After almost two years of being in a slump, the vacation rental industry is making a comeback, even in places like New York. If you’re a real estate investor and you’re looking for the best places for buying a vacation home in New York, you came to the right place. Below, we will talk about how to identify what it takes for an investment property to be profitable when listed on short-term rental platforms like Airbnb. We’ve also listed a few NY markets that could be profitable for real estate investors.
The Best Locations for Buying a Vacation Home in New York
Vacation rental properties like the ones listed on Airbnb, VRBO, or HomeAway provide tourists and travelers with very affordable accommodations as alternatives to the pricier hotels and resorts. Many cities and towns are experiencing different levels of tourism growth following the arrival of vacation rentals.
One of the states that see a huge number of tourists and visitors is New York. New York City remains one of the world’s most popular cities and tourist destinations. Upstate New York – which is pretty much everything north of NYC – offers year-round vacation properties. Tourists can enjoy the many lakes and mountains during summer, while ski lodges and luxury resorts make for great winter destinations.
For this reason, real estate investors set their eyes on the Empire State as one of the best locations for Airbnb properties.
An Overview of the New York Real Estate Market
The pandemic might have hit the New York real estate market hard, especially New York City, but real estate industry experts and insiders are optimistic about its future. The median sales price of a New York property sold in 2020 was $310,000. In 2021, local properties sold for a median price of $310,000, up 19.4% from the previous year.
According to the latest data from the New York State Association of Realtors (NYSAR), 44,071 homes were up for sale in December 2021. In the previous month, the number of homes listed was 30,654. The number of newly-listed properties decreased by 12.3% year over year from 2020’s 9,005 to 2021’s 7,896.
NYSAR also said that even with a slight increase in December 2021’s mortgage rate (3.10%) from November (3.07%), the rate on a 30-year fixed-rate mortgage remains at historically low levels. However, investors should also be aware that 2022 is poised to see incremental increases in mortgage rates throughout the year. As of January 21, 2022, the mortgage rate for a 30-year fixed-rate mortgage already went up to 3.59%.
In addition, prices for homes are expected to go up another 2.9%. Industry professionals from Realtor.com foresee that the NY market is likely to remain competitive. High buyer demand and low inventory continue to drive home prices up. The upward trend seen over the last year and a half is expected to continue in 2022. So, if you’re seriously considering buying a vacation home in New York, now might be a good time.
Defining the Best Places for Buying a Vacation Home in New York
Now, as far as vacation homes are concerned, New York state is one of the ideal places to start an Airbnb business. There are a number of excellent options within New York state to acquire rental properties. Let’s take a look at what makes a market ideal for the short term rental strategy.
How Do We Determine What Makes for a Good Vacation Home Market?
Any smart investor knows the value of performing due diligence before diving into something. It includes buying a vacation home in New York. One needs to do extensive research and gather as much information and data as possible to justify whether an investment is worth getting into or not.
Mashvisor is a website that specializes in helping real estate investors make the most informed and confident investment decisions. The site allows its subscribers to search for investment properties and analyze essential data using its investment property calculator. One of its features that short-term rental property investors find useful is the Mashvisor Airbnb calculator.
This specific tool lets investors find the best Airbnb markets, locate the right property that matches their needs, and computes its profitability.
The company believes that providing high-quality service to its subscribers means delivering the most accurate real estate market analysis using up-to-date data. Investors can see if a market is worth considering by the following criteria found on the website:
Cap Rates
Capitalization or cap rate is one of the most important real estate investing metrics used to determine how much income a certain property can generate. The cap rate formula is as follows:
Cap Rate = Net Operating Income (NOI) / Property’s Current Market Value
One of the downsides of using just a cap rate to compute profitability is that it does not consider the financing method. Not everyone has enough money to buy a property in cash. Regular folks who don’t have easy access to hundreds of thousands of dollars often go with other financing options to fund their investment.
On the other hand, a cap rate helps keep things simple by pointing out which locations have the best rental markets, especially if you’re buying a vacation home in New York.
Airbnb Cash on Cash Return
Cash on cash return is another metric investors use to determine if a property is worth investing in. The metric is computed by taking the property’s net operating income and dividing it by the total cash investment. The main difference between cash on cash return from a cap rate is that the former takes into account the method of financing to see how much positive cash flow an investment property can bring in a year.
And while the ideal number is still up for debate, most experts agree that a good cash on cash return is between 8% and 12%.
