Association of Realtor and VACASA Top 10 Places to buy a vacation rental in 2023

[AJ Wong]

Recent list I'd thought I'd share from the National Association of Realtors by way of Vacasa. Their analysis showed beachside communities offered the highest ROI. There are a definitely a few locations I've considered and want more info on! North Carolina Coast anyone?

2023 TOP TEN STR LOCATIONS 

Here are the markets that topped Vacasa’s list of the best places to buy a vacation home in 2023:

1. Lake Anna, Va.
Cap rate: 10.32%
Average gross rental revenue: $64,121
Median sale price: $405,500

2. Okaloosa Island, Fla.
Cap rate: 9.08%
Average gross rental revenue: $53,832
Median sale price: $360,000

3. Sandbridge, Va.
Cap rate: 6.47%
Average gross rental revenue: $88,702
Median sale price: $928,900

4. Rehoboth Beach, Del.
Cap rate: 6.46%
Average gross rental revenue: $58,992
Median sale price: $618,000

5. Navarre, Fla.
Cap rate: 6.42%
Average gross rental revenue: $47,531
Median sale price: $420,000

6. Gulf Shores, Ala.
Cap rate: 6.09%
Average gross rental revenue: $48,169
Median sale price: $475,000

7. Palm Coast, Fla.
Cap rate: 5.69%
Average gross rental revenue: $38,212
Median sale price: $360,000

8. Corolla, N.C.
Cap rate: 5.47%
Average gross rental revenue: $80,423
Median sale price: $927,500

9. Nags Head, N.C.
Cap rate: 5.45%
Average gross rental revenue: $53,939
Median sale price: $615,500

10. Rockaway Beach, Ore.
Cap rate: 5.23%
Average gross rental revenue: $37,030
Median sale price: $340,000

These seem like low CAP rates, presumedly because the list maker is factoring their 25-35% management fee and who knows the average down payment or interest rate..

From Brookings Oregon to Rockaway Beach and beyond there are on market listings with stronger projected returns. 

Either way, clear trend towards recreation and water. Haven't found a list for luxury vacation rentals yet..

Do you own or invest in any of these areas? 

[Wyatt Wolff]

Can confirm, the Carolina Coast is amazing. One of the goals for the next few years 

[Candace Pfab]

This report was released last year, so it may be a bit outdated. Vacasa usually updates their list around March each year, so expecting the 2024 list soon. With that being said, we have been investing in the Gulf Shores area since 2009 and have helped many BP members invest in this area. Most of our buyers are more concerned with COC or cash flow vs Cap rate, but this doesn't look out of line for our market with professional management factored in. Vacasa typically charges 20% here, but more at least half of our buyers self manage.

[Bill B.]

This is basically a list of places not to invest right?

Forgetting that the data is old AND backward looking. It’s also where all the new investors with no idea of what to pay will go driving prices up beyond their value. At the same time increasing competition and lowering average rents. 

sure, it’s good for the people that bought there 2-3 years ago, not somgood for someone looking to buy today. 

[Carlos Ptriawan]

Quote from @AJ Wong:

Recent list I'd thought I'd share from the National Association of Realtors by way of Vacasa. Their analysis showed beachside communities offered the highest ROI. There are a definitely a few locations I've considered and want more info on! North Carolina Coast anyone?

2023 TOP TEN STR LOCATIONS 

Here are the markets that topped Vacasa’s list of the best places to buy a vacation home in 2023:

1. Lake Anna, Va.
Cap rate: 10.32%
Average gross rental revenue: $64,121
Median sale price: $405,500

2. Okaloosa Island, Fla.
Cap rate: 9.08%
Average gross rental revenue: $53,832
Median sale price: $360,000

3. Sandbridge, Va.
Cap rate: 6.47%
Average gross rental revenue: $88,702
Median sale price: $928,900

4. Rehoboth Beach, Del.
Cap rate: 6.46%
Average gross rental revenue: $58,992
Median sale price: $618,000

5. Navarre, Fla.
Cap rate: 6.42%
Average gross rental revenue: $47,531
Median sale price: $420,000

6. Gulf Shores, Ala.
Cap rate: 6.09%
Average gross rental revenue: $48,169
Median sale price: $475,000

7. Palm Coast, Fla.
Cap rate: 5.69%
Average gross rental revenue: $38,212
Median sale price: $360,000

8. Corolla, N.C.
Cap rate: 5.47%
Average gross rental revenue: $80,423
Median sale price: $927,500

9. Nags Head, N.C.
Cap rate: 5.45%
Average gross rental revenue: $53,939
Median sale price: $615,500

10. Rockaway Beach, Ore.
Cap rate: 5.23%
Average gross rental revenue: $37,030
Median sale price: $340,000

These seem like low CAP rates, presumedly because the list maker is factoring their 25-35% management fee and who knows the average down payment or interest rate..

From Brookings Oregon to Rockaway Beach and beyond there are on market listings with stronger projected returns. 

Either way, clear trend towards recreation and water. Haven't found a list for luxury vacation rentals yet..

Do you own or invest in any of these areas? 

