Top 10 Markets Investors Are Targeting for Beach Houses

Waterfront vacation properties remain a hot commodity. A new report calls out the locations that offer the brightest opportunities.
man using laptop while sitting on deck

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Demand for short-term rentals has surged since the start of the pandemic, and beachfront properties offer a special allure and can create a steady income stream for owners. Properties along the Atlantic Ocean and Gulf Coast may offer the best opportunities for investors this year, according to Vacasa, a vacation rental management platform.

The town of Lake Anna, Va.—which has a 17-mile stretch of water and sandy beaches—is the top place to buy a beach house, a new Vacasa study shows. The area boasts some of the highest cap rates and offers a median annual gross rental revenue of $69,723. The median home sale price in the area is $385,000.

In the last year, demand for vacation rentals hit an all-time high, and this year is expected to be strong for the sector as well, according to AirDNA’s 2023 U.S. Short-Term Rental Outlook Report. Though occupancies are dropping from recent peaks, they remain above pre-pandemic levels. Regardless, inflationary pressures are keeping revenue returns strong for owners, the report notes.

Homes along the beach remain an investment focal point. Fifty-two percent of buyers who are looking for a vacation home are targeting beach destinations, the Vacasa report notes. Still, like the national market, many locales are noticing a slight downward shift, posing an opportunity for some buyers. “Interest rates are higher, mortgage applications have slowed and, generally, the market has cooled,” says Daned Kirkham, senior director of real estate for Vacasa. “The bidding wars keeping some second-home buyers out of the market a year ago may be less of a headwind today, which can open up the right opportunity to purchase if buyers are comfortable with some level of increased costs to purchase.”

The following are Vacasa’s top picks for the markets offering the best beach vacation rental opportunities in 2023. The rankings are based on average cap rates or yearly rates of return on investment.