Rental Properties: The 5 Best Places to Invest in a Vacation Rental

If you’ve ever thought about diving into the world of real estate and investing in properties, it’s likely that you’ve heard of vacation rental properties. These are short-term rentals that tourists and travelers typically reserve through booking websites such as Vrbo or Airbnb.

Many people have invested in these types of properties and have become successful in doing so, even earning passive income in the process. So what makes a vacation rental property successful?

The owners of successful vacation rentals have a solid marketing plan, are aware of their rental guests’ demographics, and recognize their own value as a supplier in the tourist and travel sector. They have a high regard for the visitors who have chosen their home for a holiday, and they work hard to fulfill requests and ensure that their guests are satisfied.

If you ask any real estate professional what matters most in choosing a vacation rental property, though, they’ll tell you one word: location.

It’s widely known that, in real estate, location is the most important factor in choosing a property for any purpose. For vacation rentals specifically, you’ll want your chosen property to be located in or near a popular vacation spot.

Here we’ll explore the 5 best places to invest in a vacation rental.

#1: Branson, Missouri

Branson is a town located in southwest Missouri, near the Arkansas border. Even though it is small and many people have never heard of it, it still sees a substantial number of tourists throughout the year. Branson is most popular for its entertainment and its theaters, and although it’s not Las Vegas or Hollywood, it is nicknamed the Live Entertainment Capital of the World. It is located in the Ozark Mountains, so many nature lovers vacation here, too.

Missouri is also one of the least expensive states for real estate. The median listing price for vacation homes in Branson is about $180,000 — which is well below the national median price of a home in the U.S. (around $250,000). However, you can expect to earn only about $20,000 each year when renting out a vacation home here, which is significantly less than other places on this list.

#2: Bryson City, North Carolina

One type of place many people like to visit in the U.S., whether they’re international or domestic travelers, is a national park. In North Carolina there is Great Smoky Mountains National Park, and Bryson City is a gateway to the park. There are a ton of fun things to do here, such as white-water rafting and hiking or taking a train ride through the park. It is the most visited national park in the U.S., with more than three times as many visitors as Yellowstone National Park.

The median listing price for a vacation home in Bryson City is a little more than Branson, Missouri, at around $195,000 — still below the national median price. However, vacation rental owners can expect to make around $30,000 each year off their rental property.

#3: The Poconos, Pennsylvania

The Poconos are a mountain range located in northeast Pennsylvania. The area is another popular vacation destination for people all over the world due to the fact that it’s located not too far away from New York.

It’s a very popular recreation destination that offers fishing, hunting, skiing, snowboarding, and many other activities. From hiking to Bushkill Falls (dubbed “The Niagara of Pennsylvania”) to water sports to skiing, snowboarding and snow tubing, the Poconos provide a variety of year-round activities for families and outdoor enthusiasts. In addition, vacation rental villages like Tobyhanna, Pocono Lake and Albrightsville provide small-town charm.

Purchasing a vacation rental property in the Poconos will offer you one of the best returns. The median listing price for a lake house or other vacation rental is just under $200,000, but you can expect to generate somewhere around $40,000 each year from your rental property.

#4: McGaheysville, Virginia

Like Bryson City, McGaheysville is a small town that’s a gateway to a popular national park: Shenandoah National Park. Many consider this park a hidden gem because it doesn’t get the same amount of recognition as many other national parks. However, it is still a very popular destination in both the winter and the summer.

Vacation rental listings here have a median price of $265,000, but property owners can expect to make around $48,000 each year renting their property to guests. Even though the median home price is higher than the national median, you can expect to have many guests wanting to book lodging near the Appalachian Mountains, which are one of the best things about Virginia.

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#5: Sevierville, Tennessee

Once again, you can’t go wrong with investing in a vacation rental that’s located near a national park. Sevierville is another gateway town into the Great Smoky Mountains, which, as we mentioned earlier, is the most visited national park in the U.S. There’s also plenty to do in Sevierville, especially for those tourists who love to shop on their vacation.

If you can’t find the perfect home in Sevierville, you can easily broaden your search to include adjacent Gatlinburg and Pigeon Forge, which are also among the finest places to buy a vacation rental.

The median price of vacation homes in Sevierville is much higher than in Bryson City at almost $300,000. This may not seem like a good value at first, but you can expect to make around $50,000 in annual revenue from your rental.

If you decide that owning a vacation rental is right for you, there are plenty of lenders to help you finance the vacation rental of your choice.

Keep in mind that the annual income you can earn from your vacation rental property will vary depending on numerous factors. Two of those factors are how well you market your property and how good a landlord you are. External factors such as travel restrictions can also impact the amount of money you can make from your property.

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