Top 10 Best Cities in North America to Own a Vacation Property
Mid-Century Modern house in Palm Springs.
It’s a widely accepted fact that owning real estate is one of the best financial investments you can make. My husband and I own two homes in Sacramento - we live in our East Sacramento house and we rent out the other to tenants. Our next big venture will be to invest in a vacation home that will most likely be rented out the majority of the time.
The process of acquiring real estate requires a lot of research beforehand. But the type of research you’ll be looking into really depends on the end use of your property. In the next several paragraphs I will go into detail about all the important checklist items your vacation property must have in order to be successful.
Additionally, this blog post explores the top ten cities in North America that we have been looking into and I’ve reported my findings to help anyone make an informed decision about investing in their own vacation property. Whether you're getting a house for convenience, sentimental value, or investment, I've outlined why each city should be a contender in your house hunt.
Mid-Century Modern house in Palm Springs with bright yellow door.
Market Research Required for Buying a Vacation Home
How Much Tourism Comes to the Region
A vacation house is a great asset to have near a tourist attraction because there will always be a steady flow of travelers to provide a cash flow for the market. In addition you’ll find no shortage of potential guests willing and able to rent your home.
North America is a great region to invest in due to its beautiful destinations and rich resources. Since it’s surrounded by large oceans with long coastlines, stunning beaches and amazing islands - millions of tourists travel to a variety of attractions in this diverse continent.
School District Ratings May Be Less Crucial
One of the biggest reasons we purchased our second home in Sacramento was because we needed to get into a better school district for our kids. Finding a house with highly rated schools really reduced the numbers of houses on the market we could consider, and it also dramatically increased the price we would have to pay.
If you’re shopping for a home that you know will be strictly used for just vacation rentals, you don’t need to be as concerned with the school districts zoned with the house. Also, if you think this may be your retirement home someday, even less reason to pay a premium for a top school district. Of course, you definitely need to be in a safe and pleasant neighborhood where guests will be comfortable staying overnight.
Beachfront and Walkable Neighborhoods Are Best
When you’re looking at vacation properties, you want to consider how convenient the location of the house will be to visitors. If they can walk to beaches, restaurants, shopping and nearby attractions, this will save them money and time with dealing with car rentals and car sharing apps such as Uber of Lyft. This also means that you can charge premium rental rates for the perk of being located in a prime spot.
Make Sure Your Vacation Property Doesn’t Have any Renting Restrictions
Before you get too deep into the process of buying a property, make sure that there are no zoning or HOA restrictions associated with renting out your house or condo to vacationing guests. Also check the local city’s codes and ordinances regarding short term home rentals.
Sunshine and palm trees in Palm Springs.
Colorful blue lounging chairs in the backyard at a Palm Springs vacation house.
Best California Cities to Own a Vacation Rental Property
Being that we are California residents ourselves, our first cities to explore purchasing vacation rental property were within our own state. We quickly ruled out Sacramento because it’s not your typical vacation destination and there’s not enough demand for short-term home rentals. Read on to see our top cities in California to invest in a vacation home.
South Lake Tahoe
Having a property near a major tourist spot is one of the best strategies for investing in properties and Lake Tahoe is the backyard playground for many surrounding cities.
For instance, South Lake Tahoe lakeside vacation properties are great investments because Lake Tahoe is a major attraction for tourists hailing from both California and Nevada since the lake is situated in between these two states. Here in Sacramento and the San Francisco Bay Area, weekend warriors are often planning to road trip up to Tahoe to enjoy the beautiful natural landscapes and part take in outdoor activities.
Another feature that makes this location a hot spot for investors is the availability of the activities year-round. In the winter, it is the go-to spot for winter sports such as skiing and sledding, while in the summer it is a great spot for outdoor activities such as swimming, hiking, cycling, and various water activities.
Currently in the South Lake Tahoe cabin housing market, if you’re searching for a mountain cabin prices start at $500,000. For a lakeside property you can expect to pay at least $1,000,000.
Palm Springs vacation home with Mid-Century Modern interior design.
Palm Springs vacation home with Mid-Century Modern interior design.
Palm Springs, California
Palm Springs is located in Southern California's Coachella Valley and it’s a world-famous hot weather vacation destination. There’s a very specific style and vibe in Palm Springs known as the ultra chic Mid-Century Modern. This applies to the buildings architecture and interior design inside of the homes and hotels.
