I have the chance to buy a condo (oceanfront) for investment rental income at a popular beach in NC, that is about to become boomtown. The cost for the condo is fairly cheap (under $100,000) and in very good condition. Furnished. The rental history brings in $12-15K/year. I have thought about the pros/cons but need to hear from someone who owns and has had the experience of renting it. Thanks.
After going through a couple N'oreasters, I have no hankering for beachfront property. I would check the insurance rates including flood before you buy. If a storm swell destroys the complex, regular insurance might leave you high and dry. Other than that just make sure you factor in all the other expenses.
Don, A good place to find out about investing in real estate is http://realestateinvesting.com That board can tell you the in and outs or any kind of rentals. Are you looking at managing it youself or having a managment company do it? Are you thinking weekly rentals or year long leases? Do you live near it? How much are condos selling for at this site and in the area?These questions will effect whether or not this might be a good rental. It sounds under valued if so you might consider flipping it instead. Flipping is where you buy it and re-sell it quickly. Anyway I know nothing about investing except through what I've read but good luck with it and I hope this helps you. Kirk
Problem with condos is always the monthly fees (which will always go up, and you will be paying them whether it is rented or not), and the association itself--you never know when they might have a meeting and vote to exclude owners from renting out their properties, and you probably aren't that interested in hanging around for the meetings. If you choose to buy, make sure the furniture is not included in the loan. Most of the time the furniture isn't that great if it is included (I mean furniture, not appliances)--the sellers just don't want the expense of moving it. Furnished houses also seem to move more quickly in a market. 90% of the time, when furniture is included, it is one of those "gimmies" that sellers use to trick buyers into thinking a property is worth more than it is. Like throwing in a new microwave oven. Just something to watch for.
Kirk: many thanks for the website. That is exactly what I need (was even thinking about that today). Rac: good points, but this is beach property where eveyone rents -- weekly during season (9 months). I'm not interested in flippin right away because I want to enjoy it, too. Do both of you own property that is similar? I would appreciate hearing from property owners.
Doc, since you say people are renting by the week, are owners subject to collecting lodging and every other tax that gets passed on to the poor tourist (no wonder people stay with relatives)? In many places, less than a 30-day rental agreement makes you in essence, a hotel--subject to all the other taxes that normal landlords aren't. If the current owner is renting on the QT by the week and not reporting it as a hotel, you can just about bet that you probably won't be able to get away with the same thing--someone there all the time will probably complain about it. So, that is another reason to read the Association rules before you buy. Make sure you get a copy of the owner's tax returns on the property--anyone can say "well, you can make so-and-so", but check into what they reported, and what they took as expenses. And, if the agent is telling you what rents go for, find out if that is before or after management company expenses--if you're renting by the week, management company expenses can really cut into your profits. We have looked into the beach rentals (cabins) in different areas--both from the staying at and from the owning/renting aspect. The agencies that do the managing want like 40% of collected rents! Now, part of that includes housekeeping and such, but remember, if it is a weekly rental, you also won't be able to get tenants to pay for their own utilities, which can eat into profits no matter how much you do to make the place energy efficient. And you can only charge what the market will bear rent-wise.
