Investment properties in Beach Towns

6 Replies

Has anyone here invested in Beach towns in Ocean City, MD , Myrtle Beach, SC or Panama City Beach, Fl ? I'm interested In buying a property in a beach town and renting it out. Can you make a profit buying a property in the $250k range ? I have heard horror stories about people buying properties as an investment but then saying that after the rental management fee and HOA fees there isn't much profit , if any to be made. Can anyone share some advice or their own personal experiences ? Thank you in advance

I own a second row ocean view beach house in coastal NC. We bought ours for $250k four years ago and have not seen annual profits from rent. Luckily it has appreciated nicely and the tax write offs have been advantageous. I have learned a lot from owning the house and would not buy another summer seasonal rental. 

Take a close look at insurance costs, particularly flood insurance which has increased drastically over the past few years. My overall insurance costs almost exceed my mortgage. 

Maintenance is another big expense to consider. The sun, sand, and salt are great for renters but terrible for your rental. Wood decks take a beating from the sun and routinely need $1-2k/yr in maintenance. Furnishings take a beating from wet swim suits and need to be replaced more frequently. AC fans need to be replaced every 5-7yrs instead of 15+. Washers/dryers the same. Outer doors need to be replaced from abuse from renters and the salt/sand. 

Depending on the region, property management will take 15+% which does not include the cleaning fee between tenants, cost to winterize your home, and cost for mandatory pest control and other routine maintenance specified by the PM. 

Repair costs can accumulate if you plan to own from afar and have a property manager coordinate repairs. 

In my opinion, the high end summer beach homes will likely cash flow much nicer than a lower cost home. The benefit to a seasonal beach rental would be to rent during the peak season and use it for personal use during the offseason. My next investment though is going to be a more traditional buy and hold in a market not on the coast.

I live in Panama City Beach, and I'm currently building a STR beach house in Inlet Beach which is next to Panama City Beach. There is money to be made, but there are many factors that come into play. I'm not the most experienced person to speak to, but I've done a lot of research on the subject. In addition my wife is a PM for luxury STR's; so, she gets a lot of hands on experience. I haven't invested in a condo in PCB, but for 250k that is probably what you are going to get. However, if you are looking for long term rentals. I believe the world is your oyster in Panama City Beach and you would just apply text book principles. People move to Florida every day. There is no state income tax, and Florida is almost always warm. Working from home continues to get easier with new technology; so, people will continue to move to Florida to avoid cold weather and state income taxes. HOA's have many different flavors. They can work to your favor in some cases and not in others. For example, you may have a place that bans STR. That could increase the value of your home, but make it harder to rent at the same time. Just make sure you know the HOA expectations going into an investment.

@Christopher Grgas

I can say from my experience in PCB since the last cycle, I'd rather be building and selling vacation rentals than holding on to them. Or be one of the many new management companies since the rise of VRBO. I'm finishing a new home now that I didn't build as a vacation rental, but half the buyers calling me want to know if they can do short term rentals.

@Kurt Alder

I lived in Panama City Beach while going to school. You are not wrong. There are some sketchy parts of Panama City....mostly in the older areas. Interestingly, these are the areas that got hit the hardest.

There are some C+ multifamily on the market now where the cap rates are around 7%. Certainly tempting. I think the landscape will change completely. When rent shot up several in lower income housing left town for Alabama.

@Melissa Jolley

I know of a single family home in PCB that will be sold furnished that cashflows $350 or so a month. Rent shot up before home prices could catch up in some areas. The condo market is not quite like that. The trouble is predicting when these things will level off after the hurricane (or if they will).

Locals would say landlords are terrible people who are charging insane prices for rent.....but PC has been trashy for years and I know officials there have really tried everything.

Inlet beach area is up and coming. I think it will mimic other, more expensive parts of 30A.