When looking for a vacation home rental in Palm Springs to purchase, keep in mind that guests are looking for newly renovated modern homes with backyard pools and patios for lounging. Bright pastel colors and whimsical motifs in your decor are highly encourage. Vacationers come to Palm Springs to escape into a fantasy land with plenty of sunshine and pool time.
The average cost of a house in Palm Springs, California in 2022 is about $720,000. The prices of houses in Palm Springs have been rising at a fast rate of 37% in one year. Big attractions that bring tourists to Palm Springs includes the music festival Coachella, Creator Conference Alt Summit and Modernism Week.
Our family vacation at an Oahu, Hawaii vacation house on the North Shore.
Our family vacation at an Oahu, Hawaii vacation house on the North Shore.
Big Bear Lake, California
Big Bear Lake is a forest city located in California and it is Southern California’s largest recreational lake. My husband’s best friend owns two cabin vacation rentals in Big Bear a he’s has great success with listing them on Airbnb.
During the winter season, it is one of the best places for winter sports and activities in California and the very first Winter X Games were conducted there in 1997. During other seasons, tourists can enjoy a variety of nature and recreation activities offered locally such as hiking, trekking, fishing and mountain biking.
In 2022, the median property price in Big Bear was listed at around $699,000 and the prices continue to rise as time progresses. Big Bear vacation properties will be expected to increase in value as time increases and this is a good investment for property investors, especially if they focus their services on tourists who enjoy winter sports and activities.
Our family vacation at an Oahu, Hawaii vacation house on the North Shore.
Our family vacation at an Oahu, Hawaii vacation house on the North Shore.
San Diego, California
Known as “America's finest city,” San Diego is the second-largest city in California and is known for its best climates and beautiful beaches. The city is also home to famous attractions such as San Diego Zoo, Balboa Park, San Diego Zoo, Safari Park, USS Midway Museum, SeaWorld San Diego (the first SeaWorld theme park), and LEGOLAND California.
In 2020, about 14.3 million visitors have gone to San Diego. This huge number of travelers going to the city is also why 1 out of 8 jobs in the city are accounted for under leisure and hospitality. The city’s tourism industry generates $848 million annually from transient occupancy, sales, and property taxes. This signifies the relevance and great income that is generated from the tourism activities in San Diego.
As of April 2022, the median price of home listings in San Diego is $900,000. San Diego vacation properties are increasing in value and demand, hence it is better to invest and purchase one as soon as possible.
My husband was born and raised in the San Diego area and I myself have lived there as well. Together we have spent a lot of time exploring the city of San Diego and surrounding areas. I can personally vouch that tourists truly love this Southern California destination. The best neighborhoods to search for a vacation house would be La Jolla, North Park, Little Italy, Hillcrest, Carlsbad, Mission Beach and Pacific Beach.
Our family vacation at an Oahu, Hawaii vacation house on the North Shore.
Our family vacation at an Oahu, Hawaii vacation house on the North Shore.
Los Angeles, California
Los Angeles needs no introduction as it is the second-largest city in the United States and it is best known as the home of the Hollywood film industry. With a rich collection of famous film industries and studios, beaches, and amusement parks, and paired with its Mediterranean climate. Los Angeles can be considered one of the hottest markets in rental properties.
Los Angeles is a very large and sprawled out area which incorporates many zip codes. The most desirable areas for tourists include beachfront areas such as Venice Beach and Santa Monica, Long Beach, Malibu, Manhattan Beach and Huntington Beach. Slightly more inland Los Angeles tourist destinations include West Hollywood, Beverly Hills, Pasadena, and the San Fernando Valley because of Universal Studios Hollywood.
Sitting at $800,000, the median property price in Los Angeles increased by 10.3% compared to the median prices last April 2021. While Anaheim is technically in Orange County and outside Los Angeles County lines, a home rental near Disneyland would be real-estate gold.
Our family vacation at an Oahu, Hawaii vacation house on the North Shore.
Our family vacation at an Oahu, Hawaii vacation house on the North Shore.
Best American Cities to Own a Vacation Rental Property
Looking beyond our state of California, the following US cities are also excellent contenders for owning a vacation home.
Austin, Texas
Austin is the state capital of Texas and it has a population of around 1,028,220 people. The city is a center of culture and economy and it boasts a huge number of entertainment districts, places to shop and dine, institutions of arts, and modern art museums for tourists to visit.
There are also several outdoor attractions such as parks and botanical gardens for nature-lovers to explore. With a rich culture of art and a good balance of urban and rural areas, the city is listed as one of the best places to live and start businesses.
