| ||
| ||
|
|
|
| |
| |
|
Buying Outer Banks (OBX) Investment Property
So, you're thinking of purchasing a rental property at the beach. Historically, real estate investments have proven to be a wise investment strategy. The name of the game has always been maximizing cash flow. Years ago, one could realize a healthy rate of return based on cash flow generated from rental income alone, however, with rising property costs, the number of beach properties with a substantial positive cash flow are dwindling. Fear not investors! The goals have changed, but the market is still strong. In today's arena, the goal is break even or slight positive cash flow while capital is grown through equity. With annual appreciation rates of 30-40%, investors are eager to tackle a small negative cash flow! Let's look at an actual example: Mr. and Mrs. Mainland purchase an Outer Banks rental property in February 2003 for $575,000. They finance 75% of the purchase with a mortgage rate of 4.5% ($2,250 monthly P/I). The 2003 season nets $30,577 in rental income. They cover their mortgage expense ($27,000) with the income generated. Other expenses (taxes, insurance, utilities, property management, etc.) add up to $5,860. That leaves the Mainlands with a negative cash flow of $2,283 for the year, or $190 per month. In March of 2004, the Mainlands decide to sell the house and net $740,000 from the sale. In the one year that they owned the cottage, their out of pocket expense was $2,283. Conversely, their equity gain was $165,000.* Not a bad rate of return ! In this case, the Mainlands used an IRS 1031 exchange and did not have to pay any capital gains taxes from the sale of the property. What to look for when choosing the right property. * Proximity to the Water~> The closer the property is to the Ocean (or sound/bay) the more demand there will be from potential renters. * Amenities~> Today's beach homes have every conceivable bell and whistle (pools, elevators, game-rooms, tiki bars, etc.). You will need to make sure your potential investment home is competitive with other properties in the area. * Age of Structure~> Only consider homes that have years of enjoyment left in their lifecycle. If you plan to keep the house for the long haul, this will keep your maintenance and utility expenses down. If your goal is to exchange the property in one or two years, a newer home will be more marketable.. * Protection~> One of the most essential elements to comfortable ocean front ownership is the protective sand dune. You want to choose an area with a high, established, vegetated dune line. This will protect your investment in the case of a tropical storm system. * Rental History~> If available, get accurate rental records for the cottage. This will illustrate the home's rental rates as well as any repeat tenants. * Respected, Hard Working Property Manager~> Your property manager ultimately controls your cash flow. They have the power to book every week available in your cottage, thus increasing positive cash flow or they can do a poor job and leave prime weeks un-rented, therefore, increasing negative cash flow. They also have the responsibility of keeping your tenants happy. * Keep Your Emotions in Check~> Remember, you are buying this property for the renter's comfort not your own. You may not think a cottage is decorated up to your standards, but you are not the one living in it, the tenants are. How to get started: The most important things you will need to get started are: ^ Your target area (town, subdivision) ^ Pre qualification letter from local lender ^ Down payment amount ^ A reputable Real Estate Professional to help you find appropriate properties and generate cash flow analysis' (CFA's). Purchasing an Outer Banks rental property has proven to be a wise choice in today's investment world. This is evident in the number of investors that continue to re-invest in the market. With property values half of that in other coastal markets and historically low interest rates, there is still a fantastic opportunity for growth. One thing is for sure, it would be hard to mirror this yield in today's stock market! To get started or the learn more, contact Chandler Spawr, ABR, RRS at 1-800-650-8238 x 225 or visit him on the web at or *number based on pre-closing costs Chandler Spawr, ABR, RRS Outer Banks Investment Specialist About the Author Chandler Spawr is an award winning real estate agent specializing in Outer Banks investment properties. He is primarily a buyer's representative in the Northern Outer Banks (Nags Head, Kitty Hawk, Duck, Southern Shores and Corolla). Chandler is an Accredited Buyer's Representative (ABR) and a Charter member of the Worldwide Recreation and Resort Sales Council (RRS). He currently resides in Southern Shores, North Carolina with his wife and two daughters.
