Resort Town Real Estate Investing
Resort towns operate on different economic rules than traditional real estate markets. Property values are driven by tourism demand rather than local employment. Rental income comes from short-term vacation stays rather than long-term leases. And government regulation of short-term rentals adds a layer of complexity that can make or break a deal. For investors who understand these dynamics, resort towns offer some of the highest gross rental yields in real estate, but the risks are equally elevated.
The short-term rental economics
A beach house that rents for $1,500/month as a long-term rental might generate $300-$500 per night as a vacation rental during peak season. In a high-demand resort market, a property rented 200 nights per year at an average of $350/night generates $70,000 in annual gross revenue. Compare that to $18,000 from a long-term tenant. The difference is enormous, but so are the operating expenses.
Short-Term Rental Operating Costs
Cleaning between guests: $150-$250 per turnover
Property management (full service): 20-35% of gross revenue
Platform fees (Airbnb, VRBO): 3-15% of booking revenue
Furnishing and supplies: $5,000-$20,000 initial + $2,000-$5,000/year replacement
Utilities (owner-paid): $300-$600/month
Higher insurance premiums: 2-3x standard rental insurance
Occupancy taxes and licensing: varies by jurisdiction
Seasonal demand patterns
Most resort markets have defined peak, shoulder, and off seasons:
- Peak season: 3-4 months of high demand with premium nightly rates and near-full occupancy. Beach towns peak in summer; ski resorts peak in winter.
- Shoulder season: 2-3 months on either side of peak with moderate demand and reduced rates
- Off season: 3-4 months of low demand. Many properties sit vacant or rent at deeply discounted rates. This is the financial challenge: expenses continue year-round but income does not.
Your deal analysis must account for seasonal variation. Use average annual revenue (not peak season extrapolation) when calculating returns. Properties that can attract off-season demand (business travelers, remote workers, snowbirds) generate more consistent income.
Regulatory risk: the STR factor
Short-term rental (STR) regulations are the single biggest risk factor in resort town investing. Many communities have enacted or are considering restrictions on vacation rentals:
- Permit requirements: Many jurisdictions require STR permits or licenses with annual renewal fees
- Occupancy limits: Maximum guests per property, often lower than the property could physically accommodate
- Minimum stay requirements: Some areas require 3-night, 7-night, or even 30-night minimums that reduce booking flexibility
- Zoning restrictions: STRs may be prohibited in certain residential zones or limited to specific overlay districts
- Total caps: Some communities cap the total number of STR permits, creating a finite supply that either makes existing permits more valuable or makes it impossible for new investors to enter
- HOA restrictions: Condominium and HOA communities often have their own rental restrictions separate from municipal regulations
Analyzing resort town deals
Standard rental analysis does not apply to resort town properties. You need specialized metrics:
- ADR (Average Daily Rate): Average nightly rate across all booked nights for the year
- Occupancy rate: Percentage of available nights that are booked. Strong resort markets: 55-70%. Average: 40-55%.
- RevPAR (Revenue Per Available Room): ADR × occupancy rate. This accounts for both pricing power and occupancy.
- Gross revenue: ADR × occupied nights per year
- Net operating income: Gross revenue minus all operating expenses (management, cleaning, supplies, utilities, taxes, insurance, maintenance, platform fees)
- Cap rate: NOI / purchase price
Use comp analysis tools for the property value and platforms like AirDNA or Mashvisor for short-term rental revenue projections.
Wholesaling resort town properties
Resort town buyers are a specific investor segment. They are looking for income-producing vacation properties and may be purchasing for a combination of investment return and personal use. Target these buyers through outreach tools and include resort-specific analysis in your marketing package:
- Revenue projection based on comparable STR data (ADR, occupancy, RevPAR)
- Operating expense breakdown including management, cleaning, and platform fees
- STR regulation status: is the property currently permitted? Are permits transferable?
- Seasonal revenue breakdown showing peak, shoulder, and off-season income
- HOA restrictions on rentals (if applicable)
- Property management company recommendations for the area
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