Top 5 Best Places to Buy a Vacation Rental Property Compared

When it comes to making smart investments in the vacation rental market, real estate investors are always on the lookout for the best places to buy. Given the resurgence of the industry, identifying locations with high potential for profitability is crucial. Specifically, New York has emerged as a hot spot, offering diverse opportunities from the bustling city to the serene landscapes of upstate.

The key to succeeding in this arena involves a blend of strategic planning, understanding current real estate trends, and a deep dive into the dynamics of the vacation rental market. Whether you are a seasoned investor or new to the game, harnessing these insights can pave the way for substantial returns.

The vacation rental market’s revival, especially in locations like New York, accentuates the need for an informed investment strategy. With the right approach, investors can tap into high-demand areas, backing their decisions with solid market data and managed by experienced property management teams like Weekender Management. This blend of knowledge and expertise is what transforms a good investment into a great one.

Infographic: Top Vacation Rental Markets in New York - best places to buy a vacation rental property infographic pillar-3-steps

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Understanding Vacation Rental Investments

When diving into vacation rental investments, it’s like stepping into a new city. You need a map to navigate through. This map comes in the form of some key concepts: the 2% rule, the 50% rule, ROI, and cap rate. Let’s break these down in simple terms.

The 2% Rule

Imagine you’re buying a toy for $100, and you want to make sure it’s worth your pocket money. The 2% rule in real estate is somewhat similar. It suggests that the monthly rent from a property should be at least 2% of the purchase price. So, if you buy a vacation rental for $200,000, you’d want it to bring in $4,000 per month. This rule helps investors quickly assess if a property could be a good deal.

The 50% Rule

Now, let’s say you’ve started making money from your toy by showing it off to friends. But, you also have to spend money to keep it shiny and working. The 50% rule helps here. It says that about half of your rental income will go towards expenses—not including the mortgage. If your beautiful vacation rental makes $4,000 a month, expect to spend $2,000 on things like repairs, taxes, and management fees.

ROI (Return on Investment)

ROI is like checking how much candy you get back after trading some with your friends. If you spend $100 on a toy and it helps you make $10 in a year, your ROI is 10%. It measures how effectively your investment is paying off. For vacation rentals, a good ROI means your property is not just covering costs but also putting extra money in your pocket.

Cap Rate

Finally, there’s the cap rate. Think of it as a more detailed look at how much candy you’re getting for your trade. It compares the property’s net income (what you make after expenses) to its purchase price. So, if your vacation rental earns $20,000 a year after expenses and it cost you $200,000, your cap rate is 10%. A higher cap rate usually means a better investment, but it can also mean higher risk.

Why These Matter

Understanding these concepts is crucial. They’re your compass in the vast world of vacation rental investments. They help you spot the best places to buy a vacation rental property, ensuring you’re not walking into a bad deal. The goal is to find a property that not only brings joy to guests but also makes financial sense to you.

With these tools in hand, you’re better equipped to navigate through the exciting journey of vacation rental investments. Next, we’ll explore some of the best places to buy a vacation rental property, using our newfound knowledge to make informed decisions.


Navigating through the intricacies of vacation rental investments with these guidelines ensures that you’re not just buying a property; you’re making a calculated move towards financial growth. In the next section, we’ll dive into specific locations that offer promising opportunities for investors.

Best Places to Buy a Vacation Rental Property

When it comes to choosing the best places to buy a vacation rental property, several key factors play a crucial role. These include location, market data, property management availability, and guest demand. Let’s break these down to understand why each is vital and how they interconnect to influence your investment decision.

Location: The Heart of the Matter

The adage “location, location, location” holds especially true in the vacation rental market. A prime location not only ensures a steady flow of guests but also impacts the property’s appreciation over time. Ideal locations are typically near tourist attractions, beaches, mountains, or in urban centers with rich cultural experiences.

For instance, Skaneateles Lake, New York, is renowned for its pristine waters and high demand among tourists seeking waterfront properties. Similarly, the Mid-Hudson Valley attracts visitors with its historic mansions and vibrant food and wine scene, making it an enticing option for vacation rental investments.

Market Data: Making Informed Decisions

Understanding the local real estate market is crucial. This includes analyzing the median home price, average rental income, cap rate, and occupancy rates. Such data provides insights into the potential return on investment (ROI) and helps investors gauge the competitiveness of the market.

For example, the Hamptons in New York, known for its beaches and cultural events, often sees high-end transactions with significant investment returns. On the other hand, the Upper Hudson Valley appeals to those looking for a serene getaway near the Catskills and Berkshires, with rising sales indicating growing interest.

