term rental potential. Costs of home ownership include a variety of factors such as purchase price, local property taxes, home insurance and maintenance. Short-term rental potential taps into multiple sources including actual Rented.com demand from management companies in these markets, as well as Everbooked and Airdna occupancy and rental rate projections, and the current legal situation in each market.

Several key points that appear to be indicative of the overall profitability of a short-term rental include:

• Real Estate Price • Local Vacation Rental Rates • Insurance, taxes and Maintenance Costs • Overall Popularity of the Tourist Destination

We also factor in short-term rental regulations and these can have a significant impact on a

vacation homeowner’s bottom line.

In addition, we create a weighted “Revenue” number and “All in Cost” number for each market,

and then index the ratio between markets on a scale of 0 to 100, with 100 being a perfect score.

Based on these factors, Rented.com gave out scores on a scale from 0 to 100, with the goal

of objectively providing potential vacation homeowners the information necessary to

select the best destination for their personal needs.

Alternative accommodations have gone mainstream and are here to stay as part of the sharing economy. It has rapidly expanded from visitors seeking low-cost accommodation to people eager for an experience more personal than a traditional hotel room.

Conclusions

That said, consumers considering a second home purchase to be used as a rental still must carefully do their homework. While no analysis will provide a surefire answer to whether a consumer will meet their ROI goals through renting their property, below are several guidelines to maximizing the probability of success:

• Purchase homes in lower cost markets to reduce income the home must generate to achieve financial goals • Have a clear understanding of necessary improvements, as well as maintenance, property tax, insurance, HOA and other costs • Seek out markets with a strong vacation and/or rental history • Learn about the prospective community’s regulations regarding rental properties

For an individual assessment of your short-term or vacation rental property, visit rented.com/calculatoror call us anytime at (844) 736-8334.

