These Are the 15 Worst Places to Buy a Vacation Rental Home
However, buyer beware. Some of the hottest vacation spots actually provide the lowest returns. Researchers believe tough regulations, high prices, and killer property taxes may hamper a vacation homeowner’s ability to get a decent return on rental income.
Rented compared real estate price, local rental rates, insurance, taxes, maintenance costs, and overall destination popularity to assign an ROI score from 0 to 100 for each location. Which destinations performed the worst? You’ll be scratching your head about No. 1.
15. Honolulu, Hawaii
- ROI score: 18.6
The average short-term rental income on a home in Honolulu is about $39,047, according to Rented. The median home value in Honolulu is about $662,636, according to Zillow with home values rising 2.9% year over year.
14. Nantucket, Massachusetts
- ROI score: 17.9
Although the estimated short-term rental income is about $111,691, Zillow reports the median home value on the charming island is a staggering $1,520,692. Values have risen 5.6% since last year making this an expensive purchase.
Next: You might catch mega-producer James Cameron hanging out here.
13. Crested Butte, Colorado
- ROI score: 17.2
One reason gorgeous Crested Butte makes the list is because home values have skyrocketed by 27.6% since last year, according to Zillow. Median home value is about $682,578 and you can get an estimated average of $53,225 in short-term rental income.
12. Beaver Creek, Colorado
- ROI score: 15.9
The median home value in Beaver Creek is about $725,000, according to Berkshire Hathaway Home Services. Estimated short-term rental income is approximately $95,016, which makes owning a vacation rental home in this highly desirable ski destination pretty pricey.
11. Long Island, New York
- ROI score: 14.8
Long Island is a large span of land, which also includes the exclusive Hamptons area. Generally, median home values on Long Island are about $383,869, according to Zillow. And you can expect to see short-term rental income around $13,226.
But, go to the tip of the island and hit the Hamptons, Montauk area and you are looking at median home values up to $1,293,800.
10. Oklahoma City, Oklahoma
- ROI score: 14.8
Homes in Oklahoma City are relatively affordable as the median home value is $126,566, according to Zillow. Although values increased 4.2% since last year, values are still lower than the national average of $213,146. Short-term rental income is an estimated $22,693.
9. Ponte Vedra, Florida
- ROI score: 14.2
Located outside of Jacksonville, Zillow reports that the Ponte Vedra market is ice cold, making it a buyer’s market. Median home values are $498,659, up about 8% since last year. Now might be the time to house hunt as Zillow anticipates market values will rise another 4.3% within the next year. Estimated short-term rental income is about $14,223.
8. New York, New York
- ROI score: 12.8
Prices vary depending upon whether you are purchasing a vacation home in Manhattan, a nearby borough, or elsewhere in the state. General median home values in New York are $299,093 and prices rose 13.8% since last year, Zillow reports.
However, digging deeper, the median home value in the metro area, including the city is $431,570 with prices rising 10% since last year, according to Zillow. While the general New York market appears to be healthy, Zillow reports the metro area is cold, which could be a boon for buyers. Short-term rental income, specifically in the metro area is about $68,505.
7. Baltimore, Maryland
- ROI score: 12.5
This market is cold, according to Zillow with median home values at $108,844. Although values rose by 24.2% and are expected to rise again next year by 11.4%, it is going to be tough to generate decent short-term rental value. Rented estimates rental income to be about $7,916.
Next: Tom Cruise loves to relax here.
6. Telluride, Colorado
- ROI score: 12.1
Home values are pretty high in Telluride as the median home value is about $784,830 according to Zillow. Values rose 12.9% since last year and homeowners can possibly earn an estimated $75,464 in short-term rental income.
5. Park City, Utah
- ROI score: 11.9
Median home values actually declined slightly in Park City, although values stand at about $679,189, according to Zillow. Estimated short-term rental income is about $28,909.
4. Naples, Florida
- ROI score: 11.6
Homes are pretty pricey in the Naples vacation area, with Zillow reporting the median home value being $808,091. This value represents homes located in the typical vacation area, however the Naples market has a general median home value of $290,737. Estimated short-term rental income, most likely from the vacation home market is about $31,562.
3. Martha’s Vineyard, Massachusetts
- ROI score: 10.2
Median home values on Martha’s Vineyard can vary from $781,885 in the Vineyard Haven metro area to $871,701 in Edgartown. However, other areas on the island, like Chilmark, command an even higher median value of $1,575,603. On average, the estimated short-term rental income is about $34,175, however certain areas on the Vineyard may produce a higher rental return.
2. Palo Alto, California
- ROI score: 10
Median home value alone may scare most buyers from the market as Zillow estimates values to be $3,336,418. Values rose 18.6% from last year and are anticipated to increase 9.2% next year. Although short-term rental income is estimated to be about $75,826, it may not be enough if you are paying $3 million for your crib.
Next: Who’s who of stars converge here every winter.
1. Aspen, Colorado
- ROI score: 9.9
The very worst place for a vacation return on investment is Aspen. While you can get top short-term rental dollar at $93,122, Zillow’s median home value in this area is $1,359,558.
Source: cheatsheet.com
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