Property Management: Ensuring Smooth Operations

Having a reliable property management solution, like Weekender Management, can make a world of difference. Good property management ensures your vacation rental is well-maintained, marketed effectively, and provides guests with a seamless experience. This is particularly important in areas where you might not be locally present to oversee the operations.

Guest Demand: The Driving Force

The success of a vacation rental property hinges on consistent guest demand. Factors influencing demand include the area’s popularity as a tourist destination, the availability of attractions or events, and the seasonality of visits. Properties in locations that attract visitors year-round or have a longer tourist season tend to offer a higher and more stable ROI.

Thousand Islands, New York, for instance, appeals to outdoor enthusiasts and history buffs, ensuring a diverse guest base. Meanwhile, Montauk, located at the tip of the Hamptons, is a surfer’s paradise, drawing a steady influx of visitors looking for the perfect wave.

In conclusion, when searching for the best places to buy a vacation rental property, consider these interconnected factors. By doing so, investors can identify locations that not only promise a good return on investment but also match their personal and financial goals. The key is thorough research, understanding market trends, and considering the unique appeal of each location to guests.

In the next section, we’ll delve deeper into some of these promising locations, exploring what makes each a good investment opportunity.

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Skaneateles Lake, New York

When we talk about the best places to buy a vacation rental property, Skaneateles Lake in New York stands out for several compelling reasons. Let’s break down why this location might be the perfect spot for your next investment.

Cleanliness

First off, Skaneateles Lake is renowned for its pristine water quality. It’s considered one of the cleanest lakes in the United States. For vacationers, this means a top-tier experience in water activities without the worry of pollution. Cleanliness is a huge draw, especially in a post-Covid world where guests are more conscious about health and safety than ever before.

High Demand

The demand for vacation homes in Skaneateles Lake is sky-high. The area’s natural beauty, coupled with its laid-back vibe and stunning views, makes it a magnet for travelers seeking a peaceful getaway. Ellen O’Connor of Four Seasons Sotheby’s International Realty calls it the “jewel” of the Finger Lakes region. This high demand translates to potentially higher occupancy rates for your rental property.

Competitive Offers

However, with great demand comes great competition. Properties here are in such high demand that multiple offers are the norm. Buyers looking to secure a vacation home in Skaneateles Lake need to come prepared to make competitive offers. This might mean offering above the asking price or being ready to move quickly when a property hits the market.

Waterfront Properties

The allure of waterfront properties cannot be overstated. Skaneateles Lake is home to some of the most spectacular residences in the Finger Lakes region. Eight of the top 10 most expensive homes sold in the last 12 months were on Skaneateles Lake, with the highest sale reaching $13 million. If you manage to secure a waterfront property, you’re not just buying a vacation rental; you’re investing in a piece of paradise. These properties not only fetch a premium in rental income but also tend to appreciate in value over time.

Skaneateles Lake - best places to buy a vacation rental property

In conclusion, Skaneateles Lake offers a unique combination of cleanliness, high demand, competitive market conditions, and the undeniable appeal of waterfront living. For those considering an investment in the vacation rental market, this New York gem represents a prime opportunity. Just remember, success in this market requires a willingness to act swiftly and make strong offers to outcompete other buyers.

As we continue exploring other promising locations for vacation rental properties, keep in mind the importance of location, market dynamics, and property features in shaping your investment’s success.

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Mid-Hudson Valley, New York

The Mid-Hudson Valley in New York stands out as one of the best places to buy a vacation rental property for several compelling reasons. Let’s dive into what makes this area special.

Historic Mansions: The region is dotted with grand historic mansions, each telling a unique story of New York’s rich past. These estates not only attract history buffs but also offer a unique backdrop for vacationers looking for a touch of elegance and history during their stay.

Food and Wine Scene: The Mid-Hudson Valley is a paradise for foodies. With a vibrant farm-to-table movement and numerous wineries dotting the landscape, guests can indulge in some of the freshest and most exquisite culinary experiences. This aspect alone draws a steady stream of visitors year-round, eager to taste the local flavors.

Proximity to Manhattan: One of the Mid-Hudson Valley’s biggest draws is its close proximity to Manhattan. Less than a two-hour drive away, it offers a serene escape from the hustle and bustle of city life, making it an ideal weekend getaway for New Yorkers. This accessibility boosts the rental market, as it caters to city dwellers looking for quick retreats.

