Last updated on November 4th, 2022 at 09:33 pm
Searching for the best places to buy property for Airbnb Rental [2023], you have come to the right place. This article will provide you with two excellent profitable locations. Buying a second home and placing it on the Airbnb market can generate rental income when you are not there. These short-term rentals are managed by a property manager in your absence. The key is knowing the best places to buy property for Airbnb rental [2023].
Beach vacations are among the most popular destinations. Knowing the best cities where there is warm weather much of the year and the beach city you choose is a popular vacation destination. You must invest in a popular destination so that you can earn income during more than just the peak season. You want amenities near your property and the beach.
The best situations are in a small town with little traffic and few crowds. We know a good place to start, Gulfport, Mississippi, and Waveland, Mississippi on the Mississippi Gulf Coast. These two cities for a variety of reasons are among the best markets for rental homes. There are several Airbnb properties located in both cities. These are among the best beach towns in the country. With beautiful beaches consisting of white manicured sand.
Beaches are the best places to buy property for Airbnb rental [2023]
Small cities such as these earn repeat business because people can come and relax or engage in activities. It’s important if you intend to buy Airbnb investment properties that there is sufficient income to cover all costs including a mortgage. Many other beach communities on the West Coast and East coast have a short season where rentals are confined to the summer months.
Our selections of Gulfport and Waveland have longer seasons because of the weather and the proximity to activities such as 12 casinos.
Your Airbnb property is an ideal place for people who come to visit casinos to get away from gambling for a while during their stay. During much of the year along the Mississippi Gulf Coast vacation rental properties are in high demand. Most vacation homeowners may agree that their investment property is paying them satisfactory dividends year around.
We have listed the following reasons why both of these Cities are our choice for the best places to buy beach property for Airbnb rental [2023].
- Local regulations permit vacation rentals. Neither has onerous rules and both the community as a whole and elected officials recognize the tax revenue potential
- Housing prices. The cost of property within a short distance of the beach is reasonable by local standards and extremely reasonable by outside standards. Buying in the right price range can help ensure that your property will be a good investment. The median price for a home in Gulfport or Waveland is well below the national average for beach-close property.
- Average occupancy rates are good. Occupancy grows with experience. Starting, your Airbnb hosts will work hard to see that the rate grows with time.
- Best location. Both of these communities are located on the Gulf of Mexico with beautiful beaches. Waveland is a short distance from New Orleans a very close home base for a large pool of potential weekend getaway people. Gulfport is located in the center of the Mississippi Gulf Coast close to several casinos, aquariums, amusement, and restaurants.
- Property tax rates. For an ocean city, the rates are reasonable. Beach house investors will find that the property taxes are usually 1% of the market value or less.
- Water sports. The area in both cities is popular for jet skis, boating, kite surfing, and paddle boarding just to name a few. Visitors can take a boat trip to an island.
- Tourist attractions. In addition to the 12 casinos and a few that were mentioned, visitors can see alligators, drive golf carts to the beach, operate mini formula one cars, catch shrimp on a shrimp boat (Bubba Gump style), golf at one of the many courses and much more.
- Outdoor enthusiasts. Hunting just a short distance inland during the season. Catch an alligator. Shooting ranges are open to the public. Fishing both inshore on the rivers for freshwater fish and in the bay or out in the gulf for saltwater fish.
- State income tax. Residents pay one of the lowest tax rates in the nation. No state income tax for any retirement withdrawals after 59.5 years.
- Sales tax. The total sales tax charged to guests is 12%. That is reasonable compared to some areas where they charge multiple taxes that average more than 12%
- Utility cost. The cost of power and water is reasonable, far less than many other areas. This makes the net operating cost workable.
- Airbnb Income. This is one of the best points. The average rates per night and the average occupancy for a great property in Gulfport or Waveland can generate significant income.
- Property management. Excellent property management is available in the area so remote owners can be assured their properties will be well cared for. Management rates start at 10% of revenue.
- Gulfport and Waveland are the best places to buy property for Airbnb rental
The above are just a few points to help inform you what a great place the Mississippi Gulf Coast and in particular Gulfport and Waveland are to invest in. I mentioned the topic of the median home price.
How about an example?
I bought a three-bedroom, one-bathroom house two blocks from the beach in Gulfport for less than $120,000. This price included buying the property and completely furnishing it. It was put on Airbnb, VRBO, and the Christies Gulf Beach Rentals website (property manager) in late February 2021. By the end of the first year, the property grossed over $45,000. This is for 10.5 months of the first year. The net operating income was very substantial.
Another example is a house being offered at this writing by Logan-Anderson, Gulf Coastal Realtors for $229,000 about 1/2 mile from Waveland. This property was a vacation rental for years before the owners decided to sell. The property was grossing over $40,000 per year primarily from returning guests who lived in the New Orleans area. This house has a pool, a nice bonus.
