Many investors have been buying coastal homes recently. These investors are purchasing these coastal homes as either secondary homes or vacation rentals. Low market prices and foreclosures have provided flipping opportunities in the market, but there are few points you need to consider before you finalize your purchase.
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 the home is not going to be your primary residence, you will likely pay a higher tax rates for secondary home owners. Secondary home owners generally pay about two times higher taxes than someone who is lives in the home year round. Ask your local tax office what both rates will be. Also, bear in mind that after you renovate the home the value will be reassessed, therefore the taxes and the insurance will be higher due to 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.
Obtain several estimates for the renovation costs before you close on the property. A good rule of thumb is to take your estimates and double them. This figure will likely be more accurate as unseen problems will almost always arise. Delays in shipping and installation due to weather also lead to increased hold times.
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.
Closing Thoughts
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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