How to Maximize Returns from Vacation Rental Investments in Top Destinations

By Robert JohnsonLast Updated September 8, 2025

Photo by RomÃ©o A. on Unsplash

Introduction: Why Vacation Rental Investments Continue to Thrive

Investing in vacation rentals has become a widely recognized pathway to building wealth and generating passive income. As travel patterns shift and remote work grows, demand for short-term accommodations in popular destinations is reaching new heights. For prospective investors, understanding how to select the right market, evaluate revenue potential, and manage properties efficiently is key to long-term success. This guide provides actionable insights and step-by-step instructions for accessing opportunities in leading vacation rental markets worldwide.

Identifying the Best Vacation Rental Destinations in 2025

Market selection is the foundation of a successful vacation rental investment strategy. In 2025, several destinations in the United States and Europe stand out for their high demand, rental yields, and unique attractions.

United States: The Vacasa 2025 report highlights a mix of classic and emerging hotspots, from coastal retreats to mountain escapes. Notable markets include:

Ocean City, Maryland : A perennial favorite for beachgoers, Ocean City offers strong occupancy rates and affordable entry points, making it ideal for both new and seasoned investors. The city hosts millions of tourists each year, supporting consistent short-term rental revenue [1] .
Park City, Utah : Renowned for its ski resorts and the Sundance Film Festival, Park City delivers year-round demand and premium rental rates, especially during peak winter and summer months. Investors here benefit from a favorable revenue-to-cost ratio [1] .
Las Vegas, Nevada : With robust tourism driven by conventions and entertainment, Las Vegas remains a compelling option, thanks to affordable property prices and high occupancy [1] .
Klamath Falls, Oregon : Surrounded by natural attractions, this market offers an average gross yield of 7.9%, with average property values around $420,703 and annual revenue of $33,062. The region is experiencing significant growth in short-term rentals, with a 57% increase in qualifying properties over the past year [2] .
Myrtle Beach, South Carolina : Known for its affordability and high seasonal demand, Myrtle Beach allows investors to achieve strong occupancy during peak months while benefiting from lower entry costs [5] .
Lake Tahoe : This market commands premium rates due to its dual-season appeal, attracting both winter sports fans and summer vacationers. High property values are balanced by robust rental demand throughout the year [5] .

Europe: According to industry analysis, these cities and regions offer strong investment potential:

Seville, Spain : A year-round destination with expanding tourism infrastructure and strong rental demand [3] .
France : From Paris to the countryside, France’s stable tourism sector supports a wide range of rental opportunities [3] .
Italy : Iconic cities and lake regions continue to attract both tourists and investors seeking consistent returns [3] .
Berlin, Germany : As a hub for tech and culture, Berlin’s rental market is driven by a young, growing population [3] .
Dublin, Ireland : With a strong economy and competitive corporate tax rates, Dublin offers high demand for modern apartments and corporate rentals [3] .
Krakow, Poland : Lower entry costs and high tourist appeal make Krakow attractive for investors seeking strong yields [3] .

Evaluating Revenue Potential and Returns

Before committing to an investment, it is critical to analyze potential income, expenses, and local regulations. The average gross yield, annual revenue, and occupancy rates vary widely by location. For example, Klamath Falls, Oregon, currently offers a 7.9% gross yield, while the average annual revenue for vacation rentals in the area is $33,062 [2] . Lake Tahoe’s high property values are offset by strong year-round demand, enabling investors to maintain high occupancy and command premium nightly rates [5] .

Investors should also consider the following:

Seasonality: Markets such as Myrtle Beach and Ocean City see demand peaks during summer, while destinations like Park City and Lake Tahoe benefit from both summer and winter tourism.
Regulatory Environment: Local laws concerning short-term rentals can significantly impact profitability. Research zoning rules, permit requirements, and any restrictions before making a purchase.
Management Costs: Consider property management fees, maintenance, cleaning, and marketing expenses when calculating net returns.
Financing: Mortgage rates, loan terms, and property taxes will affect your cash flow and long-term gains.

Step-by-Step Guide to Investing in Vacation Rentals

Implementing a successful vacation rental investment strategy involves several key steps:

Market Research: Explore authoritative reports and local real estate listings to identify markets with strong occupancy rates, affordable entry costs, and regulatory stability. Consulting the latest Vacasa report can help you compare different destinations [1] .
Financial Analysis: Use online rental calculators or consult with local real estate agents to estimate gross yield, annual revenue, and expenses. For example, platforms like Rabbu provide data-driven insights for markets such as Oregon [2] .
Property Selection: Focus on homes that appeal to your target guests, such as lakefront properties in Lake Tahoe or ski chalets in Park City. Pay attention to amenities, proximity to attractions, and unique selling points.
Due Diligence: Conduct thorough inspections, review local short-term rental regulations, and assess the long-term sustainability of the market. Consult local government websites or real estate boards for up-to-date zoning and licensing requirements.
Management Plan: Decide whether to self-manage or use a professional vacation rental manager. Companies like Vacasa offer full-service property management, marketing, and guest support, which can simplify operations for absentee owners [1] .
Marketing & Guest Experience: Optimize your listing on major platforms, invest in professional photography, and maintain high standards of cleanliness and hospitality to attract repeat bookings and positive reviews.

Examples and Case Studies

Consider the following examples to illustrate how different investors approach the vacation rental market:

Case Study 1: Ocean City, Maryland

An investor purchased a two-bedroom condo in Ocean City for $350,000. By targeting summer vacationers and offering family-friendly amenities, the property achieved an average occupancy rate of 70% during peak season. After accounting for management fees and maintenance, the investor realized a net annual return of approximately 8% [4] .

Case Study 2: Klamath Falls, Oregon

A buyer invested in a property valued at $420,000, leveraging the area’s scenic attractions and year-round events. With an average annual revenue of $33,062 and a 7.9% gross yield, the investor balanced moderate occupancy rates with steady demand, especially during local festivals and holidays [2] .

Case Study 3: Lake Tahoe, California/Nevada

An owner acquired a lakefront home and partnered with a local management company to cater to both winter sports enthusiasts and summer boaters. The property’s dual-season appeal led to minimal vacancies and consistent premium rates, resulting in robust annual cash flow [5] .

Challenges and How to Overcome Them

While vacation rental investments can be lucrative, challenges exist. Local regulations may change, affecting rental eligibility or occupancy limits. Market saturation can drive down nightly rates. Seasonal fluctuations may lead to inconsistent income streams. To mitigate these risks:

Stay informed about local regulations by regularly checking city or county government websites and subscribing to real estate newsletters.
Diversify your portfolio across different regions or property types to spread risk.
Invest in guest experience enhancements and creative marketing to stand out in competitive markets.
Consider flexible pricing strategies to maximize occupancy during off-peak periods.

Accessing Vacation Rental Investment Opportunities

If you are ready to begin, consider these practical steps:

Contact a local real estate agent who specializes in vacation rental properties in your target market.
Consult the latest market reports published by reputable platforms such as Vacasa or Rabbu for data-driven insights.
Research local government websites for up-to-date information on zoning and short-term rental regulations.
For international investments, work with professionals familiar with cross-border transactions and local compliance requirements.
Consider reaching out to property management companies for guidance on operational best practices and market-specific challenges.

Summary: Key Takeaways for Prospective Investors

Vacation rental investments in popular destinations offer strong income potential, portfolio diversification, and the opportunity to own property in desirable locations. By focusing on proven markets, conducting thorough research, and implementing sound management practices, investors can achieve consistent returns while minimizing risk. To maximize your success, stay informed, remain adaptable, and leverage both professional expertise and market data throughout your investment journey.