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Timing is everything for an investment. The old adage -buy low , sell high applies. The pandemic caused a significant inflation of the Real estate market in southern coastal states. Insurance for your desired location needs to be identified. A 2nd mortgage will require complete coverage IF insurance is available for a barrier island location. | |||
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Official forum SIG Pro enthusiast |
Yes!! That would be sweet. I got to do this with our Australian forum friend cjevans while visiting Melbourne. It was so much fun. This forum’s incredible membership is a big part of what makes this place so special. ~~~~~~~~~~~~~~~~~~~ The price of liberty and even of common humanity is eternal vigilance | |||
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That rug really tied the room together. |
Coastal Carolina? Looking at a 1 million to 3 million dollar house. The larger houses, purpose built for this, have like 8 bedrooms and 10 bathrooms. They bring in $14,000 to $20,000 per month and can be lucrative. Management and maintenance and cleaning services will take up a majority of your profits. Your probably be better off opening a cleaning service that serves these rentals. THESE companies make an absolute killing. ______________________________________________________ Often times a very small man can cast a very large shadow | |||
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As Extraordinary as Everyone Else |
OK I’m back from my little party… As Chelim said you usually only make money on a high maintenance rental property when you buy low and sell at the top of the market. In my case we bought at the height of the marker in ‘08 because my company was doing well and we had the money. We put about 50% down and financed the balance on a 15 year note. What the realtors “forgot” to mention is the outrageous carrying costs. Here are a few.. 1. Since we lived 7 hours away and both worked full time the only way to make it work was th let a rental company manage it for us. Management rates vary between about 18 and 25% depending on the house and management company. In our case we were able to negotiate it down from 20 to 19%. The management company does not really represent you. They try to get as many weeks booked as possible and if you’re not careful with the terms of your management agreement they will rent it for less than you initially agreed to just to fill the house. We put a stop to that as soon as we saw that little clause! They also don’t do a good job suggesting rental rates (although they have gotten better than in the past). Every year my manager would let me know that we were overpriced and I would tell him not according to my market analysis. We typically had our house rented about 95% of our season and would gross quite a bit more than if we had 100% rental at the managements suggested rate. 3. Maintenance is ridiculous! On average we were spending 3x more to maintain our 2400 sf beach house than we were on our 4500 sf home. It wasn’t the renters per we as we were fortunate to have people who looked after our place (after we raised the rates to eliminate the low life’s! But, it was the weather. They have a saying on the OBX that even plastic will rust and they’re not far off from the truth. Expect to replace your hvac outdoor units every 5 to 6 years, your decks maybe every 10 years, siding depending on what type every 10 years or so. If you have a painted exterior, depending on how close to the water/sand you are every 3 to 5 years.etc. You get the idea. 3. Insurance - you will need 3 different types of insurance. Your regular homeowners with a rental rider, Flood insurance which is a federal program and limited to $250K and Wind insurance which is the most expensive. All totaled we were paying over $8K per year, and that was without any claims … 4. We did not start to make any money on the rental until after we paid off the mortgage. Of course with depreciation it was beneficial tax wise for us. 5. As per IRS rules you are allowed to use the house for yourself a total of 14 days but you can stay there and do “maintenance” as long as you like! We always took the house off the market in late fall through late spring and really enjoyed spending time there. Of course every time we went we always did some projects. It’s just the nature of the game. Let me know if you have any specific questions and I’ll be glad to answer them. ------------------ Eddie Our Founding Fathers were men who understood that the right thing is not necessarily the written thing. -kkina | |||
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As Extraordinary as Everyone Else |
Sounds like a plan! If you end up getting a place we could all come over and help you with some “maintenance”! ------------------ Eddie Our Founding Fathers were men who understood that the right thing is not necessarily the written thing. -kkina | |||
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Get my pies outta the oven! |
Where we go now for our annual beach vacation; Sandbridge Beach, VA (had to leave NJ as we outgrew the beach houses available that wouldn't bankrupt us) there appears to be just TWO management companies that handle most of the rentals there. They have got to be printing money. | |||
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I started with nothing, and still have most of it |
I was seriously looking in the Dare County area about 5 years ago, and prices have exploded since then, partially due to covid. Vacation housing inventory is low, and houses that back then were in the $290 range (my target at the time) are now in the $500 range. We ended up going with a co-ownerhips, where we own 10% of a house and use it 5 weeks a year. Just be aware that prices are very high right now, from a historical perspective. Good luck! "While not every Democrat is a horse thief, every horse thief is a Democrat." HORACE GREELEY | |||
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Member |
For me the biggest issue would be from renters. Most of what I have seen in my area, which is a nice area and has hard working people in it that take care of their homes, the rental homes get no respect. I have one directly across the street from me that the owners built for their daughter to live in, as she was going to be working in the area as a nurse. Things changed and they put the house on the rental market, as they still lived in NYC and wouldn't be down for a few years. The first renters literally destroyed the home-most of the 2,400 sq/ft home had tile and almost everyone of them was broken. The carpets were stained beyond repair/cleaning, the walls had hand prints/marks/gouges,etc., and the appliances were all broken or missing when they took off. The owners came to my home in tears after seeing what happened to their brand new home. I felt bad for them,as whatever they made on the home in rent, they had to spend that and more for repairs. We now have renters in a brand new home just down the street from us and they are parking their cars all over the lawn and I don't think their cars have mufflers on them. Of course all of my neighbors, we all have a great rapport with each other,( a real blessing), call the rental agency and the city due to the problems. We have contemplated on getting a cabin in Tn, for a future home but it worries me not being able to be there myself to keep an eye on it. | |||
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Member |
Couple of things I'd put into the calculations: 1. Are you able to cash flow it indefinitely without rental income? Say there is some global event that would keep people from renting your unit to help pay the mortgage. Not that it could ever happen. 2. If I still wanted to consider it after item 1, I'd hold off a bit. As others have indicated the market in most places is at or near an all time high. I personally think we are going to see a significant pull back in most markets in the not too distant future. | |||
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Official forum SIG Pro enthusiast |
Very good point!!! My first experience as a land lord was such that I would never consider a vacation rental or any rental unless I could afford to pay the mortgage and upkeep without any tenants indefinitely. ~~~~~~~~~~~~~~~~~~~ The price of liberty and even of common humanity is eternal vigilance | |||
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