Despite the steep rise in real estate prices in recent years, the demand for buying or renting vacation homes is still strong, especially for those looking for beachfront property. If you’re interested in finding a second home that will generate income while you’re away, a new report lists the most profitable waterfront locations for investment returns. Vacasa, a vacation rental management platform, has released the top ten beachfront destinations in the U.S. to purchase a vacation home in 2023, and the results may be unexpected.
Lake Anna in Virginia has been named the most profitable waterfront location to purchase a beach home, according to the report. The report found that Lake Anna offers a cap rate of 12.1%, the highest in the nation, and a median gross rental revenue of over $69,000. With median home sales of around $385,000, Lake Anna proves to be an attractive option for prospective buyers seeking to generate income while away from their second home.
Ranked number two in the list of the most profitable waterfront locations is Hatteras Island, North Carolina. This popular coastal destination draws in over 2.5 million visitors annually. The seven-village area has a median home sale price of $412,500, with a median annual gross rental revenue of over $58,000. The cap rate for Hatteras Island is 9.51%.
Navarre Beach, a charming seaside town located outside Pensacola, claimed the third spot on the list with an annual cap rate of slightly over 8%. Homes in this area have a median price of $370,000, while the median annual gross rental revenue is just over $50,000.
Palm Coast, Florida, a golfing community situated between St. Augustine and Daytona Beach, has secured the fourth position on the list with an average cap rate of 7.13%. The area attracts over a million visitors each year, and the median home price is around $345,000, with an annual gross rental revenue of more than $43,000.
Investing in a vacation home in Surf City, North Carolina’s Topsail Island may cost around $520,000, but it has the potential to generate around $50,000 in annual gross revenue and a cap rate of 5.8%.
Gulf Shores is a vacation hot spot, attracting over 8 million visitors annually due to its family-friendly activities and atmosphere, making it a desirable location for both vacationers and investors. Vacation homes in the Alabama beach town have a median price of $520,000, bringing in annual gross rental revenue of $49,000, and a cap rate of 5.5%.
Destin is a popular vacation spot located on Florida’s Emerald Coast, attracting 5 million visitors annually. Over 62% of visitors who stay overnight book vacation homes and condos, making it an attractive investment opportunity.
The median price of a vacation home in Destin is around $525,000, with an annual return of approximately $51,000 and a cap rate of 5.32%.
North Topsail Beach, North Carolina, ranked No. 8 on the list, is a quieter side of Topsail Island and is located close to Surf City. Although the home prices are slightly higher at $558,000, the area boasts a cap rate of 5.26%, which means investors can expect a gross rental revenue of $49,600 annually.
Although the Oregon coast may not be a sunny destination, travelers are still attracted to its beaches for its cooler climate.
Investors can expect annual revenue of approximately $39,000 at a 4.66% cap rate, and a median home price of $400,000 in Rockaway Beach.
Vacasa’s report ranks Highway 30A as the 10th most profitable waterfront location to purchase a beach home in the US. This 20-mile stretch of Florida beach towns between Destin and Panama City on the Emerald Coast is a popular destination, and a home in the area typically costs around $640,000. However, with a cap rate of 4.6%, buyers can expect to generate approximately $55,000 in annual revenue by renting out their property. Check out the 2022 Florida Gulf Coast market report.