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.
A lot of empty coastal homes and foreclosures have been lacking maintenance. You ought to be capable of negotiating a lower price on the purchase of the home to offset the work needed. Coastal homes have very rigorous zoning and building codes, so it’s suggested that you talk to a few local building contractors who can lead you in your renovation attempts. Whenever you have to replace the roof, you’ll in all probability have to replace more than just the roofing covering. A few upgrades to the framework such as roof straps may be required to bring the home up to code. Replacement windows and doors will likely call for upgrades to high impact wind rated windows and doors which can easily cost more than expected.
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.
If you are planning on renting out your coastal home to vacationers, you should do your homework on the local economy. Call around to local property management offices to determine what similar homes are renting for on a daily, weekend, and weekly rate. Ask them about their management fees and what is included as part of their service. Services like housekeeping before and after tenants are usually 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
Whenever you’re looking for investment opportunities in coastal homes it’s suggested that you start by browsing the internet. Internet real estate advertising services and local real estate internet sites offer listings, photographs, and even virtual tours online. When you discover the coastal home that meets your needs, you’ll be able to call or email the agent or seller with whatever questions you may have.
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