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.

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.

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.

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.

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.

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.

Hubert Miles is the founder of Waterfront Houses USA, an internet advertising service that offers Coastal Homes and Coastal Homes For Sale listings in the United States and Caribbean.

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