Is a Beach House a Good Investment for a Vacation Rental Business?

Picture the stunning views of the ocean lapping on your doorstep. Or drinking a warm cup of coffee on the balcony as you watch the sunset hovering over the water. And hearing the gentle crashing of the waves as you sleep. These are the unique perks of owning a house by the beach. But is a beach house a good investment? More so, is it worth investing in a beach house to earn revenue as a vacation rental property?

Let’s unpack what it takes to invest in a beach house vacation rental that successfully earns a steady rental income and how iGMS can help streamline that for you.

How Much Does a Beach House Cost?

The cost of a beach house investment property can vary drastically depending on the location, size, and amenities of the property.

On the more affordable coasts of the U.S., beach house investment properties could start at around $300,000, while more luxury beach houses may exceed $1 million. Therefore, it’s crucial to have a clear idea of your budget before you decide to start looking for your own beach house investment

How Much Rental Income Can I Earn With A Beach Vacation Rental?

Purchasing a beach rental is by no means a get-rich-quick investment. It takes time and money to run a successful vacation rental business. However, once you hit your stride, the investment can be highly lucrative.

Once again, the amount of rental income you can earn will depend on the beach house’s size, location, and amenities. Generally, though, successful beach house vacation rentals could typically earn anywhere from $30,000 up to $70,000 in yearly rental income, although some may earn less and others significantly more.

What To Know Before Buying Beach House Vacation Rental Properties: Pros and Cons Unpacked

If you’re trying to decide whether or not it’s the right time to be buying a beach house, the best thing to do would be to consider the pros and cons of the investment. Here are some pros and cons you should weigh up if you want to diversify your portfolio with a beach house.

Pros

1. Attract a Higher Rental Income

On average, beach houses attract a higher income than those in a less desirable vacation place. Naturally, the higher prices you are able to charge per night for your rental home, the more chance you have of turning a profit quickly — provided your expenses are kept under control.

The higher potential income is one of the main incentives to invest in a beach vacation home.

2. You Have a Second Holiday Home at the Beach

While the main purpose of a vacation rental investment is to rent your home out to guests, the beach house will still be your property to enjoy for personal use when you want a taste of waterfront living.

It will be even easier to book a beach vacation if you already own a holiday home at the beach which you can simply block out of your availability calendars and enjoy with friends and family instead.

3. It’s Easy To Market a Beach House

With the stunning ocean views and the built-in beach activities, like swimming or surfing, for guests to enjoy, beach houses are in high demand — especially during peak season in the summertime.

Having the luxury of adding “beach house” to your listing title and description and including enticing images of the sea in your listing will stand out among the competition and get travelers clicking on your listing.

4. Beach House Property Increases in Value Over Time

While all property increases in value over time, depending on where it is located, property value appreciation can be greater for a beach house.

This means that even if you decide to sell your property after a few years, you should still be able to get great resale value for it.

Cons

1. Rental Income Depends on Location and Season

When it comes to beach property, the potential earnings greatly depend on its location and the length of the high season. Simply buying a beach condo near any ocean does not necessarily guarantee you high profits. The location should be a popular beach town to really capitalize on peak season.

Similarly, while a beach property thrives in the summer months, if there’s not much else to do in the beach towns, your rental income will suffer during colder seasons when guests aren’t as interested in going to the beach. This reliance on seasonal demand can be a hinderance and you should consider strategies to mitigate that such as lower listing prices in the off season.

2. Higher Insurance Costs

Beach houses are more prone weather related risks and wear and tear. Because of this, homeowners insurance will be more costly and you will need to take out extra mandatory flood insurance to ensure your rental is covered. This could cost thousands of dollars depending on your property.

3. Higher Maintenance Costs

Along with the higher insurance, you’ll also have higher maintenance costs when you own property close to the ocean. The water and high winds will be harsh on your foundation, windows, roof, etc., and will mean that maintenance and repairs will have to be performed more regularly than the average property. These property maintenance costs could add up quickly.

4. Higher Taxes

The most popular beach towns usually come with high property taxes that will eat at your bottom line. You may also pay higher property taxes the closer you are to the ocean. You can expect these taxes to increase over time too.