MORE RESOURCES: There is something emotionally charged about the buying and selling of New York high-end real estate. How else to explain the juggernaut of reality TV shows about high-end brokers? After 30 years of marriage, Sharon and Michael Newman decided it was finally time to move from the Catskills to New York City. On blocks near Kissena Park streets are quiet, houses are small, and the electricity that charges the atmosphere in downtown Flushing is nowhere to be found. A five-story, seven-bedroom house in Brooklyn Heights has sweeping views of New York Harbor and the Manhattan skyline. Demand is so intense that there are waiting lists in some buildings, and a few landlords report that eager renters are even bidding up rents. Sales at the very high end of the market barely missed a beat in the recession. But that prosperity hasn’t yet trickled down. A Flatiron condo, a Midtown South co-op and a Brooklyn Heights carriage house. A four-bedroom ranch in Montclair, N.J., and a four-bedroom colonial Cape in Babylon, N.Y. For a century, Roosevelt Island housed a grim penitentiary. It was demolished in the 1930s. More borrowers are opting for fixed-rate loans with terms other than the standard 30 or 15 years, especially when it comes to refinancings. Two more glass skyscrapers are added to a group of towers on the waterfront of Long Island City. Insurance coverage for a co-op unit; when a tenant is ‘blacklisted’; a co-op is smaller than estimated. The market for $500,000-to-$600,000 houses in Westchester has become especially active. A shaky real estate market means more sellers are providing buyer concessions, from gift cards to help with paying property taxes. Houses of worship are adaptable to residential and other uses as congregations dwindle. Nearly two million Americans could benefit from mortgage relief from the nation’s biggest banks, as part of a broad government settlement to be announced on Thursday. A cold war-era satellite relay station is for sale in California after a Silicon Valley mogul gave up on plans to turn it into a weekend home. How can I make my front porch more appealing to buyers? Court hearings meant to protect New York homeowners from foreclosure are hopelessly slowed by endless paperwork and requests for additional information. The Bay Area and Silicon Valley expect the windfall from the Facebook stock offering to make their in-demand region even hotter. The house, designed by the architect Eric Fisher, looms over the street like a big industrial arm. A town house in Dallas, a midcentury modern in Rhode Island and a Tudor in Denver. Prices in some parts of the country are still off by as much as 25 percent from their 2007 peak. Trinity Church is the largest landlord in Hudson Square and is part of the effort to rezone the area to residential from manufacturing. Rising oil prices and a boom in shale exploration are leading companies to add office space in the Houston area, most notably Exxon Mobil. Ms. de França is the president and chief executive of Douglas Elliman Development Marketing, which focuses on new residential developments. Meet the real estate broker’s interns: an ambitious group willing to do anything, earn nothing and wake up early on a Sunday to fluff the couch cushions at open houses. A Flatiron condo, a Midtown South co-op and a Brooklyn Heights carriage house. A four-bedroom ranch in Montclair, N.J., and a four-bedroom colonial Cape in Babylon, N.Y. Homes in Dallas, Rhode Island and Denver. Compare the cost of renting and buying equivalent homes. For recently divorced men, a new breed of decorators offers help navigating a strange new world. Plants that light up the winter garden can be found at Broken Arrow Nursery in Connecticut, which has long been a favorite of gardening geeks. A sister in need drew the painter Beverly McIver back home to North Carolina, unaware that a new beginning was in store for both of them. A jewelry designer finds striking new objects for storage. Timothy Sakamoto and Jochen Repolust are part of the small but growing niche making mobile apps focused on specific works of architecture. To promote an auction of 20th- and 21st-century design, the interior designer Stephen Sills has created a preview exhibition in an apartment at the Apthorp. Fishs Eddy now sells plates acquired from the archives of the now-defunct Syracuse China Corporation, many more than 100 years old. The designer Russell Greenberg creates custom baby rattles with ends shaped like profiles of mom and dad. |
|
|
|
RELATED ARTICLES
|
| home | site map | Disclaimer | Privacy Policy |
| © 2006 |