7 Best Places to Invest in a Vacation Home in the U.S.

The U.S. real estate market continues to be an attractive destination for international investors, particularly Canadians, who accounted for the highest share of foreign home purchases in the U.S. over the past year. Foreign buyers purchased $53.3 billion worth of existing U.S. homes from April 2022 to March 2023, and $42 billion from April 2023 to March 2024. Although the overall volume of foreign transactions declined by 9.6% and 21.2% respectively in each period, the average and median purchase prices for international buyers hit record highs, driven by demand in top vacation destinations like Florida, California, and Texas.

International Interest in the U.S. Housing Market and Tourism

Despite economic headwinds and currency fluctuations making U.S. properties more expensive locally, many international investors continue to see value in the American real estate market due to the stable economic environment, strong rental yields, and opportunities for capital appreciation. International buyers primarily target states with strong tourism industries, such as Florida (23% of all foreign purchases), Texas (12%), and California (11%).

The U.S. tourism industry is also a significant driver of the vacation home market. In 2023, more than 50 million international visitors were recorded, fueling demand for short-term rental properties in high-traffic vacation spots. As tourism continues to recover post-pandemic, investors see vacation homes as a dual-purpose asset: a personal retreat and a source of passive income through platforms like Airbnb and VRBO.

How to Choose the Best Places to Invest in a Vacation Home in the U.S.

Selecting the right city for a vacation home investment involves evaluating key factors to ensure high returns and a valuable personal asset. As an international buyer, consider these crucial metrics:

1. High Rental Income Potential: Look for cities with strong rental demand and competitive nightly rates. Tools like AirDNA provide average rental incomes by area and property type. 2. Home Value Appreciation: Opt for regions with proven historical home value growth. Research future growth predictions using platforms like Zillow to ensure long-term returns. 3. Consistent Occupancy Rates: Choose areas with steady year-round demand. Use Mashvisor to compare occupancy rates during peak and off-peak seasons. 4. Tourism Growth and Market Demand: Focus on cities with thriving tourism markets. Check data from sources like the U.S. Travel Association for annual visitor statistics, especially for cities with popular events or attractions. 5. Favorable Short-Term Rental Regulations: Research local short-term rental rules. Cities like Orlando and Savannah have fewer restrictions, which can increase profitability. 6. Ease of Property Management: Look for cities with a strong network of property management companies to simplify remote management and guest communication. 7. Affordability and Financing: Evaluate your budget and financing options, especially in high-cost areas like Miami. Leverage tailored financing options, such as Milo’s mortgage solutions for international buyers, to ensure a smooth investment process.

By analyzing these factors, international investors can pinpoint the best U.S. cities for vacation home investments, ensuring solid returns and long-term appreciation.

Top 7 Places to Invest in a Vacation Home

Orlando, Florida

• Rental Income Potential: $3,000 - $4,500 per month for a 2-bedroom property.
• Home Value Appreciation: 6% year-over-year.
• Tourism Growth: Orlando is one of the most visited cities in the U.S., with 75 million visitors annually.
• Why Orlando?: High rental yields, stable demand due to major theme parks, and strong appreciation potential.

Myrtle Beach, South Carolina

• Rental Income Potential: $2,500 - $3,800 per month during peak season.
• Home Value Appreciation: 7% year-over-year.
• Tourism Growth: Attracts over 19 million visitors annually, known for its beaches and golf courses.
• Why Myrtle Beach?: High occupancy rates, relatively affordable prices, and strong rental demand.

Palm Springs, California

• Rental Income Potential: $4,000 - $6,000 per month.
• Home Value Appreciation: 8% year-over-year.
• Tourism Growth: Popular for its festivals like Coachella, attracting millions each year.
• Why Palm Springs?: High rental returns and strong appreciation due to steady tourism demand.

Scottsdale, Arizona

• Rental Income Potential: $3,500 - $5,000 per month.
• Home Value Appreciation: 9% year-over-year.
• Tourism Growth: Known for golf resorts and luxury spas, with 9 million visitors annually.
• Why Scottsdale?: Attractive appreciation potential and growing luxury vacation rental market.

Nashville, Tennessee

• Rental Income Potential: $3,000 - $4,500 per month.
• Home Value Appreciation: 10% year-over-year.
• Tourism Growth: Home to vibrant music scene and annual festivals, attracting 15 million visitors.
• Why Nashville?: Booming tourism and high occupancy rates for short-term rentals.

Savannah, Georgia

• Rental Income Potential: $2,800 - $4,200 per month.
• Home Value Appreciation: 5% year-over-year.
• Tourism Growth: Draws over 14 million visitors annually for its historical charm.
• Why Savannah?: Steady demand for historical vacation properties and affordable entry price.

Miami, Florida Rental Income Potential: $4,500 - $7,000 per month for a 2-bedroom condo. Home Value Appreciation: 12% year-over-year. Tourism Growth: Over 23 million visitors annually, making Miami a tourist hub. Why Miami?: High appreciation and demand for luxury vacation properties.

To summarize Investing in a vacation home in the U.S. is a viable option for international buyers looking to capitalize on growing tourism and high rental yields. As the non-hotel accommodation industry expands, demand for vacation properties is likely to remain strong. With tailored financing options like those offered by Milo, international investors can navigate the complexities of purchasing in the U.S. more easily, securing prime real estate in top tourist destinations. For more information on U.S. real estate market trends and international buyer activity, visit the National Association of Realtors’ International Transactions Report

The opinions expressed in the Blog are for general informational purposes only and are not intended to provide specific advice or recommendations for any individual or on any specific security or investment product.