Scenic Landscapes: The area is renowned for its breathtaking scenic landscapes, including the majestic Hudson Highlands. The natural beauty of the region, with its rolling hills, lush valleys, and picturesque waterways, offers a tranquil setting for vacationers. Outdoor enthusiasts have plenty to explore, from hiking and biking trails to kayaking on the Hudson River.

Given these attributes, the Mid-Hudson Valley offers a unique combination of cultural richness, culinary excellence, easy access from major urban centers, and natural beauty. This mix not only appeals to a wide range of vacationers but also positions the area as a prime location for vacation rental investments.

The allure of historic mansions set against a backdrop of stunning landscapes, coupled with a thriving food and wine scene, makes properties here particularly attractive. Furthermore, the convenience for New Yorkers looking for a quick getaway adds to the demand, ensuring a steady stream of guests.

Remember that understanding the local market, the area’s appeal, and the potential for guest demand is crucial in making a successful vacation rental investment. The Mid-Hudson Valley, with its blend of history, cuisine, accessibility, and natural beauty, exemplifies the kind of location that can offer a strong return on investment while providing guests with unforgettable experiences.

Next, we’ll explore the unique appeal of other top destinations for vacation rental properties, highlighting the factors that make each location a worthwhile investment.

Thousand Islands, New York

Outdoor Activities: The Thousand Islands region is a playground for those who love the outdoors. Here, you can dive into world-class fishing, boating, and scuba diving adventures thanks to the area’s rich aquatic life and clear waters. Hiking and camping are also popular, with numerous trails and sites that offer breathtaking views and a direct connection to nature. This abundance of outdoor activities attracts a wide range of visitors, from adventure seekers to families looking for a memorable vacation.

Historical Heritage: Beyond its natural beauty, the Thousand Islands area is steeped in history. From Native American sites to Gilded Age mansions, the region offers a deep dive into the past. Castles and forts dot the landscape, each with its own story, providing a unique backdrop for visitors interested in exploring the cultural heritage of the area. This blend of natural and historical attractions makes the Thousand Islands a rich, educational experience for travelers of all ages.

Accessibility: One of the key advantages of the Thousand Islands as a vacation destination is its accessibility. Located between Canada and New York, it’s easily reachable by car, making it a convenient getaway for those in the Northeast and beyond. This ease of access increases the region’s appeal, drawing in visitors looking for both short weekend escapes and longer vacations.

Marina Shortages: However, the popularity of boating and fishing in the area has led to a notable challenge: marina shortages. As more people seek the tranquility and adventure offered by the Thousand Islands, the demand for dock space and boat inventory has outstripped supply. This situation underscores the area’s growing appeal but also highlights the need for potential investors to consider the logistics of property management and guest amenities.

The Thousand Islands region, with its rich blend of outdoor activities, historical heritage, ease of access, and current marina shortages, stands out as one of the best places to buy a vacation rental property. Investors can capitalize on the area’s year-round appeal, offering guests a unique blend of adventure, history, and natural beauty. However, understanding the local challenges, such as marina shortages, is crucial for maximizing your investment and ensuring guests have the best possible experience.

In the next section, we’ll delve into another prime location for vacation rental investments, examining the factors that contribute to its allure and potential challenges investors might face.

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The Hamptons, New York

The Hamptons, a string of seaside communities on Long Island’s East End, represent a pinnacle of vacation rental investment opportunities. This area is renowned for its beaches, cultural events, high-end real estate transactions, and Montauk’s surfing. Let’s break down why each of these factors makes The Hamptons one of the best places to buy a vacation rental property.

Beaches

The Hamptons are synonymous with pristine, white sandy beaches stretching as far as the eye can see. These beaches are not just a place for sunbathing and swimming; they’re a lifestyle. From Southampton to East Hampton, each beach has its own vibe, attracting a wide range of visitors. The allure of these beaches drives a constant demand for nearby vacation rentals, especially during the summer months.

Cultural Events

Beyond the sand and surf, The Hamptons are a cultural hub. With a calendar packed full of art fairs, music festivals, and wine tastings, there’s always something happening. These events not only enrich the local culture but also attract visitors from all over, many of whom prefer the comfort and privacy of a vacation rental over a hotel stay.

High-end Transactions

Real estate in The Hamptons is among the most coveted (and expensive) in the country. The average home price here soared to $2,803,562 in 2021, marking a 19.3% increase from 2020. This surge in demand and price underscores the area’s investment potential. Properties, if priced correctly, often sell quickly, indicating a robust and competitive market that can offer substantial returns to savvy investors.

