Investment Opportunities For Coastal Homes
If you have purchased a coastal home lately as an investment opportunity, you are not by yourself. Many investors and homeowners state that they are purchasing coastal homes as a secondary home or vacation rental home. With all the foreclosures and the low market prices, many are considering flipping a coastal home to make a future profit. There are few things you ought to be aware of that could hold back your profit potential.
All local tax assessors handle property taxes differently. If you hang on to a home for several years, you may be slammed with hike in property taxes. In these unstable economic times, many local tax assessors have chosen to either lower property taxes or freeze them for an undisclosed period of time. As the economy begins to rebound, the local tax assessor has the authority to reevaluate the milage on the property taxes and raise them. This will be based on local economies within different markets. A lot of hot real estate markets have seen property taxes escalate every a couple of years as a means of suppressing the demand in the area to control growth.
Whenever the home isn’t going to become your primary residence, you’ll probably be placed in a higher tax bracket for secondary homeowners. Secondary homeowners usually pay double what someone who is lives as a primary residence. Call your local tax assessors office and inquire about what the rates will be if the home was a primary or a secondary home. Also, keep in mind that after you renovations are complete on your coastal home the tax value will be reevaluated to determine what your new tax rate will be.
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.
While talking to your building contractors to obtain your renovation bids, a good idea would be to double both the estimate and the time table. At some point you can expect delays due to weather, material deliveries, and other out of the blue problems that will affect both price of the project and repair time table.
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.
In Closing
A home buyer looking for investment opportunities in coastal homes is recommended to begin their search online. Online listing services and real estate web sites allow you the opportunity to view inventory online. You can then ask real estate agents or sellers questions about potential properties before planning visits to the area to save time.
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