Owning an Airbnb in These Beach Towns Will Make You the Most Money
They might not be where you'd expect.
For some, owning a second home by the sea is one of those pie-in-the-sky aspirations, accessible perhaps only when you retire, pay off your credit cards, or (yup) win the lottery. But thanks to home-sharing sites like Airbnb, if you can swing the initial investment, owning a second home can also be a lucrative business decision—especially if you live in certain cities.
According to investment property exchange company IPX 1031, where you live (or buy a second home) can make a huge difference in the bang you’ll get for your buck through Airbnb. And if you’re thinking the obvious—that tourist magnets like New York City or San Francisco would top the list—you’d be wrong.
To compile the data, IPX 1031 looked at median home prices in cities with populations of 150,000 or more. They then compared that information with data found on AirDNA that looks at average nightly rates of rentals in each city plus the average occupancy rates of all rentals.
By those measurements, the overall best return on investment can be found in Moreno Valley, California, followed closely by Virginia Beach, Virginia. In the latter, Airbnb rentals go for an average nightly rate of $275 and are occupied on average 54 percent of the time, meaning a vacation property has the potential to pull in $32,208 annually.
In analyzing the top 10, it would appear that rental properties tend to have more of an ROI when they’re located not in, but nearby big cities, where real estate prices are much higher and Airbnb competition tends to be fiercer. Pasadena, Texas, located outside of Houston on the bay, took third place in the rankings, followed by Garden Grove, California (south of LA) and Fremont (a suburb in the San Francisco Bay Area).
If your heart’s set on being oceanside in California, though, you might want to take a look at the town of Oxnard. The city just south of Ventura averages a nightly rental rate of $404 while maintaining a median listing price of a reasonable (for California, anyway) $519,000. On the opposite coast in Florida, big tourism draws still rule, with Orlando ($22,020 average annual profit) and Miami ($17,940 average annual profit) rentals topping the Sunshine State’s list of smartest investment cities.
Need we say more to convince you that buying a beach home is a really good idea? If you’re thinking of renting, here are seven qualities that could make your home stand out over all the rest.