Recently they published the same list over and over. However bear in mind that the projected cap rate is gross which doesn't include property tax and insurance. Currently what kills the motivation to purchase STR on the coast in the eastern side is insurance cost. When it's calculated properly I bet the actual cap rate is close to 3-4%. There's almost no such thing one could get cap rate 9% after all the cost LOL

[Bill B.]

@Carlos Ptriawan

Does it include Hoa fees which can be $0, $200, or $1,000/mo? Especially on beach front condos that they like to push. 

Reminds me of the math they use when they show “average flipper’s profits” by simply taking sold price minus purchase price. it appears they assume the flipper is a magician that borrows the purchase money for free, does no rehab, and then finds a realtor to sell it without any commission to a buyer willing to pay more, just because. 

[Carlos Ptriawan]

exactly, adding HOA+electricity+internet cost+property tax+insurance+flood+ flood insurance++VACASA PM FEE LOL

and plus 50% vacancy rate for Airbnb rn.

In hawaii vacasa doesn't have good reputation with their higher than normal PM fee. But they keep calling me to use them (our building is managed by vacasa).

[Jessica Parker]

I live and I'm also a realtor in Navarre, FL.  The short term market here is saturated and long term rentals are sitting on the market...there is just such a huge number of rentals on the market for what we are used to.  I have a short term rental just built last year.  We did pretty well for the season, but the winter months are very quiet with few bookings.  I don't know how the other short term rentals did..but I'm guessing probably similar. 

Currently there are 42 single family homes that are listed as rentals on the MLS here in Navarre. Nearly half of them have been sitting on the market for more than 60 days. 90% of them are priced from $1800-3,000 with just 3 priced higher than $2900/month. I'm not sure how old their figures are but these are all from today.

[Joseph Beilke]

Palm Coast FL here. Speaking to a few Investor in the STR market here. What they're seeing is a drop in repeat customers. The over all cost of just living has increase so much the past 2 to 3 years that people are taking less and less vacations. My wife and I are good for 4 to 6 weeks a year. 2023 we took 3 Weeks and in 2024 we only have a few long weekends planned. The exception is my week long boys trip to hunt for Bourbon in Kentucky.

What we tell our investor customers is, if you can make it work Longterm, you're pretty much good to good for short turn. That is exactly what we're seeing. STR switching to Longterm and now the area is saturated, and rents are coming down. I recently had to drop the price on some longterm rentals that a year ago, I would be fighting people off to get in these properties.

What I believe will happen by the summer vacation season is less STR to choose from because of how many switched to LTR and rates for the STR might jump up some. The investor will make the same or more with less time rented.

[Ricardo Hidalgo]

Quote from @AJ Wong:

Recent list I'd thought I'd share from the National Association of Realtors by way of Vacasa. Their analysis showed beachside communities offered the highest ROI. There are a definitely a few locations I've considered and want more info on! North Carolina Coast anyone?

2023 TOP TEN STR LOCATIONS 

Here are the markets that topped Vacasa’s list of the best places to buy a vacation home in 2023:

1. Lake Anna, Va.
Cap rate: 10.32%
Average gross rental revenue: $64,121
Median sale price: $405,500

2. Okaloosa Island, Fla.
Cap rate: 9.08%
Average gross rental revenue: $53,832
Median sale price: $360,000

3. Sandbridge, Va.
Cap rate: 6.47%
Average gross rental revenue: $88,702
Median sale price: $928,900

4. Rehoboth Beach, Del.
Cap rate: 6.46%
Average gross rental revenue: $58,992
Median sale price: $618,000

5. Navarre, Fla.
Cap rate: 6.42%
Average gross rental revenue: $47,531
Median sale price: $420,000

6. Gulf Shores, Ala.
Cap rate: 6.09%
Average gross rental revenue: $48,169
Median sale price: $475,000

7. Palm Coast, Fla.
Cap rate: 5.69%
Average gross rental revenue: $38,212
Median sale price: $360,000

8. Corolla, N.C.
Cap rate: 5.47%
Average gross rental revenue: $80,423
Median sale price: $927,500

9. Nags Head, N.C.
Cap rate: 5.45%
Average gross rental revenue: $53,939
Median sale price: $615,500

10. Rockaway Beach, Ore.
Cap rate: 5.23%
Average gross rental revenue: $37,030
Median sale price: $340,000

These seem like low CAP rates, presumedly because the list maker is factoring their 25-35% management fee and who knows the average down payment or interest rate..

From Brookings Oregon to Rockaway Beach and beyond there are on market listings with stronger projected returns. 

Either way, clear trend towards recreation and water. Haven't found a list for luxury vacation rentals yet..

Do you own or invest in any of these areas? 

 I think Panama City beach has a better cashflow potential and growth potential than Navarre. Navarre is developing but at a very slow rate... on the other hand, The St. Joe foundation is one of the biggest hedge funds and is pouring hundreds of millions into bay county with more developments, job opportunities and growth from the airport and infrastructure being put into place. Follow the money... it's giving us a 5x return on capital over the last 2 years!