List Categories | List All Articles | List Articles By Title
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
*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.
Real Estate Website Marketing - 5 Steps to Crushing Your Competition and Doubling Your Business
Getting your real estate website more traffic is easy if you know how Internet marketing works, not to mention search engine optimization. Your goal is to get as much traffic as possible to your website, but not just any traffic, targeted traffic.
Selling Your Own Home: 10 More Tips
Selling your own home can be a time-consuming and frustrating process. Sometimes, though, in the right market, it makes sense to save thousands of dollars in commission and do it yourself.
Forclosure And The Durrett Rule
It's probably happened to you..
Should I Invest in Real Estate While Running an Internet Business?
Of course you should. I practice this for quite a while and I never looked back.
Notify Them When Youre Moving
One of your first steps, when you're getting ready to move, is to pick up a stack of change-of-address cards from the post office. Yes, old-fashioned go-by-snail post cards! You'll want to notify everyone in your address book and also.
Creative Real Estate Investing
With a job that paid $3.40 an hour, I saved $5,000.
For Sale By Owner: The Inside Scoop On Selling Your Own Home
If you're thinking about selling your home perhaps the 'for sale by owner' signs posted on neighborhood lawns have intrigued you. When you browse the newspaper listings you see ad after ad boasting 'for sale by owner' as an added incentive for buyers and you envy the owners that are confident enough to try it.
Panama is Hot - A World Class Retirement Haven Thats Ripe For Profitable Real Estate Investment
If you've followed any of the major survey agencies around the world that rate places for retirement, Panama has been on top of the list in many, and for a few years running. So, if you're looking for a place outside U.
Real Estate Investing In Belize
Any trip to Belize starts fantasies of owning a beach villa, or a jungle resort. There are a lot of North Americans in this English speaking, former English colony.
Investing in the Baltic Tiger: What Has Estonia Got to Offer?
Estonia's reputation is growing within the property investment market. Rising far above her new European neighbours in terms of infrastructure and growth, Estonia is fast becoming the Baltic's very own 'Tiger' economy with a healthy growth rate of 5.
Property Investing Secrets 7
Property Investing Secrets:How Buying Real Estate Is Like Planning a Trip to the Greek IslandsOne you start property investing, one important tip is to press the flesh with the real estate agents in the areas where you plan to buy. Because property investing is a bit like buying a holiday package, you must separate yourself from the rest of the investors by giving the real estate agents the information they are looking for in your first face to face meeting.
Directionals Move Properties
One of the most effective and frequently overlooked methods of filling or selling a property is the use of directional arrow signs. I'm guilty of it myself, although usually I'm merely lazy instead of overlooking this great marketing technique.
Selling Houses: The Basics of Design Psychology
I'm often asked about the basics of Design Psychology, which offers innovative interior and exterior design ideas for increasing profit and shortening market time. In reply, I begin by saying that Design Psychology's strategies go well beyond normal cleaning, painting, and repair.
Are Condo Hotels What the Orlando Real Estate Investor Has Been Looking For?
Earlier this year the Hawthorn suites in Lake Buena Vista quietly sold out all of their units in less than a month. These 540 sq.
FSBO - How to Prepare Your House to Sell
Did you hear that? Prices of houses in Phoenix have been jumping 5% each month for 2005 according to market experts! Some even predict that the price of housing could jump an additional 10% for the upcoming year. The shortage of houses for sales and the still relatively low interest prices are causing the price of homes not just here in Phoenix but nationwide to escalate.
Green Building Media Fact Sheet - Past, Present & Future
PastSpecialized, niche home builders began constructing resource-efficient, environmentally sensitive homes in the early 1970s. The home building industry coined the phrase "green building" in the late 1980s/early 1990s, turning a movement into a quiet revolution.
How To Build A Million Pound Property Portfolio
Looking to quickly build a million pound property portfolio? You could try a high risk and speculative technique that has been used over recent years by investors hoping to make big profits from property.The technique relies on re-mortgaging and negotiating good discounts on off-plan property to take a £50,000 deposit and turn it into a million pound property portfolio within a couple of years or less.
Real Estate Investing - Makeovers vs. Flipping
Please don't call it "flipping."Some real estate investors who practice the technique of buying property for immediate fixup and resale call it "flipping houses.
Dont Get Stuck Having To Deal With The Sellers Household Hazardous Wastes - After You Move In!
I have a confession to make!I was just outside with Frankie (my dog) and noticed I still had an old car battery sitting by the foundation, at the rear of my house.Yes, I'll admit it's not right, and quite environmentally insensitive for me to have it there.
Home Appraisal Values Are Critical
To most, owning a home is a necessity, but sometimes it is a matter of pride or a business investment. Home appraisal values become relevant if one wishes to sell his house.
home | site map
All articles are copyright to their owners.
Note: this website lists articles, We do not Write Articles !