Wildwood NJ STR hold - Break-even year 1-2, Worth it?

Question

Looking for outside perspective from investors with coastal STR / NJ shore experience or helpful opinions.

Under contract on a 2 bed / 1 bath SFH in Wildwood, NJ, about 4 blocks from the beach. Plan is a long-term STR hold, not a flip. purchasing for 348k. reno 70k. After we renovate and refinance, were leaving approx $80k in the deal for about 25% equity (will appraise for approx 460k).

The deal is roughly break-even in Year 1 for cash flow (maybe slightly negative depending on performance). This is for self managing too. Cash flow improves over time as rents increase, but this is primarily an appreciation + leverage play in a supply-constrained shore market. From 2014-2024, Wildwood real estate appreciated approx 8.1% annually. The past 1 year is + 5.7%.

My concern is dealing with STR and different tenants just to maybe break even year 1. I'm going back and forth with myself. On the one hand, it's a top shore town real estate market that will appreciate nicely over time. Wildwood is a highly attractive coastal market. On the other hand, im tying up $80k and dealing with weekly STR turnovers to just breakeven on cash flow year 1.

This would be my first STR. I have a few long term rentals. Can anyone provide any insight or opinion?

Account Closed · Answer

Make sure your STR Design is guest centric, focused and will stand out among the competition! This will help increase your ROI and what rates your charge.Best of Luck!

Jules Aton · Answer

Definitely add a 2nd bath or powder room when you renovate.

John Underwood · Answer

I think it depends on your goals.

If you can get someone to clean it then you day to day involvement is mostly on your phone or computer.

The tools Vrbo and Airbnb provide do most of the heavy lifting.

If your OK with the investment knowing it will appreciate and hopefully break even to start with and be a place your family can use then absolutely buy it!

Joseph Kirk · Answer

the $80k would be split between my brother and i. Self managing (between my brother and I) for a 0% cash flow in year 1 sounds rough and an unattractive investment, but like we already mentioned I'm more focused on the high appreciation part.  Im just stuck between the two. Also, im sure theres opportunity costs here that may hold me back from another investment, but Im not (yet) doing too many deals per year so it's not too concerning.

For winter, I'd try and get a tenant in there for about 5 months at a reasonable monthly rate just to help cover some costs until the summer comes back around.

Andrew Steffens · Answer

Hey Joe

I am primarily in Tampa market but I am originally from Atlantic County and have 1 in Ventnor and had a few other in LBI area in years past.  I am not an expert in this market but I know how it works.

I think you said it best yourself, this is an appreciation play on a long term investment.  It is short term pain for long term gain.  You obviously believe in the market based on your findings, but the question remains are you ok with a 0% or even slightly negative CoCr.  This is a personal question.  The other questions I would ask are is that $80k all of your capital? If so, are you missing out on other deals i.e. is there an opportunity cost?  Also for a lot of STR owners, is there any personal use side to this deal? I find the best STR owners are the ones who get the benefit of enjoying their properties from time to time.

Also as I'm sure you know this is a highly seasonal market.  Can you increase revenue by doing a winter rental?

Wildwood NJ STR hold - Break-even year 1-2, Worth it?

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