Montauk’s Surfing

For those seeking a more laid-back vibe, Montauk offers world-class surfing and fishing, making it a haven for water sports enthusiasts. The diversity of properties here—from beach bungalows to modern waterfront homes—provides potential investors with a wide range of options. The unique appeal of Montauk, combined with its reputation as the East Coast’s premier surfing destination, ensures a steady stream of guests looking for that perfect wave.

In conclusion, The Hamptons offer a blend of luxury, culture, and natural beauty, making it an attractive option for those considering investing in a vacation rental property. The area’s high-end real estate transactions, combined with its cultural events and natural attractions, position it as a lucrative market for potential investors. However, the competitive nature of the market means that success requires careful planning, an understanding of guest demand, and effective property management.

In the next section, we’ll explore the Upper Hudson Valley, another New York gem that offers a distinct set of attractions and investment opportunities.

Upper Hudson Valley, New York

The Upper Hudson Valley, including areas like Ulster County in the Catskill Mountains, presents a unique blend of natural beauty, cultural richness, and growing market potential for vacation rental properties. Let’s dive into what makes this area a standout choice.

Catskills

The Catskills are a haven for outdoor enthusiasts. With its vast forests, mountain ranges, and rivers, it offers a plethora of activities year-round, from hiking and skiing to fishing and camping. This natural appeal translates to a high demand for vacation rentals, as visitors seek comfortable and scenic accommodations to complement their adventures.

Berkshires

Close by, the Berkshires in Massachusetts also attract visitors with their mix of cultural attractions and natural beauty. While not in New York, their proximity to the Upper Hudson Valley means that the area benefits from the overflow of tourists looking for a quieter, yet equally enriching, experience. This cross-pollination of tourists between the Catskills and Berkshires increases the potential guest pool for vacation rental owners.

Farm-to-Table

A significant draw to the Upper Hudson Valley is its vibrant farm-to-table scene. The area is dotted with small farms, artisanal food producers, and wineries, making it a foodie’s paradise. Vacation rental guests often seek out these authentic culinary experiences, which are not as readily available in urban environments. This growing trend not only supports local agriculture but also adds a unique selling point for vacation rentals in the area.

Rising Sales

Property sales in the Upper Hudson Valley have been on the rise, with both average and median sale prices increasing — $442,000 and $360,000, respectively, for 2022. This upward trend indicates a healthy and growing real estate market. However, it also means that prospective buyers should be prepared for a competitive market, with properties often selling for above asking price. This competition is a testament to the area’s desirability, both as a place to live and as a vacation destination.

For investors considering the best places to buy a vacation rental property, the Upper Hudson Valley offers a compelling mix of natural attractions, a strong farm-to-table movement, and a robust real estate market. While the initial investment may be higher due to rising property values, the area’s popularity among tourists and the potential for premium rental rates make it a lucrative opportunity. Just remember, success in this market requires an understanding of what draws visitors to the area — a love for the outdoors, an appreciation for local food and wine, and a desire for a peaceful retreat from the hustle and bustle of city life.

In the next section, we’ll move on to evaluating your investment, where we’ll discuss the importance of understanding local regulations, financing options, and other key factors that can impact the success of your vacation rental property.

Evaluating Your Investment

When diving into vacation rental properties, it’s crucial to keep your eyes wide open. This means understanding not just the potential profits, but also the regulations, financing options, and the tools available to help you make informed decisions. Let’s break these down into bite-sized pieces.

Local Regulations

First off, local regulations can be a game-changer. Different areas have different rules about short-term rentals. Some places welcome them with open arms, while others have strict limitations or even outright bans. For instance, New York state has some tough legislation around vacation home rentals, aimed at keeping housing available for residents rather than turning them into tourist accommodations. Before you commit to buying, make sure you can legally operate a vacation rental in your chosen location.

Financing Options

Next up, financing. Not everyone has a pile of cash ready to invest outright, and that’s okay. Mortgages can actually increase your return on investment if used wisely. For example, if you buy a property with a 6% cap rate but finance half of it at a 4% mortgage rate, your return on the invested cash can jump significantly. The key is to balance your borrowing in a way that maximizes your returns without over-leveraging yourself.

Now, let’s talk about Airbnb. The platform has made vacation rentals more accessible than ever, but it’s also brought legal scrutiny in some areas. As mentioned earlier, New York has seen a crackdown on Airbnb rentals, with many listings being illegal. This isn’t unique to New York; many cities around the world are implementing regulations that impact short-term rentals. Always check the legal landscape before listing your property on Airbnb or similar platforms.

