By Hubert Miles
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.
Many vacant coastal homes and foreclosures have been lacking maintenance. You should be able to negotiate a discount on the purchase of the home. Coastal homes have very strict zoning and building codes. It is recommended that you speak to some local building contractors who can guide you in your renovation efforts. If you have to replace the roof, you will probably be replacing more than just the roofing material. Some improvements to the framing such as roof straps may be needed to bring the home up to code. Replacing the windows and doors will probably require upgrades to windows and doors with high impact ratings which can easily cost more than anticipated.
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 forecasting your rental income for your coastal home, determining the length of the vacation season is important. Regions such as Florida and other southern states will likely rent out 9 to 12 months a year. Meanwhile coastal homes in Maine and other northern states may only rent out 5 to 6 months a year.
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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MLA Style Citation:
Miles, Hubert "Great Investment Opportunities In Coastal Homes." Great Investment Opportunities In Coastal Homes. 22 Jun. 2010. uberarticles.com. 26 Dec 2014 <http://uberarticles.com/home-and-family/great-investment-opportunities-in-coastal-homes/>.
APA Style Citation:
Miles, H (2010, June 22). Great Investment Opportunities In Coastal Homes. Retrieved December 26, 2014, from http://uberarticles.com/home-and-family/great-investment-opportunities-in-coastal-homes/
Chicago Style Citation:
Miles, Hubert "Great Investment Opportunities In Coastal Homes" uberarticles.com. http://uberarticles.com/home-and-family/great-investment-opportunities-in-coastal-homes/
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