Short-term vacation rentals remain a solid investment for many landlords and property managers, but the market has become saturated in some areas, and owners must contend with more statewide and municipal-level regulations. To give investors a head start, Property Reach has compiled a list of states where vacation rental returns are holding and where they’re falling apart.
States with Strong Vacation Rental Returns
Some states have laws that support short-term rentals, making them more attractive to investors. These states include Texas, Indiana, Arizona, and Tennessee, which all have statewide preemption laws that prevent municipalities from enacting strict restrictions or outright bans on short-term rentals.
For example, Texas has a strong job market, no state income tax, and many attractive metros for short-term rentals, including Port Arthur, Abilene, and Waco. Indiana’s affordability, lack of competition, and investor-friendly laws also make it an attractive option. Arizona’s predictable operating environment and long-standing short-term rental preemption law make it a good choice for landlords.
States with Challenging Vacation Rental Markets
Other states have implemented harsh restrictions on short-term rentals, making it difficult for investors to navigate the market. California, New York, Colorado, and Hawai’i are examples of states with challenging vacation rental markets. California’s municipalities have implemented especially harsh restrictions, while New York’s rules make it impossible for many property owners to list on Airbnb and Vrbo.
Colorado’s high demand for vacation rentals has led to many cities capping the number of short-term rentals, and more regulations may come to pass in the future. Hawai’i’s high property values and restrictions make it a notoriously difficult market for investors.
Investors must analyze data and consider factors such as statewide laws, available housing, and median home sales prices when searching for profitable properties. The right properties can yield strong returns, even in states with challenging markets.
Original reporting: KRDO (Colorado Springs metro) — read the source article.
