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10 best places to buy a vacation home in the Southeast

Demand for vacation properties has soared since COVID-19 due to lockdowns and travel restrictions, leading to a strong seller's market for vacation homes. Lately however, the market has started to cool somewhat, meaning there are terrific deals to be had in some fantastic Southeast locales, many of which are under $500,000.1 Learn where those places are and how to pick the right location that would best suit your needs.

 

Top 10 places to buy a vacation home in the Southeast

This list of top 10 locations to buy a vacation home is for people buying a second home solely for their own personal use, an investment to use as rental property, or a combination of the two.2 The following locations consider vacation lifestyle, price of entry, and investment potential (shown below as “cap rate," which shows the potential rate of return on an investment).


  1. Gatlinburg, Tennessee: Median home price, $320,111; cap rate, 8.6%.
  2. St. Augustine, Florida: Median home price, $365,576; cap rate, 7.4%.
  3. Gulf Shores, Alabama: Median home price, $402,905; cap rate, 7.1%.
  4. Dauphin Island, Alabama: Median home price, $382,699; cap rate, 6.8%.
  5. Norris Lake, Tennessee: Median home price, $343,907; cap rate, 6.2%.
  6. Blue Ridge, Georgia: Median home price, $290,934; cap rate, 6.1%.
  7. Litchfield Beach, South Carolina: Median home price, $499,259; cap rate, 4.5%.
  8. Banner Elk, North Carolina: Median home price, $331,290; cap rate, 4.3%.
  9. St. George Island, Florida: Median home price, $471,501; cap rate, 4.2%.
  10. Ellijay, Georgia: Median home price, $281,402; cap rate, 4.2%.

 

How to pick the right location

As mentioned above, you can buy a vacation home for your own personal use, as investment property, or for both. Knowing what you intend to use the property for can help guide you on your decision. Here are some considerations:

 

Your own personal use

If you're buying a second home purely for your own personal use, consider the home itself, its location, and the life you'd like to live while occupying the home.

The home itself

Consider how many bedrooms and bathrooms you require, the square footage of the house, the lot size, and the house's age.

The location

Because this will be a vacation home, the location is at least as important than the house itself. Whether the property is located in an urban, mountain, beach, or lake setting is one consideration. Where the property sits within the chosen locale. Another consideration is how far away the second home is from your primary residence.

The life you envision living

Think about your daily life while in your vacation home. Say, for example, you want to live by a lake for fishing. That's a good start. But if you also want to be near or have easy access to a town with shops, restaurants, and medical services, you'll need to consider the entire picture and not just the fishing aspect. You might need to compromise on location to get all the amenities you desire. So don't rule out the important step of envisioning your entire lifestyle in your vacation home.

 

As investment property

If your second home will be used purely as a rental property, you'll want to consider the numbers. Besides the potential cap rate, you'll want to know the potential cash flow. You determine cash flow by figuring potential rental income and then subtracting likely expenses.

A real estate agent who specializes in investment property can help you determine both cap rate and cash flow for any property you're considering. Ask your friends or colleagues who invest if they can recommend an agent. You might also want to ask any contractors or property managers you might have worked with if they know a good investor agent. Plus, any of the top brokerages in your area could steer you to an agent with investor experience.

When interviewing agents, ask whether they have experience with investment property and whether they own investment property themselves. The latter isn't a requirement, but it shows firsthand knowledge. Some agents have earned a Real Estate Investing (REI) certification from the National Association of Realtors (NAR), which you will typically find next to their name in their signature line and often also in their online bio.3

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Do you know the top eight reasons people buy a second home? Find out.

For both personal use and investment property

Many people buy a second home to use as rental property now but intend to live in the home at some future date. Other people rent the property part of the year and stay in it while it's not rented. If you intend to use the property for both personal use and investment property, consider not only what you find attractive but also what vacationers would likely find appealing.

Talk to a tax professional to understand the tax implications of owning a property that you both occupy and rent.

 

Popular vacation activities

If you're buying an investment of combo property, consider not just what you want but also what prospective renters would want. These are the most popular activities people choose when buying a vacation home, according to a survey of 700 people from Vacasa:4

  • Rest and relaxation: 78%
  • Family-friendly retreat: 66%
  • Drinking and dining: 46%
  • Water sports: 45%
  • Sightseeing: 44%
  • Shopping and arts: 37%
  • Mountain sports: 26%
  • Snow sports: 14%

 

About buying sight unseen

Internet listings, particularly ones with 3D models of homes, make it possible for homebuyers to purchase a home sight unseen. This is particularly helpful for people who are buying property hours away from their primary residence, which most vacation homes would be. And people who are buying in a hot market with lots of competition might value the ease and speed of making an online offer on a home they haven't yet visited.

If you're considering doing this, keep in mind that photos and videos, while useful in helping you make a buying decision, won't tell you everything, such as defects that aren't apparent from photos or videos, any odors the home might have, or a sense of the neighborhood, such as noise levels. One remedy would be to hire a local real estate agent who can visit the property for you to answer such questions. Also, an inspection contingency becomes more important than ever on homes purchased remotely.

Because a vacation home is also an investment, a real estate agent, particularly one who works with investors, can help you choose a location that's likely to hold or potentially increase its value versus one that might lose value. Employment and crime statistics, as well as trends for the area can make a difference on whether the property you choose would be a good investment.

Important disclosure information

This content is general in nature and does not constitute legal, tax, accounting, financial or investment advice. You are encouraged to consult with competent legal, tax, accounting, financial or investment professionals based on your specific circumstances. We do not make any warranties as to accuracy or completeness of this information, do not endorse any third-party companies, products, or services described here, and take no liability for your use of this information.

  1. Gabrielle Olya, "The 10 Best Places To Buy a Vacation Home in 2021 ," Yahoo, published November 5, 2021, accessed December 1, 2021. Back
  2. Vacasa, "2021: Top 25 best places to buy a vacation home," accessed December 1, 2021. Back
  3. National Association of Realtors, "Real Estate Investing (REI)," accessed December 20, 2021. Back
  4. Vacasa, "2021 Vacation Rental Buyer Report," accessed December 1, 2021. Back