For those looking to get into the world of vacation rentals, location is always key — do you go for something close and convenient or an up-and-coming city that’s poised to explode in value?
With both home values and rent prices rising to higher and higher heights, a number of eleven-sleepy cities are seeing an explosion of interest. Due to easy publicity from the popular names companies like Airbnb (ABNB) – Get Airbnb Inc. Report and VRBO are some of the most popular among people looking to rent out a vacation home — at one point, Airbnb made up more than 20% of the vacation rental industry in the US
According to AirDNA’s annual Best Places to Invest in Vacation Rentals report, finding out what requires looking at three separate factors: rental demand, revenue growth and the cost of buying a property relative to the income you can (or hope!) to bring in.
“Staying informed on trends as the travel industry begins to normalize will allow investors to make the right decisions and optimize their revenues, in 2022 and beyond,” AirDNA VP of Research Jamie Lane said in a statement sent to TheStreet.
Here are the top 10 cities that are likely to see skyrocketing rental income growth in 2022:
- Typical Home Value: $802K
While a somewhat obvious choice, the Hawaiian island of Maui has been seeing skyrocketing demand from both vacationers and newfound remote workers in search of island sun. The flip side, naturally, is that the market is pricing out all but the very wealthy — the median price for a single-family home rose from $980,000 in January 2021 to $1,157,500 in January 2022. With the island weather, energy and property upkeep costs can also add up fast.
Kenai Peninsula, Alaska
- Typical Home Value: $237K
Off the coast of southern Alaska, the Kenai Peninsula has long been known for its wildlife and natural wonders. During the pandemic, the remote factor became attractive and the area saw an influx of visitors.
“Prior to the pandemic, occupancies averaged just 60% during peak season while in 2021, they pushed well over 80% over the 2021 summer,” reads the AirDNA report.
- Typical Home Value: $258K
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You didn’t expect to see that there, did you? But dismiss Chattanooga at your peril as the Appalachian city has seen its rents grow by over 20% in the last year in large part due to the rise in domestic travel — the Tennessee River and the Lookout Mountain Incline Railway make it a popular vacation destination.
- Typical Home Value: $155K
Another under-the-radar destination, the neighboring cities of Gulfport and Biloxi are located along a stretch of sandy beach and have been seeing a steady stream in tourists looking not just for swimming but also its booming casino industry — the entry point to buy, meanwhile, remains quite affordable.
“While all areas within the Gulfport/Biloxi region score high in Investability, Long Beach and Ocean Springs are the two standouts within this market, offering the highest short-term rental occupancy over the past year at over 68%,” reads the report.
- Typical Home Value: $225K
If you’re not from the South, you probably haven’t heard of the New Orleans suburb of Slidell. The town is, however, attractive for a lot of the same reasons as Gulfport and Biloxi: it is located along the Mississippi Gulf Coast and will always be a popular tourist destination.
“In this position, Slidell should reap the benefits of increased regional travel demand, scoring 100 in both our Revenue Growth and Investability metrics,” reads the report.
Crystal River, Florida
- Typical Home Value: $249K
All of Florida has been seeing an explosion of people looking to both buy and rent — but while Miami prices may make investing seem out-of-reach, what is often called the Manatee Capital of the World (two hours from Orlando alongside the state’s western coast) could be a good way for someone interested in running an Airbnb in Florida to break into the market.
Joshua Tree, Calif.
- Typical Home Value: $342K
There may have been a slew of articles about how Joshua Tree is the place where remote workers are flocking but, at least so far, it remains relatively affordable — the city in the Mojave Desert still a typical home value of $342,000.
“In Joshua Tree, it pays to invest in a larger property, with larger homes more than tripling revenue potential, with a much lower impact on the acquisition cost of the home,” reads the report.
Charleston, South Carolina
- Typical Home Value: $504K
You’ve heard about how beautiful it is but did you know that Charleston homes are expected to rise by another 19% in 2022? A vacation rental here will almost surely never stay empty but, with an average home price of $504.00, it does require having some extra funds to purchase.
- Typical Home Value: $215K
Three hours from Chicago, Galena is much closer to Iowa than the midwestern metropolis — but its attractiveness lies precisely in the tranquil lifestyle that the lakeside city can offer.
“During the summer months, regional travelers vacation in cabins near Lake Galena or stay downtown in historic 19th-century buildings,” reads the report. “This opens up a profitable opportunity.”
Southwest Harbor, Maine
- Typical Home Value: $399K
The higher home prices will show you that Southwest Harbor is not as under-the-radar as some of the other entries on this list — the seaside cottages and proximity to Acadia National Park have for years made it a popular vacation destination.
“With a TTM occupancy of 76%, Southwest Harbor has benefited from an expansion of its peak season, with guests visiting earlier and staying later in the season than ever before,” reads the AirDNA report.