The Best Beach Towns To Invest in a Vacation Rental, Based on Your Budget

For many people, the reasons for buying a second home on the coast are twofold: having a dreamy seaside escape, and just as importantly, generating extra cash flow. While you might be tempted to focus your real estate search on a favorite getaway destination, it's smart to take into consideration a home's average capitalization rate (or the annual return you can expect on your investment). Vacation rental manager Vacasa recently analyzed home sale prices, operating costs and average incomes of rental properties in high-density rental markets to create the ultimate guide for beach house hopefuls. If your destination is flexible, here are some of the top revenue-generating beach towns to buy in, based on your budget:

If you have $250k…head to Daytona Beach

More than just an affordable entry to Florida, Daytona Beach is a dream destination for all kinds of vacationers. Adrenaline lovers flock to the Daytona International Speedway for races, nature lovers explore local hiking, biking, and eco tours, and of course every visitor revels in 23 miles of shoreline and the fabulous restaurants and shops.  The median home price is $248k, and median annual gross rental revenue is $32k, giving Daytona Beach a capitalization rate of 6.5%.

If you want to stay under  $350k…head to Galveston, Texas
With winter temps that rarely dip below 60 degrees, Galveston is a year-round beach destination. Take your pick from kid-friendly spots with gentle waves, or quiet stretches perfect for birdwatching, or vibrant East Beach with its party atmosphere. Other reasons to love this Gulf Coast island: Moody Gardens, Schlitterbahn Waterpark, and the historic Pleasure Pier, where you can enjoy thrill rides right on the water. The median home price in Galveston is $341k, and median annual gross rental revenue is $44k, putting its capitalization rate at 6.4%.  

If you have $375k…head to Port St. Joe, Florida
This Forgotten Coast community is brimming with charm, seafood shacks, and plenty of natural beauty—the perfect place for both you and potential renters to enjoy kicked-back beach life. Enjoy a guided sunset horseback ride on a quiet beach, spend an afternoon shelling or kayaking, and take in panoramic Gulf views from atop nearby Cape San Blas Lighthouse. In Port St. Joe the median house price is $361k, and the median annual gross rental revenue is $40k with a capitalization rate of 6.1%.

If you have around $400k to spend…head to Gulf Shores, Alabama
What makes Gulf Shores the number-one destination on the Vacasa's Best Place to Buy a Beach House report? It must be the spectacular blend of a 32-mile white-sand coastline, plenty of family activities including amusement parks and golf courses,  and picturesque live oaks that give Alabama's southernmost community a magical feel. The capitalization rate here is a whooping 10.2%, and the median home price is $403k with the average annual gross revenue at $56k.

If you want to spend less than $500k…head to Hatteras Island, North Carolina
Residents of the seven villages that make up this Outer Banks community cherish the peace, simplicity, and sheer beauty of this area. Less known and built-up than the some other Outer Banks communities, Hatteras Island is known for its more wild and unspoiled charms. With a National Seashore, two iconic lighthouses, and prime fishing and recreation opportunities, you and your renters will love this magical island. The median home price is $482k, and the median annual gross rental income is $46k, giving Hatteras Island a capitalization rate of 6.4%.

If money doesn't matter…head to Corolla, North Carolina
On the other end of the Outer Banks, residents and visitors love the blend of Currituck Beach's wide open vistas and choice shopping and dining opportunities nearby. Fill your days with parasailing, golfing, or four-wheel drive tours, or take a relaxing stroll through the Outer Banks Center for Wildlife Education. There's no question the Outer Banks keeps growing in popularity, and couple that with a limited supply of rental properties, and you're guaranteed a great investment. Homes here go for a hefty median price of $609k, but you can expect to earn back an average income of $78k, giving it a capitalization rate of 9.5%.