First Time NJ Beach Vacation Rental Buyer
My wife and I are looking to purchase a beach house on Long Beach Island New Jersey in the foreseeable future. Long Beach Island has been a vacation spot of ours most of our lives, and we want to be able to own a house that our family can spend quality time together at. Our only way to make this happen since LBI is an expensive market to get into is to purchase a property, rent it out in the summer so that rental income can cover the mortgage/taxes/expenses for the year, and then enjoy it in the offseason.
There are a few complicated aspects though in order to make this work.
1. LBI is an expensive market to get into, and rentals are typically weekly. From the research that I've done, a typical rental season is anywhere between 12-16 weeks so in my analysis I have been running rental numbers for 15 weeks. The rest of the year will most likely be vacant which is a long time.
2. Weekly vacation rentals have variable prices, so early in the summer is cheaper, July and August are the most expensive, and September might rent out for a few weeks. I have been trying to analyze properties by including an average weekly rental price in my spreadsheet.
Here are my questions for you all:
1. With beach houses being in such short supply and prices very high, should we wait a year or two to get into the market?
2. If we are simply looking at this as a way to afford a beach house and pay the mortgage/costs with rental income, should I accept a lower cash on cash return and annual cash flow than a typical rental property would demand? I still include capital expenditures, vacancy rates, and all of the other expenses in each analysis of mine. But it is very tough to find a property with a respectable annual cash flow worthwhile.