Owning a vacation home can be ideal: Having your own place to stay in your favorite getaway location means never having to worry about finding a hotel or Airbnb. But most Americans have enough trouble handling the financial burden of a single home — adding a second one can often seem like a pipe dream.
However, if you’re willing to be a little flexible about where you buy a vacation home, it might be a lot more feasible than you thought. GOBankingRates found the best places to buy a vacation home for under $200,000. The roundup reveals that there are plenty of areas with options for cheap vacation homes — you can even expect to turn a profit renting them out. You might not have considered these places that are actually great options for owning investment property.
20. Fort Walton Beach, Florida
Median home value: $184,800
Median rent: $1,226
Annual gross profit from renting: $44,384
Located on the Gulf of Mexico in the Florida Panhandle, Fort Walton Beach could be just the place for you to take in the sea and the sun while also padding your income through your rental property. The nearly $45,000 a year you can make in rental profits is the highest in the study.
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19. Knoxville, Tennessee
Median home value: $167,300
Median rent: $1,139
Annual gross profit from renting: $25,959
Knoxville might not get the press of Memphis or Nashville, but it still offers a chance to own a second home at a very reasonable price. And you can expect to clear $25,000 a year or so on it if you’re ready to rent it out throughout the year.
18. Lexington, Kentucky
Median home value: $180,400
Median rent: $1,246
Annual gross profit from renting: $19,886
Lexington might be on the low end of its gross rental profits for this list, but if you’re a fan of horses and/or whiskey, this could be the place for you. Known as the “horse capital of the world,” it’s also right next door to Kentucky’s famous Bourbon County.
17. Jacksonville, Florida
Median home value: $172,300
Median rent: $1,221
Annual gross profit from renting: $24,093
Located on Florida’s Atlantic Coast, Jacksonville could be the ideal place for you to take in Florida’s natural beauty without having to pay sky-high prices. And, with projected rental income approaching $25,000, it could be a decent investment, too.
16. Myrtle Beach, South Carolina
Median home value: $147,400
Median rent: $1,107
Annual gross profit from renting: $27,116
Get this: You can enjoy the beach here even if you’re not named Myrtle. What’s more, you can also buy a vacation home here even if you’re not a tech billionaire. With a median home price under $150,000, you could hypothetically pay off the full purchase price with rental income in about five and a half years.
15. San Antonio
Median home value: $173,500
Median rent: $1,292
Annual gross profit from renting: $24,950
For people who have never been, San Antonio’s Riverwalk is a wonderful experience, full of shops, restaurants and places to explore. And owning a home there would give you plenty of opportunities to explore — in addition to nearly $25,000 a year in rental income.
Median home value: $158,400
Median rent: $1,200
Annual gross profit from renting: $29,443
Okay, so the phrase “vacation home in Detroit” might raise its share of eyebrows, but that might just be because people don’t realize what they’re missing: Features like the famous Diego Rivera mural at the Detroit Institute of Arts, the actual bus where Rosa Parks refused to move at the Henry Ford Museum, and the original Wright Brothers workshop where the first airplane was built at Greenfield Village, just to name a few. Access to all of that — plus close to $30,000 in potential rental income a year — could be yours if you take advantage of the city’s low housing prices to get a summer home.
13. Pensacola, Florida
Median home value: $140,200
Median rent: $1,079
Annual gross profit from renting: $38,227
Another coastal city in the Florida Panhandle, Pensacola offers up the chance to live near the water without having to pay the outrageous prices that usually accompany that desire. With a median price tag under $150,000 — not to mention the second-highest projected rental profit in this study at $38,227 — this could be one smart investment even if you never set foot in Florida.
Median home value: $149,500
Median rent: $1,144
Annual gross profit from renting: $22,842
The Steel City has a lot to offer, from the Roberto Clemente Museum to a fun art and theater scene. And with the median home price coming in under $150,000, it could be one place where you can get a taste of city life without paying the normally astronomical city housing prices.
11. Kansas City, Missouri
Median home value: $146,100
Median rent: $1,130
Annual gross profit from renting: $24,504
If you’re a fan of wide open spaces, there’s plenty to be had nearby to Kansas City. If not, consider buying here just for the city’s famous barbecue. Kansas City is another city where you can definitely find an affordable house that will still generate significant income through rentals, with the cost of the house paying for itself in about six years.
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10. Fort Worth, Texas
Median home value: $192,300
Median rent: $1,455
Annual gross profit from renting: $24,908
Buying a second home in Dallas is likely going to be costlier than would be “worth” it, but a vacation home in Fort Worth would mean relatively easy access by car to Dallas, Arlington and other major cities. Not only does that give you a lot of options for enjoying your vacation home, but there are a lot of different potential renters interested in the area for short-term rentals.
