subject: Great Investment Opportunities In Coastal Homes [print this page] If you've recently bought a coastal home as an investment opportunity, you're not alone. Recent news reports state that many investors are purchasing coastal homes as a secondary investment or vacation rental due to the amount of foreclosures and low market prices. If you are thinking about flipping a coastal home, there are few points you should be mindful of that could reduce your profit on the home.
Local county governments all treat property taxes differently. If you hold the home for a couple of years, you may be hit with a rise in property taxes. In these tough financial times, many local governments opted to either reduce the property taxes or freeze them for a period of time. When the market begins to recover (and it will recover) the local government could reevaluate the amount of the property taxes and raise them. This will likely vary with different markets. Many red-hot real estate markets have experienced property taxes double every few years in the past as a way of curbing the demand in the area.
If you plan on making the home your primary residence, you will pay lower taxes than someone who uses the home as a secondary home. Primary homeowners usually pay about half in taxes of what a secondary homeowner would pay. Speak to the local tax assessors office about what the tax rate will be. Once you renovate the home, the tax value will be reevaluated and likely raised to reflect the increased value.
Many vacant coastal homes and foreclosures have been lacking maintenance. You should be able to negotiate a discount on the purchase of the home. Coastal homes have very strict zoning and building codes. It is recommended that you speak to some local building contractors who can guide you in your renovation efforts. If you have to replace the roof, you will probably be replacing more than just the roofing material. Some improvements to the framing such as roof straps may be needed to bring the home up to code. Replacing the windows and doors will probably require upgrades to windows and doors with high impact ratings which can easily cost more than anticipated.
When speaking to your building contractors for renovation estimates, a good idea would be to double the cost and double the time frame. There will likely be delays due to weather, material shipments, and other unforeseen problems that will affect both cost and repair time.
While projecting rental revenue for your coastal home, you should talk to a few local property management agencies about what the local economy and what the daily, weekend, and weekly rental rates are for comparable sized coastal homes. Make certain to inquire about what the management fees are and what they include. Most services like housekeeping, maintenance reviews, and service calls are generally included.
Determine how long of a vacation season the area experiences. Areas like Florida will likely rent out year round, while coastal homes in Maine may only rent out from May to September. This will affect the amount of rental income the property will draw.
Closing Thoughts
If you are shopping for investment opportunities in coastal homes it is recommended that you begin by searching the internet. Online real estate marketing services and local real estate web sites provide listings, photos, and even video tours online. Once you find the property that fits your needs, you can then call or email the agent or seller with any questions you might have.