Certain large-scale events and and businesses really increase the demand for vacation rentals in Austin. These include the SXSW South by Southwest Music Conference, Austin City Limits Music Festival and the very expansive Tesla plant.
The median property prices in Austin, Texas are determined to be $624,000. The rising prices are reported to be due to increasing housing demands so the market is experiencing an abundance of customers. For owners of Austin Texas vacation properties, this can be a good sign to start investing in a vacation rental property in the city to cater to visiting tourists.
Vacation houses in Venice Beach, Los Angeles.
Vacation houses in Venice Beach, Los Angeles.
Oahu, Hawaii
Growing up in California, many of us vacationed in Hawaii during summer breaks. My husband and I took our daughter when she was a baby to Oahu on a leisurely vacation. Hawaii is a very family-friendly travel destination because it's safe, has modern infrastructure and is still legally part of the United States so passports are not required.
Oahu is one of the larger islands of Hawaii and it is home to almost a million people. The island is nicknamed “The Gathering Place” due to its history of having a lot of residents and tourists, alike. The island boasts a number of beach resorts for swimmers and surfers and it also provides a place for nature hikers to visit with its beautiful mountain ranges, reaching an elevation of 4,026 feet.
Being one of the most populated islands in the state, Oahu Hawaii vacation properties are really good investments because of the inflow of tourists. The median prices of condominium and townhouse properties start at $485,000 and these types of properties are sought after by vacation management companies to turn them into their assets. Tourists will always look for condo types of housing because they are cheaper to rent than single-family homes.
The median price for a single-family home in Oahu is $1,050,000 making the mortgage higher than a condo. Which ultimately makes the vacation rental prices much higher for houses rather than condos.
Vacation houses in Los Angeles.
Vacation houses in Los Angeles.
Florida Keys
I've been to the Bahamas a couple times on vacation, but I still haven't made it to the Florida Keys yet. But looking at photos online of the crystal clear turquoise waters in the Florida Keys, owning a vacation property on one of those islands would be like having your own tropical paradise escape.
The Florida Keys is a chain of islands in Florida that forms the southernmost portion of the United States. Its total land area is about 137.3 square miles (or 356 square kilometers). Some of the most common and economically-developed keys in the island chain are Key West, Key Largo, Marathon, Islamorada, and Big Pine Key.
The area is known for its abundant variety of plants and marine life. Mangroves, seagrasses, coral reefs, and limestone grains are plenty in the area. The main tourist attractions and activities here are island tours, beach parties, scuba diving, water sports, snorkeling, boating, and fishing.
Florida Keys vacation properties range from hotels, guesthouses, condos, and resorts to parks and campgrounds. Having a vacation property at this end of the country would be great since these kinds of unique destinations are what tourists often seek. Hence, it would be good to buy a vacation rental property in the area. The median listing price of homes and properties in the Florida Keys is about $1,249,000.
Another good thing that could attract travelers is that Key West is also famous for being an LGBT community-friendly travel destination. Tourists, especially LGBT travelers, will feel safe and have a great time, hence reflecting an excellent service from the vacation properties in the area, thereby attracting more potential customers.
Venice Beach, Los Angeles.
Best North American International Cities to Own Vacation Property
Mexico City
My husband is Mexican-American and the majority of his family were born and raised in Mexico. My in-law family already owns several properties in Mexico so it wouldn't be too foreign of us to acquire a vacation property in the popular tourist destination Mexico City.
Mexico City is the capital of the country Mexico. It is also listed as the most populated city in all of North America. The city has a rich history dating back from the time of the Aztecs and the Spaniards. Today, the city is a center of the culture, art, music, media, cuisine, and economy in Mexico.
Many investors from foreign countries are also very interested in setting up properties in Mexico City. This allows the regional area to take in foreign investors to create more economic growth for the country. By law, foreigners, such as Americans, are allowed to purchase a property that is located either 50 km from the shorelines or 100 km from the border by setting a bank trust in Mexico, also known as a fideicomiso. In this system, the buyer, the seller, and the Mexican bank work together to create a deal between the buyer and seller. The fideicomiso usually costs around $1600 to be processed while a yearly fee of $600 will have to be paid by the buying party to maintain the deal.
Most of the foreign investors will be vying for a property in the restricted zones because these are the best vacation beach properties in Mexico. The restricted zones offer great locations along the shorelines and the country borders so investors can focus on properties that provide access to beach recreational activities. You can read about the loopholes allowing Americans to buy beachfront property here.
The median house prices in Mexico for the first quarter of 2021 remain stable and prices for different areas can vary. The average house in Mexico City is currently selling for about 2,900,000 pesos which converts to $145,000 dollars.
