Considering your options for property investments? Well, hold off on making any purchases for the moment. You may be surprised to find that your money could be better spent elsewhere.
The Best US Cities For Vacation Rental Businesses
| Market | State | Score | Estimated Income | |
| 1 | Panama City Beach | Florida | 98.9 | $26,301 |
| 2 | Chicago | Illinois | 95.3 | $26,301 |
| 3 | Napa | California | 93.1 | $61,898 |
| 4 | Tulsa | Oklahoma | 92.5 | $26,350 |
| 5 | Memphis | Tennessee | 90.5 | $55,690 |
| 6 | Nashville | Tennessee | 90.3 | $30,620 |
| 7 | Killington | Vermont | 88.3 | $46,709 |
| 8 | Seattle | Washington | 87.8 | $90,766 |
| 9 | Navarre | Florida | 86.0 | $48,349 |
| 10 | Atlanta | Georgia | 85.2 | $34,502 |
| 11 | Gatlinburg | Tennessee | 82.9 | $47,224 |
| 12 | San Antonio | Texas | 82.3 | $28,414 |
| 13 | Savannah | Georgia | 82.0 | $61,933 |
| 14 | Destin | Florida | 79.0 | $47,467 |
| 15 | Biloxi | Mississippi | 75.8 | $28,768 |
| 16 | Pigeon Forge | Tennessee | 73.6 | $38,893 |
| 17 | Kissimmee | Florida | 73.1 | $24,125 |
| 18 | Corpus Christi | Texas | 73.0 | $37,144 |
| 19 | Cocoa Beach | Florida | 71.3 | $37,045 |
| 20 | Bryson City | North Carolina | 70.6 | $32,568 |
| 21 | Bangor | Maine | 69.5 | $24,979 |
| 22 | Brian Head | Utah | 69.2 | $20,625 |
| 23 | Galveston | Texas | 68.8 | $34,322 |
| 24 | Fresno | California | 66.4 | $27,034 |
| 25 | Albuquerque | New Mexico | 65.0 | $29,030 |
Feeling confused? Wondering where New York and Hawaii are? The bottom of the list at 143 and 132, respectively.
Let’s take a look at the methodology used in forming this list:
• Real Estate Price
• Local Vacation Rental Rates
• Insurance, taxes and Maintenance Costs
• Overall Popularity of the Tourist Destination
The final scores are essentially just the property’s ROI. Comprehensive studies like this allow us to make some clear conclusions about the vacation rental market:
High Tourism ≠ High Returns
For a lot of inexperienced vacation rental managers, a property’s value is tied to the amount of tourism in its location. That may be true regarding the real-estate appraisal value, but it’s certainly no indicator of your potential returns. In fact, if your business strategy involves purchasing a property for the purpose of vacation rentals, you’re better off avoiding typical tourist cities.
The Rented.com reports have repeatedly shown that real estate costs are an extremely limiting factor:
The worst places to buy a second home typically include multiple cities within states with housing shortages (California, Massachusetts, Utah, Colorado, and New York) and states with the highest costs of living (Utah, Delaware, Colorado, Massachusetts, New York, California, Hawaii and Virginia).
For rental managers looking to get started in these high tourism / high cost of living cities, your best strategy is likely a property lease.
