Right now as homes are more affordable, a larger number of home buyers have been considering purchasing investment and second properties.
Purchasing oceanfront property as a real estate investment can be a lucrative venture. There are always vacationing people looking to get away to an ocean beach. But the challenges of taking care of an oceanfront property should be taken into consideration before investing a large sum of money.
Here are some things to consider when purchasing oceanfront investment properties:
Profitability: For a rental to be truly profitable and worth the expense, the monthly charge to renters should equal at least 2 percent of the purchase price of the property. So a million-dollar oceanfront property should be bringing in about $20,000 a month in rental fees. A property can still be profitable if it does not meet the 2% threshold but this is the most advised goal amount from investing experts to make the time and work worth it.
Vacation vs. Residential: One way to make a larger sum of profit is to use the home as a short term vacation rental rather than a residential longer-term home rental. The one thing to think about here though is the work involved to make sure there are as few vacancies as possible. An empty short-term rental costs money instead of making you money. There is also the added investment of furnishing and outfitting the home to make it comfortable as well as cleaning in between guests.
Special Maintenance Needs: an oceanfront home needs extra maintenance as compared to a landlocked house. Homes near the ocean come in contact with sand and corrosive salt water. This means that items like siding, roofing, landscaping, air conditioning, and even carpet are susceptible to a higher rate of wear and tear and need more routine upkeep. Also, there is more likelihood of being hit with a storm.
Personal Use vs. Tax Benefits: if you plan to use the home as a vacation spot for personal use as well, it is good to know that there is a limit on the amount of total time you can use the home for personal ventures. Make sure to look into the tax laws where you plan to purchase the home and be aware on the personal use cap to be able to still take advantage of tax benefits.
There are many great advantages of purchasing an oceanfront property to help make some added income, especially right now as interest rates are so low. Just make sure you have weighed all of the factors before jumping into the business of investing.
The forgotten coast has some great oceanfront properties. Let us help you find an oceanfront home in Mexico Beach or a surrounding area. Contact us anytime. House hunting is the most exciting part of buying a home, but it can get exhausting or be overwhelming. For help with buying a home in Carrabelle, Homes for sale in Apalachicola or other Forgotten Coast towns please contact us any time.
