Best Places to Buy a Beach House ~ Southern Vacation Rentals
If you’re thinking about buying a beach house, there has never been a better time to take the plunge. Some of the best places to buy a beach house are found right here on the Gulf Coast! According to BiggerPockets, these markets all have some of the best returns on investment (ROI) for short-term vacation rentals. Buying a second home to use as a vacation rental is a large investment, so it’s important to consider factors like cap rate, home cost, and median annual gross rental revenue.
In addition to some statistics on the best places to buy a beach house, we’ve also compiled a list of things to consider when buying a vacation rental. If you’re a current property owner looking to find the best vacation rental management company on the Gulf Coast, look no further than Southern! As part of our vacation rental management services, we’re happy to provide a free projection analysis for your property. Contact us today to find out more!
So, where should I buy my vacation rental?
BiggerPockets lists Panama City Beach and Santa Rosa Beach, Florida as well as Gulf Shores, Alabama some of the best places to buy a beach house. Both Panama City Beach and Santa Rosa Beach came in with a cap rate of 6.1%, with a median home cost of $419,900. Gulf Shores’s cap rate was listed at 5.8%, with a median home cost of $409,900. The cap rate is the ratio of a property’s net operating income over its cost. The cap rate can be determined by:
- Calculating gross rental income for each market
- Subtracting each market’s average operating cost
- Then dividing the figures by the cost of buying a vacation rental
Don’t forget, our Revenue Management team can help you determine the gross rental income for each market. By creating your personalized rental projection, we’re able to hone in on your property’s unique features to forecast maximum revenue.
What should I consider when buying a vacation rental?
The key things to take into consideration when buying a vacation rental are:
- Type of property
All of these components go hand in hand. Once you’ve determined that you’ll want to use your property for investment purposes, then you’ll need to decide on an area that reflects your personal preferences. If you’re a big beach lover, you’re probably looking for a property (or plot, if you intend to build a custom home) right on the beach. You may prefer to purchase a home that’s inland and closer to shopping, dining, and entertainment. For those Gulf-front rentals, look at amenities the home or complex has to offer, the price, and projected ROI. Buyers of inland homes should focus on proximity to the nearest beach access points as well as amenities, price, and ROI. If the beach is out of reach, it’s also a good idea to look for properties with pools, whether private or communal. Be sure to be realistic about your budget when purchasing a vacation rental as well, especially if the home requires significant upgrades and will be blocked off for several months.