One more example. A duplex unit within sight of the beach was converted from a long-term rental averaging an annual income of $10,500. This was profitable because the property with two rental units was purchased for $115,000 a couple of years ago.
Within the first four months of placing the property on Airbnb, VRBO, and Christies Gulf Beach Rentals, it is generating just under $2,000 per month in gross revenue. Remember that it was making money at $10,500 per year and now it’s bringing in about $18,000 per year (estimated in the first year).
Remote workers affecting Airbnb rentals
Several things are happening in the vacation rental world. Not the least of which is remote workers doing the beach house vacation rental thing while they are working. I have seen this occur last year. It is likely to occur in the future as well. A very good thing is that these remote workers were supplementing income and the basic flow of guests in Gulfport and Waveland keep coming.
Rental property can be acquired for use as a vacation rental in Gulfport for under $250,000 (as of this writing) and in Waveland for between $200,000 and $275,000. The easiest way to acquire the right property is to analyze the return on investment and the cash-on-cash return. If you pay cash you will, without doubt, make a profit. If you finance, you need to run the numbers to be sure you are not paying too much for the property and furnishings.
The key to profitable beach house rental is to buy low, decorate and furnish well then excellently manage the property. A good option for many people is to buy the property as their primary residence while living away for part of the year. Another option is to buy the property as your real vacation rental. You and your family use it when you can.
Your vacation rental may not cover all costs
As your vacation rental, you may not expect it to cover all costs but if it can cover some or most that would be a win-win.
You have lots of choices on venues for your vacation home investment. You can buy it on a river, in a forest, near a national park, etc. Part of your decision will be made based on your personal use of the property. If you are buying the property based upon where you want to be e.g. a beach, that is one thing. If you are buying it to make money, that may be something else together.
As a pure investment, you should want to go where you can make money. Forget selecting a destination because “everyone else goes there”. Select based upon the length of the season (rentable days), rates on and off-season, and your costs. As housing prices are continuing to increase, some areas are just too expensive to make an investment work.
Perhaps there was a time when you could go to X and buy an investment vacation home but now that time has passed. It’s probably best you start looking at small cities such as Waveland or Gulfport for some of the reasons listed above. The area is popular but nothing on the scale of a Florida Spring Break beach party. I think that this is good. If you buy a house in Gulfport or Waveland you are more likely to receive guests from the surrounding states with their families.
About the venue
Now for the venue. People spend more time vacationing in warmer climates than they do at ski resorts. Half of the country is in very cold weather during the winter while the other half is more moderate. The Mississippi Gulf Coast at 64 degrees in December with sunny skies is attractive to many. Did I mention the many, many people from Canada and the cold states who visit during winter? These cold-weather wanderers can have a great impact on your ability to earn income in the off-season.
If you are investigating which coastal city to invest in, consider Waveland or Gulfport. With the mortgage interest rate climbing for second homes and the prices of homes in many coastal markets, you will find that looking at Waveland and Gulfport may be your best move. How can you buy a home for $500,000 on the beach, finance it, and expect to earn a large profit? Few areas in the nation will generate the required average daily rate required to meet your mortgage obligation let alone expenses.
Just when you were ready to jump in and buy in Gulfport and/or Waveland, the supply of houses is low. True, it has been tight for some time. Not every home is suitable to be a vacation rental. My preference is for a 3 bedroom, 2 bathroom house within walking distance of the beach. These are hard to find in good condition. Opportunities come up to rehab a house you buy at lower than market prices.
Another great example of a property for Airbnb rental
A great example is a house that a client placed an offer on in Waveland. It was a perfect three-bedroom, two-bathroom house within walking distance of the beach. An inspection found a long list of fairly small fixes but it looked daunting to my clients who were not local. The price was $150,000. The cost to rehab and furnish it would be about $25-$30,000. At a finished all-in cost of about $180,000, it was a great deal.
Houses in that area should generate north of $40,000 gross income per year in the first one or two years. This leaves plenty of money for maintenance, management fees, and making the mortgage payment. As I mentioned above, it’s about the price you pay for the property and now it includes the somewhat higher interest rate. Try buying this house in California for less than one million dollars.
Please click here for 9 reasons to buy a vacation home. Listen to our podcast Maximize income from your vacation home rental now.
RESOURCES
Vacation investment experts, Logan-Anderson, Gulf Coastal Realtors can help you find the ideal cash flow property.
Considering investing in short-term vacation rentals? KEYLADDER’s Short-Term Rental Investment course will teach you everything you need to know about investing in this great business. Before you buy a property, learn about the entire business opportunity by taking this course.
Vacation rental management. The experts at Christies Gulf Beach Rentals can help you by answering questions about the vacation rental market in Gulfport and Waveland.
Listen to our podcasts and read more blog articles about vacation rentals and the Mississippi Gulf Coast here
Please leave comments. Thank you.