Buying a beach rental property?

[Happy Panther]

Anyone done it?

My extended family and I stayed in a 7 bedroom places last year on the outer banks that is now for sale for around $900,000. Just happened to run across it today.

It rents fro $5500 per week in the high season and as low as $2,200 other times. Even in this economy it is rented all but three weeks the rest of the year.

Based on what i would expect for mortgage + maintenance + rental company this property would easily break even if we kept it for a few weeks in high season.

I don't have a down payment right now so its moot but does anyone do this? Is it a huge pain??

[Kyle82]

I have a rental in North Myrtle that was purchased in 2000...3rd row...no where NEAR the luxurious place that you have described....and I let a realty company manage it. They get 15% off the top and the renters pretty much pay the mortgage on it but it's a constant upkeep. The coastal weather takes a beating on a house but it's an investment..it will be a great retirement home or if some big hotel chain comes along and wants the land I can be bought. :cool:

[Happy Panther]

How much of a hassle is it?

Or does the management company make it easy?

A $1m second house is a dream but at the same time if the rent covers the mortgage...

[Carolina Husker]

What's the insurance gonna be on a place like that?

[mush]

Insurance is high as hell for that property. I was paying $2000 on a $150k house 10 years ago that was 3 miles from the ocean.

[Happy Panther]

What's the insurance gonna be on a place like that?

Insurance is high as hell for that property. I was paying $2000 on a $150k house 10 years ago that was 3 miles from the ocean.

Good points!

[Hotsauce]

We stayed in Nags head this summer at this place, which is listed for sale. 7 Beds, 7 Baths, $675,000. We paid $5,200 for the week. On the website below, it says that the mortgage is estimated at $3900 a month. So if this house stays booked throughout the summer, and gets a descent amount of traffic through the colder months, you could make that work. Hell in June, July, August @ $5200 a week x 14 weeks, it is bringing in $72,800!!! So if the mortgage is 3900 a month x 12, that house cost you $46,800 a year + insurance and tax. So you would easily pay for the house in the summer profits, plus bring home some extra cash.

http://www.trulia.com/property/3846058-5900-S-Seachase-Dr-Nags-Head-NC-27959

Some details about this house:

One street off the beach, 2 minute walk to the beach with a private boadwalk. It has its own pool, with cabana bar, hot tub on the 3rd story balcony. And it was in a really nice neighborhood.

[wattchano]

We stayed in Nags head this summer at this place, which is listed for sale. 7 Beds, 7 Baths, $675,000. We paid $5,200 for the week. On the website below, it says that the mortgage is estimated at $3900 a month. So if this house stays booked throughout the summer, and gets a descent amount of traffic through the colder months, you could make that work. Hell in June, July, August @ $5200 a week x 14 weeks, it is bringing in $72,800!!! So if the mortgage is 3900 a month x 12, that house cost you $46,800 a year + insurance and tax. So you would easily pay for the house in the summer profits, plus bring home some extra cash.

I say go 4 it!!!

[CRA]

Insurance is high as hell for that property. I was paying $2000 on a $150k house 10 years ago that was 3 miles from the ocean.

property tax and insurance on that house will be absurd. I talking absurd. my family has a beach home(not a big baller home like the one you are talking about but it is on the water). Where our house is (outside Charleston) lots of people bye beach houses to rent or do whatever (talking about the big ones on at the ocean).......most are forced to turn right back around and try to sell them as they bite off more than they can chew. I lot of people buy these fancy beach homes....realize they can't afford them....and then struggle to find some one to take it off their hands. I say be VERY careful before jumping into that.......

[g5jamz]

Cost of upkeep (normal and damage from renters or storms), taxes, you can only stay x amount of weeks down there and be considered a "rental" property so you have to be careful on the tax writeoffs, upcoming loss of mortgage interest deduction (in budget negotiations), MORTGAGE.

If you're looking at it as an eventual retirement home...sure. If you're looking at it from the perspective of a money making operation...I can almost assure you that you will not make a dime.

[Happy Panther]

Definitely a retirement home. We started renting a house in the outer banks every year since 2004. Usually $6,000 for the week. And its always too short but the idea of dropping $12,000 or $18,000 for an extra week or two is silly.

If we had a house that was break even or close to it while serving as our free vacation house as well as building equity to where we would own it one day, that would be sweet.

[Happy Panther]

Also keep in mind that you will not likely be able to use the house during prime season. The management company will view that as a week (or more) of lost revenue and will restrict your access.

That would be a deal breaker...

[Hairless Cat]

Its all great until a hurricane comes along and not only wipes out the house but puts part of the lot underwater and you cant rebuild.

We had a family friend go through this at Long beach many years ago. The storm reshaped the beach to the point he couldn't rebuild. Bank eventually sized the property and sold it a decade later when the corps of engineers dredged out the channel between Long and Holden and rebuilt the lot with the dredging.

Thanks but no thanks.

I was just there yesterday on my boat- looking at the two new houses standing there thinking - what a dumb place to build a house. Saw a couuple of decent kinis at the sand bar while I was there too.:)

[Happy Panther]

Its all great until a hurricane comes along and not only wipes out the house but puts part of the lot underwater and you cant rebuild.

We had a family friend go through this at Long beach many years ago. The storm reshaped the beach to the point he couldn't rebuild. Bank eventually sized the property and sold it a decade later when the corps of engineers dredged out the channel between Long and Holden and rebuilt the lot with the dredging.

Thanks but no thanks.

If it is fully insured why would this be an issue?