Enjoy,The Rented.com Team

The 150 Best Places To Buy A Vacation Rental Property In 2018As measured by ROI

MARKET

Panama City Beach

Chicago

Napa

Tulsa

Memphis

Nashville

Killington

Seattle

Navarre

Atlanta

STATE

Florida

Illinois

California

Oklahoma

Tennessee

Tennessee

Vermont

Washington

Florida

Georgia

SCORE/100

98.9

95.3

93.1

92.5

90.5

90.3

88.3

87.8

86.0

85.2

ESTIMATED RENTAL INCOME

$26,301

$26,301

$61,898

$26,350

$55,690

$30,620

$46,709

$90,766

$48,349

$34,502

POSITION/150

1

2

3

4

5

6

7

8

9

10

MARKET

Gatlinburg

San Antonio

Savannah

Destin

Biloxi

Pigeon Forge

Kissimmee

Corpus Christi

Cocoa Beach

Bryson City

Bangor

Brian Head

Galveston

Fresno

Albuquerque

STATE

Tennessee

Texas

Georgia

Florida

Mississippi

Tennessee

Florida

Texas

Florida

North Carolina

Maine

Utah

Texas

California

New Mexico

SCORE/100

82.9

82.3

82.0

79.0

75.8

73.6

73.1

73.0

71.3

70.6

69.5

69.2

68.8

66.4

65.0


POSITION/150

11

12

13

14

15

16

17

18

19

20

$47,224

$28,414

$61,933

$47,467

$28,768

$38,893

$24,125

$37,144

$37,045

$32,568

$24,979

$20,625

$34,322

$27,034

$29,030

21

22

23

24

25

MARKET

Detroit

Palm Coast

Baton Rouge

Kansas City

Little Rock

Palm Springs

Ellijay

Charleston

Minneapolis

Milwaukee

Fairbanks

Jacksonville

Lafayette

Blue Ridge

Myrtle Beach

STATE

Michigan

Florida

Louisiana

Missouri

Arkansas

California

Georgia

South Carolina

Minnesota

Wisconsin

Alaska

Florida

Louisiana

Georgia

South Carolina

SCORE/100

63.8

62.2

60.7

60.2

59.9

59.3

57.6

57.4

57.2

57.1

56.8

56.1

55.3

55.1

55.0


POSITION/150

26

27

28

29

30

31

32

33

34

35

36

37

38

39

40

$46,715

$28,123

$30,211

$35,555

$25,862

$62,048

$34,379

$40,351

$46,565

$40,266

$30,665

$29,701

$17,610

$37,206

$35,416

MARKET STATE SCORE/100


POSITION/150

41

42

43

44

45

46

47

48

49

50

51

52

53

54

55

Ocean City

Fort Myers

Daytona Beach

Orlando

Las Vegas

Columbus

Portland

Wilmington

Port Aransas

Santa Rosa Beach

Mesa

Bar Harbor

Burlington

Snowshoe

Virginia Beach

Maryland

Florida

Florida

Florida

Nevada

Ohio

Maine

North Carolina

Texas

Florida

Arizona

Maine

Vermont

West Virginia

Virginia

54.2

54.2

54.1

53.9

52.4

52.4

51.6

51.0

50.8

50.7

50.6

49.9

49.1

49.0

47.9

$39,747

$23,973

$35,937

$38,730

$45,094

$30,544

$45,524

$29,077

$62,094

$68,639

$22,159

$52,145

$47,778

$13,621

$50,724



POSITION/150

56

57

58

59

60

61

62

63

64

65

66

67

68

69

70

Miami Beach

Charlotte

Plymouth

Kennebunkport

Kaui

Los Angeles

Los Angeles

Reno

Carolina Beach

Raleigh

Long Beach

Sonoma

El Paso

Fayetteville

Santa Fe

Florida

North Carolina

Massachusetts

Maine

Hawaii

California

California

Nevada

North Carolina

North Carolina

California

California

Texas

Arkansas

New Mexico

47.5

47.1

46.2

46.1

45.9

45.7

45.7

45.0

44.9

44.5

43.8

43.6

43.6

43.1

43.0

$54,457

$34,852

$43,239

$48,145

$58,435

$33,495

$33,495

$33,339

$40,692

$33,666

$38,132

$70,893

$20,700

$50,132

$66,438



POSITION/150

71

72

73

74

75

76

77

78

79

80

81

82

83

84

85

Stratton

Keystone

Willamette Valley

Pensacola Beach

Key West

Indianapolis

Anchorage

Newport

South Lake Tahoe

Tucson

Kill Devil Hills

Austin

Salt Lake City

Arlington

Huntsville

Vermont

Colorado

Oregon

Florida

Florida

Indiana

Alaska

Rhode Island

California

Arizona

North Carolina

Texas

Utah

Virginia

Alabama

42.5

42.5

42.5

42.4

42.3

41.8

41.8

41.6

40.8

40.7

40.3

40.2

39.6

39.6

38.7

$27,718

$55,954

$27,016

$48,868

$74,491

$27,079

$31,739

$45,133

$44,009

$31,949

$29,884

$46,889

$32,275

$57,481

$24,867



POSITION/150

86

87

88

89

90

91

92

93

94

95

96

97

98

99

100

Fort Worth

San Diego

Taos

State College

Clearwater Beach

Eden

Wichita

San Jose

Mobile

Dallas

Big Bear Lake

Tampa

Denver

Sacramento

Portland

Texas

California

New Mexico

Pennsylvania

Florida

Utah

Kansas

California

Alabama

Texas

California

Florida

Colorado

California

Oregon

38.6

38.0

37.5

37.3

37.2

37.2

37.1

36.9

36.9

36.2

35.6

35.4

34.8

34.6

34.1

$33,035

$49,395

$34,875

$26,288

$55,472

$30,168

$25,135

$57,796

$25,474

$47,864

$33,782

$34,367

$33,952

$42,257

$46,217



POSITION/150

101

102

103

104

105

106

107

108

109

110

111

112

113

114

115

Houston

Coeur d'Alene

Slidell

Oakland

New Orleans

Rehoboth Beach

Maui

San Francisco

Pittsburgh

Provincetown

Siesta Key

Nashville

Bend

Boston

San Luis Obispo

Texas

Idaho

Louisiana

California

Louisiana

Delaware

Hawaii

California

Pennsylvania

Massachusetts

Florida

Tennessee

Oregon

Massachusetts

California

33.9

32.6

32.3

32.0

31.8

31.6

31.1

30.9

30.7

30.5

30.4

30.4

30.2

29.3

28.5

$31,300

$37,541

$14,852

$32,982

$32,526

$34,298

$49,546

$75,332

$36,687

$45,378

$55,763

$44,429

$31,957

$59,625

$47,317



POSITION/150

116

117

118

119

120

121

122

123

124

125

126

127

128

129

130

Truckee

Saint Simons Island

Philadelphia

Louisville

Washington

Isle of Palms

Gulf Shores

Steamboat Springs

Hilton Head

Alexandria

Silverthorne

Stowe

Breckenridge

Phoenix

Sun Valley

California

Georgia

Pennsylvania

Kentucky

District of Columbia

South Carolina

Alabama

Colorado

South Carolina

Virginia

Colorado

Vermont

Colorado

Arizona

Idaho

28.3

27.6

27.0

25.7

25.5

25.0

24.4

24.2

23.8

23.8

23.6

23.6

23.6

22.9

22.1

$45,884

$30,911

$42,099

$25,608

$43,255

$57,485

$22,842

$38,775

$27,741

$46,777

$33,199

$34,051

$47,956

$22,107

$43,738



POSITION/150

131

132

133

134

135

136

137

138

139

140

141

142

143

144

145

Omaha

Hawaii

Hamptons

Colorado Springs

Brooklyn

Honolulu

Nantucket

Crested Butte

Beaver Creek

Long Island

Oklahoma City

Ponte Vedra

New York

Baltimore

Telluride

Nebraska

Hawaii

New York

Colorado

New York

Hawaii

Massachusetts

Colorado

Colorado

New York

Oklahoma

Florida

New York

Maryland

Colorado

21.9

21.4

21.0

19.7

19.7

18.6

17.9

17.2

15.9

14.8

14.8

14.2

12.8

12.5

12.1

$18,775

$45,428

$79,322

$27,865

$44,525

$39,047

$111,691

$53,225

$95,016

$13,226

$22,693

$14,223

$68,505

$7,916

$75,464



POSITION/150

146

147

148

149

150

Park City

Naples

Martha's Vineyard

Palo Alto

Aspen

Utah

Florida

Massachusetts

California

Colorado

11.9

11.6

10.2

10.0

9.9

$28,909

$31,562

$34,175

$75,826

$93,122

For an individual assessment of your short-term or vacation rental property, visit rented.com/calculatoror call us anytime at (844) 736-8334.

rented report · the worst places to buy a second home typically include multiple cities within...

Documents