On vacation in Venice, Los Angelas walking down Abbot Kinney Boulevard.
On vacation in Venice, Los Angelas walking down Abbot Kinney Boulevard.
Montreal, Canada
As the second biggest city in Canada, Montreal is one the best places to invest in real estate. Apart from the creative control of making your home your own, owning a vacation property is also a good investment, especially in Canada as the property values are known to appreciate at a steady rate.
Owning properties -- be it a humble home in the suburbs or fancy units in Condos Aera -- is also worth your money not only due to low mortgage rates but also for the good location and the friendly neighbors. Currently, the average house price in Montreal is around $587,415 and the market is looking quite good for the investors. The housing market is currently in a low-supply, high-demand situation which can yield higher increases in prices and better profits for property investors
What makes Montreal an ideal location for property investors is that it always has a good inflow of tourists from both Canada and the United States. Being rooted in Quebec gives the city an ambiance similar to that of Paris as you walk along the streets of Old Montreal. On top of that, you will be amazed by the two large towers of Notre-Dame Basilica in the Old Port neighborhood. The city is also bustling with a mix of nature parks, museums, and oratories, which are also famous tourist spots.
The cycle of seasons between summer and winter also makes the city an ideal place to live for people who prefer both seasons. On top of that, a stunning look from the peak of Mount Royal is a must-have experience when visiting Montreal. In fact, the city was named after this triple-peaked hill that is situated right in the heart of the city.
Along with all of these great features and itineraries, property prices are lower in Montreal compared to Vancouver, Toronto, or even similar places in America like San Franciso. Considering the housing market value and the great destinations in the city, American investors are sure to take this opportunity of securing vacation properties in Montreal. Currently, there are no laws prohibiting foreigners, such as Americans, from purchasing properties in Montreal. Even non-resident citizens such as foreigners are allowed to purchase properties in Montreal but they must go through several processes.
When buying properties in Canada, foreigners are required to set up a Canadian bank account prior to buying the property. The buyer must personally set up their account in the Canadian bank which will handle the payments and the mortgages. The buyer must also be ready to present their letter of reference from their bank, a statement of income in Canadian or US dollars, and bank statements from the last three months. Once the documents are presented to the Canadian bank, the bank can coordinate with a realtor or a broker to negotiate the sale of the property between the buyer and the seller.
The famous Venice sign in Venice Beach, Los Angeles.
How to Rent Out Your Vacation Property
Selecting the Online Platform to List Your Vacation Rental
Owning a vacation home has become a significantly more accessible secondary income source for those who have a talent for uncovering real estate gems in popular cities. This is particularly true with the boom of vacation rental services like Airbnb. Not only do you get to enjoy a different city in your own home but also you get a good investment that you can pass down through generations.
Top Vacation Rental Sites for Home Owner Hosts Are:
Lakeside Austin vacation rental houses.
Lakeside Austin vacation rental houses.
Finding a Property Management Service for our Vacation Rental
Using a vacation rental management company can also help in managing the specifics and operations of having a vacation rental business. This is especially important if the home owner doesn’t live near the property and is unable to physically go on a regular basis to help with renters and check on the property.
In regards to assisting in the business side of for rental housing, property owners can hire a vacation rental management company to help with advertising and setting a price for the rental fees. This service will help property owners secure a steady stream of customers by attracting them with fair and affordable rental prices. In a market where the prices continuously rise, it is helpful to consult with a vacation management company on how to keep up with the rising prices and how to make your property stand out amongst all the competitors.
You can find a list of the top 50 vacation rental property management companies here.
Snow cabin vacation rentals in South Lake Tahoe.
Snow cabin vacation rentals in South Lake Tahoe.
Using a Cleaning Service for Your Vacation Rental
For vacation properties, it is important to remember that cleanliness is a huge factor that determines the satisfaction of the customers.
Some vacation rental management companies including a cleaning service with their bundle of services they provide for the homeowner. There are other companies and apps who only provide cleaning services and nothing else beyond that.
Adding this type of service can add to the capital costs for investors but it will surely pay off once the guests start giving great reviews regarding the cleanliness of the vacation property.
Deciding on whether to outsource property management and cleaning, as opposed to doing it yourself, really depends on the level of involvement you want to have in your business. If you want to keep all the profits to yourself without having to pay any third-party fees, then I suggest you roll up your sleeves and grab a mop!
Scripps Pier Beach in La Jolla, San Diego.
Scripps Pier Beach in La Jolla, San Diego.
