Many investors have been buying coastal homes recently. These investors are purchasing these coastal homes as either secondary homes or vacation rentals. Low market prices and foreclosures have provided flipping opportunities in the market, but there are few points you need to consider before you finalize your purchase.

Local county governments all treat property taxes differently. If you hold the home for a couple of years, you may be hit with a rise in property taxes. In these tough financial times, many local governments opted to either reduce the property taxes or freeze them for a period of time. When the market begins to recover (and it will recover) the local government could reevaluate the amount of the property taxes and raise them. This will likely vary with different markets. Many red-hot real estate markets have experienced property taxes double every few years in the past as a way of curbing the demand in the area.

If you plan on making the home your primary residence, you will pay lower taxes than someone who uses the home as a secondary home. Primary homeowners usually pay about half in taxes of what a secondary homeowner would pay. Speak to the local tax assessors office about what the tax rate will be. Once you renovate the home, the tax value will be reevaluated and likely raised to reflect the increased value.

Many vacant coastal homes and foreclosures have been lacking maintenance. You should be able to negotiate a discount on the purchase of the home. Coastal homes have very strict zoning and building codes. It is recommended that you speak to some local building contractors who can guide you in your renovation efforts. If you have to replace the roof, you will probably be replacing more than just the roofing material. Some improvements to the framing such as roof straps may be needed to bring the home up to code. Replacing the windows and doors will probably require upgrades to windows and doors with high impact ratings which can easily cost more than anticipated.

Obtain several estimates for the renovation costs before you close on the property. A good rule of thumb is to take your estimates and double them. This figure will likely be more accurate as unseen problems will almost always arise. Delays in shipping and installation due to weather also lead to increased hold times.

While projecting rental revenue for your coastal home, you should talk to a few local property management agencies about what the local economy and what the daily, weekend, and weekly rental rates are for comparable sized coastal homes. Make certain to inquire about what the management fees are and what they include. Most services like housekeeping, maintenance reviews, and service calls are generally included.

When planning your rental revenue for your coastal home, it is important to determine the duration of the vacation season. Parts of the US such as Florida will likely rent out year round. While coastal homes in Maine might only rent out during the Spring and Summer months.

Closing Comments

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.

Hubert Miles is the founder of Waterfront Houses USA, an internet advertising service that provides Coastal Homes and Coastal Homes For Sale available in the US and Caribbean.

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