Because these costs, along with your mortgage payments, need to be covered whether you earn enough income from your vacation property or not, you’ll need to have a solid business strategy in place to ensure your prices remain competitive and your occupancy rates are high.

It is also a smart idea to chat with a tax consultant to see if there are tax benefits you may qualify for when running your short-term rental business. Tax deductions exist where you’re able to write off business-related expenses. This could significantly reduce your tax burden.

What To Consider When Buying Beach Houses

If you’ve decided to join the thriving rental industry by buying a beach house, it is always best to arm yourself with enough information to make a sound beach home investment.

Choose the Right Location and Neighborhood

As mentioned previously, a popular beach town will attract higher bookings and generate more money than others. The best beach towns are even popular enough to keep demand high during all four seasons.

These beach towns are the ideal place to start investing in beach rentals because they will have a higher earning potential per property.

Consider the Actual Distance From the Sea

If you’re committing to the beach experience, your beach rentals can’t be too far from the actual beach. There’s nothing worse than promising your guests a beach vacation when your beach rental is a 30-minute drive from the sea.

Obviously, the ideal situation would be to have a beachfront property with the sea on your doorstep. However, these beach rentals are significantly pricier to buy and may not be financially feasible.

In this case, we recommend that your guests should either be able to see the ocean from the rental property, or it should at least be within walking distance of the beach.

Ensure Your Property and Location Offers More Than Just Sand and Sea

Yes, beach fun and activities are a big drawcard when it comes to short-term rentals, especially for young travelers and families. Though, sadly, the competition is tough, so your property and location need to offer more than just the ocean shores to ensure year-round bookings.

Highlight what the property already has, such as direct access to the sand, ocean-facing balconies, or safe swimming access in your waterfront getaway’s listing.

You can then look into upgrading the building to include more luxury elements such as hot tubs or private pools.

Try and tailor your listing to an ideal client. Are they looking for a more affordable family friendly vacation, luxury beach houses, or a simple tranquil lifestyle with waterfront views? Include thoughtful amenitiesto suit your target guest rather than spending a fortune trying to load your listing with everything under the sun.

When buying a beach house, pay close attention to what other amenities and activities are available in the area that potential guests would enjoy. Anything like a private pool at the house, a cinema or theatre, a shopping mall, or a hiking trail will ensure that your rental property is not only popular in a single season. 

Pay Careful Attention to How Well the House Is Built

Knowing that owning real estate by the sea can bring harsher weather conditions and risk of water damage, it’s best to ease the risk early on in the game by ensuring the properties you’re considering are well built with good quality materials.

When viewing potential properties, there are various aspects to pay close attention to, such as:

• How secure and well-built the roofing is 
• What floodproofing measures are in place
• How durable the windows are
• The sturdiness and strength of the foundation
• Any past damage to the property (the local realtor should disclose this).

Research Any Limiting Regulations in the Area

Local laws and regulations could hinder your property management and running your beach rental business. Some cities may ban vacation rentals or have very limiting zoning restrictions in place. 

Suppose you’re considering buying a beach house in any particular location. In that case, it’s best to do some extra research into the local laws and zoning regulations for vacation rentals before making a huge investment into vacation rental properties only to be caught up in government red tape.

Define and Stick to Your Budget

We’ve already touched on how wide the price range could be for buying a beach house. So, as part of a smart investment strategy, you need to have a clear idea of what your spending budget will be before you start house hunting, and stick to that budget as strictly as possible. 

Remember that there are other expenses besides the cost of the actual house that you will need to budget for. There are transfer and realtor fees, and you may have to pay for house inspections too. Not to mention, once you’ve bought the beach rental, you’ll need to spend money furnishing it. If you are going to rely on a property manager, you’ll also need to budget for property management fees. 

So, Is Buying a Beach House Really a Good Investment Strategy for a Vacation Rental Business?

In short, the answer is: it depends. To earn a good return on this kind of real estate investment, the conditions have to be just right. 

