If you have purchased a coastal home lately as an investment opportunity, you are not by yourself. Many investors and homeowners state that they are purchasing coastal homes as a secondary home or vacation rental home. With all the foreclosures and the low market prices, many are considering flipping a coastal home to make a future profit. There are few things you ought to be aware of that could hold back your profit potential.
Property taxes vary greatly by location. In these tough financial times, many local governments have reduced the property taxes as a means of enticing people to buy new homes. As market conditions improve, local governments will likely reassess the amount of the property taxes paid and raise them. This will likely result in you getting hit with higher property taxes down the road. This will vary based on the local market.
Whenever the home isn’t going to become your primary residence, you’ll probably be placed in a higher tax bracket for secondary homeowners. Secondary homeowners usually pay double what someone who is lives as a primary residence. Call your local tax assessors office and inquire about what the rates will be if the home was a primary or a secondary home. Also, keep in mind that after you renovations are complete on your coastal home the tax value will be reevaluated to determine what your new tax rate will be.
If you bought a coastal home that’s been vacant, foreclosed, or just lacking maintenance, you likely negotiated a discount with the hopes of renovating the home. Coastal homes have very stringent zoning and building codes. If you are not familiar with these rules, you may need to seek out the assistance of someone who can guide you in your efforts. Items such as windows and doors now require very high impact ratings. Impact windows and doors are very expensive and can easily cost more than anticipated. Replacing a roof many likely require more than just replacing the roofing material. Items like roof straps may need to be installed to bring the home up to current building codes.
While talking to your building contractors to obtain your renovation bids, a good idea would be to double both the estimate and the time table. At some point you can expect delays due to weather, material deliveries, and other out of the blue problems that will affect both price of the project and repair time table.
When planning and forecasting rental income for your coastal home, you should speak to some local property management offices about what the local economy and what the daily, weekend, and weekly rental rates are for similar sized coastal homes. Be sure to ask about what the management fees are and what they include. Most services like housekeeping, maintenance inspections, and service calls are typically included.
When planning your rental revenue for your coastal home, it is important to determine the duration of the vacation season. Parts of the US such as Florida will likely rent out year round. While coastal homes in Maine might only rent out during the Spring and Summer months.
In Closing
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.