For many Americans, owning a vacation home is a dream that remains out of reach. While most people would love to have a beach cottage, ski chalet or even rural ranch, finding the space in your budget is just not feasible.
However, if you’re smart about where you buy, your vacation home can pay for itself — or even turn a profit.
A recent GOBankingRates study found which areas in each state offered the best chance at turning your vacation home into a valuable investment.
The study took into consideration the median home value in the area and the median rental income for a property there. Then, we determined which towns offered the best annual rental yield as a percentage of the initial purchase price as well as how many years before the rental income would pay for the cost of the home.
The results show that, while Americans appear to have a diverse range of interests in their leisure time, the area you’re considering to buy a vacation home can have a profound effect on your ability to find one that’s also a sound investment.
Here are the best cities to get a vacation home in every state (please note that West Virginia and Wyoming were not included because of insufficient data):
|State||Place||Years for rental income to payoff home||Rental Yield|
|Arizona||Lake Havasu City||14.97||6.68%|
|New York||Saratoga Springs||12.33||8.11%|
|North Carolina||Wrightsville Beach||17.12||5.84%|
|South Carolina||Hilton Head||13.35||7.49%|
|South Dakota||Rapid City||11.81||8.47%|
|Texas||South Padre Island||10.86||9.21%|
|Vermont||Town of Stowe||15.00||6.67%|
The study found that all 10 of the top 10 states for rental yield in the study featured median home values below $200,000, with the top city for rental return, Michigan City, Ind., at 13.97 percent also coming in as the lowest median home value on the list at $83,500.
Likewise, the 10 states that featured the lowest rental yields all had median home values in excess of $200,000 and featured six of the seven states with the highest median home prices.
Another interesting thing to note: If you want to pay off your property sooner rather than later, eschewing ocean-front property might be an important consideration. Of the 10 states that have the cities with the highest rental yields, most are landlocked. So, if you’re eager to secure your own slice of beachfront heaven while still setting yourself up to turn a profit, inland lakes might be the affordable alternative to smelling the sweet, salt air of the sea every morning.