If you are willing to put in the work to research a profitable location and spend time finding a property with great earning potential — and you’re open to using tools like rental software to help boost your property management — it would be a smart investment to buy a beach house. 

However, if you’re banking on finding the cheapest properties that qualify as a beach house in order to cash in on the demand, you may find yourself stuck with a money drain in low seasons. 

So, the million-dollar question is: which areas are best for a vacation rental by the sea? Let’s take a closer look.

The Best Places To Buy a Beach Rental

The burning question on all your minds right now is probably “Where?”. Well, we have the answer to you, sort of. While this isn’t an exhaustive list by any means, our pick of the best beach spots for vacation rental property is a good place to start.

1. Pawleys Island, South Carolina

• Median Home Price: $497,237
• Potential Annual Revenue: $41,995

Pawleys Island is known for its laid-back charm and beautiful, quiet beaches. With its deep historical roots and only a handful of shops and restaurants, it’s the kind of place where you can truly unwind and escape the bustle of everyday life. 

If you’re searching for a beach retreat that’s all about peace and relaxation, this spot is ideal. Whether you’re lounging on the sand, exploring its historical landmarks, or simply enjoying the slower pace, Pawleys Island offers a perfect getaway for anyone looking to invest in a calm coastal haven.

2. Lake Anna, Virginia

• Median Home Price: $385,000
• Potential Annual Revenue: $69,723

Lake Anna, Virginia, offers 17 miles of sandy shoreline, making it a perfect destination for outdoor lovers. Beyond its natural beauty, it’s also drawing attention from real estate investors due to its high cap rates, promising solid returns. 

It’s an attractive spot for those who want to relax by the lake or capitalize on the growing demand for vacation rentals, offering great potential for both enjoyment and long-term investment gains.

3. East Coast, Michigan (Sunrise Coast)

• Median Home Price: $208,513
• Potential Annual Revenue: $20,265

If you’re planning to host a cozy lakeside cabin or manage a larger rental for families and groups, this part of Michigan provides the perfect mix of stunning nature and business potential. 

With Michigan’s rental market booming, the area offers a prime opportunity to attract guests seeking a peaceful escape. The tranquil views of Lake Huron, outdoor activities, and quiet atmosphere create an unforgettable experience for visitors, making it an ideal spot for your short-term rental investment.

4. Myrtle Beach, South Carolina

• Median Home Price: $299,900
• Potential Annual Revenue: $37,04

Myrtle Beach, South Carolina, is the ultimate vacation spot with its fun, energetic vibe and endless beachfront options to fit just about any budget. Whether you’re after a luxurious oceanfront condo or something more affordable, there’s something for everyone here. 

It’s super popular with families and groups because it’s the perfect mix of excitement and chill. You’ve got miles of sandy beaches, tons of entertainment like amusement parks, golf courses, and live shows, plus plenty of spots to just kick back and relax. Whether you’re into adventure or just want to soak up the sun, Myrtle Beach has it all.

5. San Diego, California

• Median Home Price: Approximately $1,200,000 (varies by neighborhood)
• Potential Annual Revenue: Around $60,000 to $80,000, depending on property specifics and location.

San Diego is the perfect blend of city life and laid-back beach vibes. It’s a booming spot where you can enjoy all the urban perks—great restaurants, shopping, nightlife—while still being super close to some of the most beautiful beaches on the West Coast. Whether you’re looking to relax by the ocean or dive into activities like surfing, hiking, or exploring the vibrant downtown, San Diego has something for everyone. 

The rental market here is hot, with plenty of options near the beach, making it a prime location for anyone wanting the best of both worlds—chill coastal living and tons of things to do. It’s the ideal place for those who want to enjoy the sun, sand, and a bustling city scene all in one.

Final Thoughts

There you have it. We hope we answered the question for you. Now, you should know what it takes to invest in a beach house vacation rental that successfully earns a steady rental income and where to find the right property for your business.

Opting for a beachside property will always seem like a good bet in terms of appeal to guests, but running it and maintaining it is where the real work comes in. That’s where iGMS comes in to help you manage your property and schedule all the necessary maintenance without so much as a second thought.