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Buying Resort Destination Investment Property
It is everyone’s dream of owning a condo or home in a fabulous coastal destination. Many think this is only achievable by the ultra rich and hope for a just a weekend holiday at the beach for themselves.
But, more and more people are realizing this dream. As more people retire or consider their retirement they understand that coastal real estate is at its lowest price in years and is only headed up into quite possible unattainable market values.
In order to get in to a property today which they can enjoy part-time now and perhaps full-time later many buy rental properties.
Destination rental properties can be anything from beachfront high-rise condos, multi-family homes, sea cottages, or condo-hotel.
In an area like South Padre Island which has very reasonable coastal real estate properties can still cash flow. Especially if the property was purchased at a great value, is highly desirable for rental and is marketed aggressively. But, even if some of these factors are not met any property can perform reasonably well and return some on the investment to assist with the cost of ownership.
There are also tax benefits, and the option for you and your family to enjoy your property during vacations, weekends and holidays.
Many of our buyers eventually recoup enough equity in one property to buy another rental or upgrade their property several times before they retire.
The keys to successful rental ownership are property selection and rental management.
It is important to select a property that meets the rental criteria fairly well. Be aware of price and ask for a rental history. If a property doesn’t have a rental history then ask a rental agency to give you an idea of how a certain property will perform.
You can manage your rental property in several ways. Some buildings have their own on-site rental service. Often this is run well and keeps the risk of damage to a minimum. However, if you don’t feel you are getting the best service then you have no other choice. Other properties allow you to select your own rental agency. There are a number of companies to choose from in each destination. Here agencies typically take 30% of the gross profit for management fees, cleaning services and marketing. They often book a significant number of rentals making up for the additional expense but, the wear and tear can be tiresome. Other owners choose to manage their own rentals. The popularity of “rent by owner” websites has made it possible for owners to market their rentals nationally for a reasonable fee. Local services can be contracted to clean and check-in guests if the owner lives at a distance. This is the most profitable management choice but, does take time and inquiries need to be consistently attended to.
When calculating the property you can afford always be aware that this is a seasonal industry. Our high profit times are summer and spring break. There are consistent rentals in the winter and some good weekends in the fall. But, rental income checks will vary greatly throughout the year and cant necessarily be depended upon at all times. Also, your property will need to be upgraded as items get damaged or outdated. Keeping up the interior of your property will translate into more inquiries and repeat rentals.
So is it a business or is it a beachfront condo? Well, on our island most owners think their property is a little of both. But, enjoying an island property now and in retirement is a great reward for a little hard work.
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Travel Part B