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Fox Business
Fox Business
7 Apr 2023

Despite soaring real estate prices over the past few years, demand for both purchasing and renting vacation homes remains strong, especially among folks seeking a place on the beach.

For prospective buyers looking to find a second home that will put money in their pockets while they are away, a new report ranks the most profitable waterfront locations for making a return on your investment.

Vacation rental management platform Vacasa has released the top ten destinations to purchase a beach home in the U.S. in 2023, and some of the results may surprise you.

view of boat house on Lake Anna in Virginia

Boat house on Lake Anna in Virginia (iStock / iStock)

Taking the crown this year is Lake Anna, Virginia, the second-largest lake in the Old Dominion, spanning three counties. One side of the lake is public, offering waterfront dining, boat launches and marinas, while the other is private and prohibits commercial operations.

Vacasa found Lake Anna offers homeowners the highest annual cap rate, or annual rate of return on investment, than any other waterfront locale in the nation at 12.1%. 

Median home sales in the area are around $385,000, and median gross rental revenue comes in at over $69,000.

Hatteras Island

Hatteras Island, N.C., waterfront mansions and houses (Jeffrey Greenberg/Universal Images Group via Getty Images / Getty Images)

The No. 2 pick this year is Hatteras Island, North Carolina, a coastal destination that attracts upward of 2.5 million visitors each year.

The median home sale price in the seven-village area is $412,500, median annual gross rental revenue is more than $58,000 and the cap rate is 9.51%.

Beach resort Santa Rosa Sound, Florida

Beach resort on Santa Rosa Sound, Fla.  (Education Images/Universal Images Group via Getty Images / Getty Images)

This little beach town outside Pensacola rated No. 3 on the list with a cap rate of just over 8%.

Homes in Navarre Beach sell for a median price of $370,000, and annual gross revenue is just over $50,000.

Palm Coast

High angle view of a beach at Palm Coast, Fla. (iStock / iStock)

This golfing community between St. Augustine and Daytona Beach draws more than 1 million visitors annually, and vacation property owners average a cap rate of 7.13%.

Palm Coast homes sell for a median price of $345,000, and median annual gross rental revenue is above $43,000.

beach homes Surf City, North Carolina

Waterfront homes in Surf City (iStock / iStock)

A home in Surf City, North Carolina, on Topsail Island, will set vacation homebuyers back roughly $520,000. 

But annual gross revenue is expected to come in to the tune of $50,000 with a cap rate of 5.8%.

Gulf Shores

The beach community of Gulf Shores, Ala. (Carol M. Highsmith/Buyenlarge/Getty Images / Getty Images)

Gulf Shores' family-friendly atmosphere and activities draw more than 8 million visitors each year, making it attractive to vacationers and investors alike.

Vacation homes in the Alabama beach town cost a median of $520,000 and rake in annual gross rental revenue of $49,000 with a cap rate of 5.5%.

view of coastal Destin, Florida

Sunset in Destin, Fla. (iStock / iStock)

Destin is a top destination on Florida's Emerald Coast, drawing 5 million visitors every year, and over 62% of those who stay overnight book vacation homes and condos.

Picking up a place in Destin will cost around $525,000, but the return is roughly $51,000 annually at a cap rate of 5.32%.

North Topsail Beach

An aerial view from the side of condos near the ocean in North Topsail Beach (iStock / iStock)

No. 8 on the list, North Topsail Beach, North Carolina, is on the sleepier side of Topsail Island and just a short jaunt from No. 5 Surf City.

But with the peace and quiet comes a bit steeper home price at $558,000. Still, the area has a cap rate of 5.26%, so investors can expect gross rental revenue of $49,600 per year.

Nehalem Bay State Park

A backpacker carrying a red sun umbrella makes his way down to Rockaway Beach in Nehalem Bay State Park, Ore.  (iStock / iStock)

Vacasa notes that the Oregon coast may not be known as a sunny destination, but travelers looking for a cooler climate are still drawn to its beaches.

Rockaway Beach buyers will shell out around $400,000 for a home there and still enjoy roughly $39,000 in annual revenue at a 4.66% cap rate.

Santa Rosa Beach,

View from a vacation home in Santa Rosa Beach, Fla. (Vrbo / Fox News)

Highway 30A, a 20-mile stretch of Florida beach towns between Destin and Panama on the Emerald Coast made No. 10 on Vacasa's list.

A home along 30A costs about $640,000. With a cap rate of 4.6%, buyers can expect annual revenue of around $55,000 by renting it out.

FOX Business' Hayley Rieman contributed to this report.