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Updated over 10 years ago on . Most recent reply

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Marc Lewis
  • Marlton, NJ
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50% or 1% rule

Marc Lewis
  • Marlton, NJ
Posted

I'm looking at buying a beach house in South Carolina. The rental season from what I can tell is only really 5 months. I want to purchase a 2nd home and rent it out for as much as I can but take advantage of it in the off season. The rental income will cover around 10 months of PIT&I and additional expenses ie utilities, internet, phone, cable, water electric or about 80% of my out of pocket costs. I know the 50% rule is a rule of thumb for investment properties. Just wondering anyone's rule of thumb in this situation.

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Chris Martin
  • Investor
  • Willow Spring, NC
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Chris Martin
  • Investor
  • Willow Spring, NC
Replied

The 'rule of thumb' for this class of property is 'It's not an investment, it's a lifestyle.' I call these types 'hybrid-resort' and investing rules just don't apply well. Buy it because you want to, not for investment gains.

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