Airbnb Monthly Rental Income
Another factor used by investors to determine how profitable a property is the average Airbnb monthly rental income. Generally, rental comps are used to compare a prospective investment property to how other similar properties within the area are performing in the short-term rental market.
Airbnb Daily Rate
The average Airbnb daily rates in a market give investors and potential Airbnb hosts an idea of how much the nightly rates are for properties similar to theirs.
Airbnb Occupancy Rate
The Airbnb occupancy rate is simply the rate at which a property is booked over the number of days it is listed on Airbnb’s site. A market’s occupancy rate will depend on the Airbnb demand for that specific location. Most locations with high tourist traffic tend to see higher occupancy rates compared to cities and towns that don’t have much to offer visitors and guests.
To learn more about how Mashvisor can help you find profitable investment properties, schedule a demo.
Before buying a vacation home in New York, potential investors need to consider several real estate investing metrics from Mashvisor.
New York Airbnb Legal Concerns Investors Need to Be Aware of
One of the important things real estate investors need to know is that laws governing short-term rentals are different in each state. New York state is known for its tough legislation on vacation home rentals. The state’s crackdown on Airbnb rentals stems from the residents’ sentiments that housing should be for New Yorkers and hotels should be for tourists.
2021 saw New York City hotels losing over $4 billion in revenue and Airbnb bringing in a whopping $2.2 billion. And that’s just NYC. Although New York state Airbnb listings number in the tens of thousands, many of them are illegal.
Under the amended New York State Multiple Dwelling Law (MDL), Airbnb hosts are subject to certain provisions and limitations. One of the main things stated in it is that hosts and operators are not allowed to list unhosted properties on Airbnb and other similar platforms. Unhosted properties are those listed as vacation rentals that allow bookings of less than 30 days without any host on-site. They can only get their properties rented out for less than 30 days if they are living on-site for the entire duration of the renter’s stay.
Several other counties throughout the Empire State also impose different short-term rental laws. We recommend that investors get in touch with local NY real estate agents or real estate lawyers so they can be guided accordingly. Ignorance is never an excuse. Checking local laws is a key part of performing due diligence.
Ten Best Places for Buying a Vacation Home in New York
Given the different factors used to determine the profitability of an Airbnb income property, taking into consideration the different Airbnb laws and other legal concerns about short-term rentals in the state of New York, here are ten of the most ideal places for buying a vacation home in New York:
1. Saugerties, NY
- Median Property Price: $375,713
- Average Price per Square Foot: $230
- Number of Airbnb Listings: 217
- Airbnb Monthly Rental Income: $4,825
- Airbnb Cash on Cash Return: 7.82%
- Airbnb Daily Rate: $300
- Airbnb Occupancy Rate: 67%
- Days on Market: 196
- Walk Score: 80
The quaint and idyllic upstate NY town of Saugerties is a great place to visit, especially if you want to enjoy some downtime. It is just a couple of hours away from NYC and is recognized as one of the coolest places in the area.
2. Niagara Falls, NY
- Median Property Price: $168,906
- Average Price per Square Foot: $108
- Number of Airbnb Listings: 193
- Airbnb Monthly Rental Income: $2,344
- Airbnb Cash on Cash Return: 6.85%
- Airbnb Daily Rate: $150
- Airbnb Occupancy Rate: 60%
- Days on Market: 183
- Walk Score: 80
Other than the highly commercialized Niagara Falls State Park, the city is also home to several fun attractions that make tourists keep a-coming. We’re talking about excellent food, awesome entertainment, picturesque views, exciting water adventures, and many more.
3. Kingston, NY
- Median Property Price: $411,738
- Average Price per Square Foot: $242
- Number of Airbnb Listings: 178
- Airbnb Monthly Rental Income: $4,076
- Airbnb Cash on Cash Return: 5.59%
- Airbnb Daily Rate: $250
- Airbnb Occupancy Rate: 61%
- Days on Market: 93
- Walk Score: 76
Located just two hours north of Manhattan, Kingston is one of New York state’s top vacation destinations with its charming shops and deep historical roots.
