6 Best Cities to Own Vacation Rentals

With the vacation rental market expected to grow 6% annually from now until 2022, now is the perfect time to get into owning a vacation rental home. The U.S. currently leads the world in this type of investment, but not all destinations show the same potential for profitability. How can a discerning property owner know which cities to scout – and which to leave out?

Here are our picks for the best cities to consider investing in for your next vacation rental opportunity:


St. Petersburg, FL

This must-see pocket of the larger Tampa Bay market has incredible potential. The urban market is among the fastest-growing in the country, giving vacation rentals the prospect to double as extended stay accommodations for start-up leaders and investors in the dozens of Fortune 500 companies represented here. With increasing employment opportunities, home values that are climbing aggressively, and a strong demand for rentals, your vacation home has a good chance of staying occupied year-round.


Seattle, WA

This busy hub has become very popular among tech-savvy investors, craft brew connoisseurs, and anyone with wanderlust for the daring! A surging population means more people will need places to stay – even for the short-term. Take advantage of the hundreds of art, music, and culture festivals held here every year by investing in a property that provides a home away from home for the 20 million overnight visitors that flock to the city each year.


Nashville, TN

While it’s best known for an always-vibrant music scene, this business mecca is currently at the top of the list for offering real estate investors a fantastic return.  Nashville’s property values have experienced double-digit increases for two years in a row, and the modest cost of living – 4.5% less than the national average – has encouraged vacationers to give this city another look. The city has provided a significant amount of Tennessee’s tourism revenue, making up 31.5% of the entire state’s visitor spend in 2014. Over 13 million travelers have made Nashville a must-see destination annually, and the number is expected to continue to climb.  


Phoenix, AZ

A beautiful landscape and toasty climate keep travelers coming back to this location year after year. In fact, Phoenix has a remarkable rate of return visitors to its tourist spots, partly because most activities are open year-round. This city also happens to be the most populous state capital, so its potential to attract business and political events continues to grow. A well-managed vacation rental home can see bookings at full capacity if it becomes a best-loved locale for Phoenix regulars.


Cape Coral, FL

The Cape Coral, Naples, and Fort Meyers area of Florida has a combined total of almost 1.1 million people. What makes this so unique? In addition to having ideal temps and access to the most beautiful beach views, Cape Coral is a frequent vacation spot for baseball fans. Investing in a vacation home within 30 minutes of either JetBlue Park at Fenway South (Boston Red Sox training) or Hammond Stadium at the Century Link Sports Complex (Minnesota Twins training) is a home run for anyone hoping to capitalize on peak seasons in an already dreamy destination for tourists.  


Napa-Sonoma, CA

Once only thought of as a “couples retreat,” this perfect blend of culture and adventure is fast-becoming a top spot for singles, families, and pet-lovers, too! From touring majestic redwoods to having a girls-only spa day, there is so much more to this area than merely wine country. Investors looking to buy a home in this festival-laden cultural center will be pleased to know that recent wildfires haven’t slowed down the potential for tourism growth. In fact, this area has become notable for the sense of community it developed when business owners worked hard to get their doors open to the public. By purchasing a vacation rental home here, you are buying a little piece of one of the most beautiful and resilient communities in the U.S.


Remember, while the location is the number one factor in picking a vacation home, it’s important to understand how a home’s design and utilization of available layout can help boost profitability and lower those vacancy numbers. Prospective vacation rental home buyers should always consult with someone who knows the area very well and view current homes on the market to see how demand and pricing play out in real-time during different seasons of the year. While these half-dozen vacation spots aren’t the only places that will see growth over the next decade, their solid tourism records continue to keep them in at the top of the list for potential investors hoping turn vacationers into a steady source of income.

Learn more about purchasing a vacation rental here.

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