Where are the most profitable beach houses?

As much as we love booking a vacation home on the beach, paying exorbitant daily rates doesn’t bring joy. But if you’re lucky enough to own such a place, short-term rentals can generate handsome income.

in the most recent studyAirDNA, a company that analyzes Airbnb data, has found that the U.S. vacation rental market is likely to be where landlords make the most annual profits. The researchers separated the markets for chalets, city apartments and beach houses, then used one year of data from April 2022 to March 2023 to derive results based on occupancy rates and average daily room rates. Potential annual gross income is calculated by subtracting Airbnb fees from expected rent (though mortgage payments and other fees are not included in the calculation).

Urban rentals have the lowest income potential of the three housing types. The cabin shows more potential. Large beach houses come out on top. Admittedly, buying in expensive markets is expensive — such as in No. 1 Santa Barbara, California, where occupancy is 66 percent, average daily room rate is $1,224, and potential gross annual revenue is $261,115. Los Angeles and Miami follow with similar earning potential. In fact, 17 of the 20 highest-paying beach house short-term rental markets are located in California or Florida. To determine the profitability of a beach house, only coastal areas, which are typically larger markets, were considered.

Long Island, New York (considered a separate market in the research) ranked 20th for beach houses, no doubt helped by luxury rentals in the Hamptons and the rest of the East Side. Long Island’s occupancy rate rose from 43% in 2019 to 52% in 2020, and has hovered around that level since then. The average daily room rate will increase significantly, from $796 in 2019 to $1,447 in 2023.

Resorts on both coasts have seen demand rise this year, which is encouraging for those lucky enough to own a property. But new owners should be warned: The increased risk of severe weather and rising sea levels could cut into income before long.

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