Now that summer has finally arrived, you may be thinking less about house flipping and more about how to get your toes in the sand. Or maybe you’re considering killing two birds with one stone by flipping a beachfront property.
If that’s the case, there are some special considerations unique to vacation flips that you’ll want to keep in mind.
Mother Nature Is Not Always Your Friend
First, consider the forces of nature that may impact your investment property at the beach. Coastal properties are often subject to hurricane force winds and rain and, oftentimes, the local building codes require upgraded (and potentially more expensive) materials. It may also be the case that climate patterns lead to land erosion and shifting sand, making future property valuation unpredictable. And although the salt air can be refreshing, it can be murder on exterior finishes. So if you are planning to turn the property into a rental, you will need to factor in additional ongoing expenses for exterior maintenance.
Assess The Rental Market
If you are planning to buy and hold rather than fix and flip, take a close look at the rental market. The beauty of a vacation rental in a popular beachfront locale is that weekly rates are usually fairly high. But be sure to factor in the rates for both the high and the low seasons as they can be jarringly different. And since most vacation homes rent by the week, the time and effort required to manage the rentals can be off-putting. Most owners find it easiest to hire a rental agency to keep everything straight but, like everything else in life, that doesn’t come cheap. Some rental agencies can charge as much as 40 percent of the rental income so it pays to consider this when running your numbers.
Insurance Matters
Another expense unique to vacation properties is flood insurance. Most standard homeowners policies do not cover flooding so special coverage must be purchased via agents participating with the government's National Flood Insurance Program. Look into the offerings in your area to see what is required. There is lots of good information on the FEMA site here. It pays to plan ahead since additional insurance expenses have the potential to cut deeply into your flipping profit.
Whether you are considering a fix and flip just down the road or down at the shore, Navigator Private Capital can help. Reach out to us at 443.603.0193 or at info@gonavcap.com to discuss the ins and outs of our flexible financing arrangements. To get the ball rolling, fill out the pre-application on our website or, if you already have the house under contract, go ahead and complete the full application to ensure fast approval.