Mashvisor

Finally, there’s Mashvisor. This tool is like a Swiss Army knife for vacation rental investors. It provides data on cap rates, cash on cash return, Airbnb monthly rental income, and more. By inputting your potential investment properties into Mashvisor, you can get a clear picture of their profitability. This can save you a ton of time and help you avoid investing in a dud.

In conclusion, investing in a vacation rental property isn’t just about finding a beautiful location; it’s about doing your homework. Understanding local regulations, exploring financing options, navigating Airbnb’s legal landscape, and using tools like Mashvisor are all critical steps in ensuring your investment pays off. Keep these factors in mind, and you’ll be well on your way to success in the vacation rental market.

Let’s address some frequently asked questions about vacation rental properties, including what constitutes a good ROI, whether you can really make money in this venture, and how to choose the best location for your property.

Frequently Asked Questions about Vacation Rental Properties

When diving into vacation rental properties, many investors have questions. Let’s break down some of the most common inquiries with straightforward answers.

What is a good ROI on a vacation rental property?

A good Return on Investment (ROI) for vacation rental properties typically starts at around 10%. However, aiming for an ROI above 15% is often considered more desirable in the industry. ROI can be influenced by several factors including the property’s location, size, and the amenities it offers. The key to achieving a strong ROI lies in balancing the income generated against the initial and ongoing investment costs.

Can you make money owning a vacation rental property?

Yes, you can make money owning a vacation rental property. The success of your investment largely depends on factors such as the property’s location, its appeal to potential guests, and how well it’s managed. Properties in high-demand tourist areas or near major attractions often see higher occupancy rates and can command higher rental prices. Effective marketing and top-notch guest experiences also play critical roles in maximizing income. However, it’s crucial to account for all expenses, including mortgage, maintenance, and management fees, to get a clear picture of your potential earnings.

What are the key factors in choosing a location for a vacation rental property?

Choosing the right location is paramount for the success of your vacation rental investment. Here are some key factors to consider:

  • Demand from Tourists or Business Travelers: Look for areas with a steady influx of visitors. This could be popular tourist destinations, cities with frequent business conferences, or locales near major attractions.

  • Local Regulations: Some areas have strict rules governing short-term rentals. Make sure you’re aware of any restrictions or permits required before investing.

  • Year-Round Appeal: Properties in locations with attractions that draw guests throughout the year can help ensure a consistent income.

  • Competition: Assess the existing vacation rental market in the area. Understanding what you’re up against can help you find ways to differentiate your property.

  • Economic Stability: Consider the overall economic health and growth potential of the region. A stable or growing economy can be a good indicator of a solid investment.

Investing in vacation rental properties can be a lucrative venture if done right. By understanding what constitutes a good ROI, recognizing the potential for profit, and carefully selecting your property’s location, you can increase your chances of success in the competitive vacation rental market. With the help of property management services like Weekender Management, you can further maximize your investment returns by ensuring your property is well-maintained and expertly marketed.


Conclusion

Investing in vacation rental properties is a journey filled with opportunities and challenges. The key to unlocking the investment potential of these properties lies in thorough market research and strategic planning. By understanding the nuances of the vacation rental market, including guest demand, seasonal trends, and local regulations, investors can make informed decisions that lead to profitable outcomes.

One of the most critical steps in this process is identifying the best places to buy a vacation rental property. This decision should be based on a combination of factors, including cap rates, average revenue, median home prices, and the unique characteristics of each location. As we’ve explored, areas like Skaneateles Lake, Mid-Hudson Valley, Thousand Islands, The Hamptons, and Upper Hudson Valley in New York offer diverse opportunities for investors, each with its own set of advantages.

However, navigating the complexities of the vacation rental market requires more than just knowledge; it requires expertise. This is where Weekender Management comes into play. Our comprehensive property management services are designed to take the hassle out of owning a vacation rental. From dynamic pricing strategies and marketing excellence to providing an exceptional guest experience and handling all aspects of property maintenance, we ensure that your investment not only meets but exceeds market expectations.

Investing in vacation rentals can be a rewarding venture, offering not only financial returns but also the joy of owning a property in a beloved destination. Yet, it’s the strategic approach to investment and management that truly unlocks the potential of your property. With Weekender Management, you gain a partner dedicated to maximizing your investment’s profitability and ensuring its success in the competitive vacation rental market.

Whether you’re new to vacation rental investments or looking to expand your portfolio, our team is here to guide you every step of the way. Let’s make your vacation rental property a standout success together.

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