4. Penn Yan, NY
- Median Property Price: $580,767
- Average Price per Square Foot: $341
- Number of Airbnb Listings: 115
- Airbnb Monthly Rental Income: $4,269
- Airbnb Cash on Cash Return: 5.47%
- Airbnb Daily Rate: $337
- Airbnb Occupancy Rate: 56%
- Days on Market: 56
- Walk Score: 77
Travelers and tourists who want to experience a unique adventure should go to Penn Yan. From eating custard made from duck eggs to drinking beer in an abandoned barn, the village offers a different experience for visitors, making it a great tourist destination for many.
5. Syracuse, NY
- Median Property Price: $197,855
- Average Price per Square Foot: $123
- Number of Airbnb Listings: 158
- Airbnb Monthly Rental Income: $2,070
- Airbnb Cash on Cash Return: 5.45%
- Airbnb Daily Rate: $127
- Airbnb Occupancy Rate: 60%
- Days on Market: 100
- Walk Score: 52
Not only is Syracuse a hub for arts, culture, and entertainment, it also hosts several events throughout all four seasons of the year. In addition, its low crime rate, affordability, and quality of life attract not just tourists but in-migrants, as well. Investors looking at buying a vacation home in New York will not regret investing in Syracuse.
6. Hudson, NY
- Median Property Price: $877,831
- Average Price per Square Foot: $409
- Number of Airbnb Listings: 197
- Airbnb Monthly Rental Income: $5,339
- Airbnb Cash on Cash Return: 5.22%
- Airbnb Daily Rate: $230
- Airbnb Occupancy Rate: 70%
- Days on Market: 146
- Walk Score: 86
Hudson is a popular weekend destination (and second home, in certain cases) for New Yorkers. It may not be ideal for those who wish to do some major sightseeing, but it does offer folks a serene environment to just sit back and relax.
7. Albany, NY
- Median Property Price: $315,137
- Average Price per Square Foot: $162
- Number of Airbnb Listings: 182
- Airbnb Monthly Rental Income: $2,921
- Airbnb Cash on Cash Return: 5.11%
- Airbnb Daily Rate: $152
- Airbnb Occupancy Rate: 62%
- Days on Market: 98
- Walk Score: 54
As the capital of New York State, Albany is filled with so much history and picturesque architecture. Visitors are treated to friendly and lively vibes. Not only is Albany the best place to live in the state, but it also ranks high among the best cities to live in the entire country.
8. Beacon, NY
- Median Property Price: $627,147
- Average Price per Square Foot: $314
- Number of Airbnb Listings: 112
- Airbnb Monthly Rental Income: $4,553
- Airbnb Cash on Cash Return: 4.88%
- Airbnb Daily Rate: $230
- Airbnb Occupancy Rate: 59%
- Days on Market: 132
- Walk Score: 90
Beacon may be a small town, but its charm is more than enough to draw the attention of travelers from across the US. It is an excellent place for adventure and exploration, along with its strong sense of community.
9. Ithaca, NY
- Median Property Price: $560,975
- Average Price per Square Foot: $236
- Number of Airbnb Listings: 185
- Airbnb Monthly Rental Income: $4,586
- Airbnb Cash on Cash Return: 4.82%
- Airbnb Daily Rate: $352
- Airbnb Occupancy Rate: 51%
- Days on Market: 79
- Walk Score: 8
Nature lovers will have quite an unforgettable trip when visiting Ithaca due to its breathtaking outdoors and picturesque views. It is especially famous for its waterfalls and great outdoor activities. Tourist activities are never lacking in this lovely city.
10. Rochester, NY
- Median Property Price: $261,241
- Average Price per Square Foot: $133
- Number of Airbnb Listings: 341
- Airbnb Monthly Rental Income: $2,558
- Airbnb Cash on Cash Return: 4.81%
- Airbnb Daily Rate: $134
- Airbnb Occupancy Rate: 60%
- Days on Market: 57
- Walk Score: 50
Rochester is just one of those places that seem to have it all. There’s something for everyone when you come to visit this legacy city. With so much history and lots of things to enjoy, Rochester remains one of the Empire State’s top tourist destinations.
Where Do You Go from Here?
Real estate investors keen on buying a vacation home in New York should not only think about how much income a particular property can generate. They should also look deeper into the different Airbnb laws and regulations in the state, given its love-hate relationship with short-term rentals. Performing extensive research may be exhausting, but it sure beats messing up just because you failed to perform due diligence. And besides, platforms like Mashvisor make doing research and gathering data easier and more efficient.
To get access to our real estate investment tools, click here to sign up for a 7-day free trial of Mashvisor today, followed by 15% off for life.