9. Buffalo, New York
Median home value: $157,700
Median rent: $1,244
Annual gross profit from renting: $15,268
Nestled between two Great Lakes and close to Niagara Falls, Buffalo has a lot more to offer than just chicken wings. That said, the chicken wings are supposed to be very, very good. But for you vegetarians who hate bodies of water, the quality of the “lettuce” alone might be enough to consider buying there, with a median home price just a little over $150,000.
8. St. Louis
Median home value: $118,800
Median rent: $978
Annual gross profit from renting: $19,189
St. Louis’ famed arch could be more than just the Gateway to the West. Based on the median home price under $120,000, it could also be functioning as the gateway to an affordable second home right in America’s heartland.
7. Memphis, Tennessee
Median home value: $138,800
Median rent: $1,134
Annual gross profit from renting: $24,190
Aside from New Orleans, there might be no single city more important to the history of American music than Memphis. Getting a vacation home there could mean being able to stroll down Beale Street or visiting the Stax Museum of American Soul — built on the same site as the legendary studio. And, oh yeah, there’s some place there called Graceland. And even if none of that sounds like fun, the median home price under $140,000 is probably going to be music to your ears.
6. Oklahoma City
Median home value: $128,500
Median rent: $1,072
Annual gross profit from renting: $20,323
Oklahoma City is one steeped in American history, offering visitors a chance to see working stockyards or the National Cowboy and Western Heritage Museum in addition to all of the culture and amenities of a modern city. What’s more, with a median home price just over $125,000, you can expect to pay for the house in rental income in a little over six years.
Median home value: $137,600
Median rent: $1,135
Annual gross profit from renting: $27,940
Indianapolis is known as America’s Crossroads, but its status as the hub of the Midwest hasn’t prevented it from offering a great value. With a median home price just over $135,000 and an estimated annual rental profit of over $25,000, you can expect to pass your break-even point on the investment just before the end of year five.
4. Daytona Beach, Florida
Median home value: $142,000
Median rent: $1,200
Annual gross profit from renting: $29,493
Although some people might have read this headline and immediately assumed it wouldn’t include a lot of locations in traditional vacation destinations, the four different Florida cities on this list — all on the coast — should indicate that warm spots on the water can still be affordable. Daytona Beach is one such location, with a projected annual profit on renting it out that’s close to $30,000.
3. Chattanooga, Tennessee
Median home value: $145,300
Median rent: $1,241
Annual gross profit from renting: $25,132
Chattanooga represents the fourth city in Tennessee, tying it with Florida for places with the most options for affordable vacation homes. With a median home price at just over $145,000 and projected rental profits of just over $25,000 a year, you could theoretically be into the black on the investment by the end of year six.
Median home value: $118,300
Median rent: $1,133
Annual gross profit from renting: $21,313
Located right on the crystal clear Lake Michigan, Milwaukee is a great place to experience Wisconsin’s culture. And speaking of cultures, the city has something of a reputation for its beer and cheese. All that while shelling out under $120,000 for a median-priced home — the lowest level of any city in this study.
1. Corpus Christi, Texas
Median home value: $148,500
Median rent: $1,364
Annual gross profit from Renting: $31,552
When you think surfing, the mind doesn’t necessarily go straight to Texas. But the residents of Corpus Christi can probably explain to you why you should reconsider as their little city on the Gulf Coast is well-known as a Southern surfing hub and beach town. And from a financial perspective, the relatively high rent and relatively low median home price land it in the top spot of this study. With projected rental profits over $30,000 a year, your beach getaway could pay for itself in under five years by taking advantage of people looking for vacation rentals.
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Methodology: GOBankingRates generated its list of vacation cities that were sourced from AirDNA’s 2018 vacation rental report; cities had to have an estimated gross profit from renting in the positive range to qualify. From there, GOBankingRates analyzed 30 cities that made this list in terms of median home value and median rent, sourced from Zillow’s November 2018 index. These two factors were scored and then combined for an overall score, and ranked the top 20 from this list, No. 1 being the best.
All information in this article is accurate at the time the study was conducted in February 2019.
About the Author
Joel Anderson is a business and finance writer with over a decade of experience writing about the wide world of finance. Based in Los Angeles, he specializes in writing about the financial markets, stocks, macroeconomic concepts and focuses on helping make complex financial concepts digestible for the retail investor.