I have been searching for a vacation rental property on the gulf coast of Florida for about 5 years. I finally found something that I now have an accepted offer on. I will be retiring in about 4 years. This is my first property. I am pretty scared with the recent events happening in the world. I have lost much of my 401 like many. I can still back out of it because the closing isn't until the beginning of May and loose only the earnest money and inspection costs. I need advice on what to do? Should I back out? I don't want to buy something that will loose its value soon after I do. Should I wait? I would appreciate any insight.
First, congrats on finally finding a vacation rental! As you know, they are few and far between.
And, the recent events...be at peace. They happen and they end. Vacations are the stuff that make life full, exciting, brings us closer together, and gives us JOMO (joy of missing out - of staff meetings, traffic, weird neighbors). I don't recommend walking away because of the current events that are making people hoard toilet paper and sanitizer. When it all said and done, it's gonna be vacation or bust!
Consider this:
Look at the deal again. Are you paying within current valuation? What historically has been the appreciation in that market? What is the demand for vacation rentals in that market - and at what price? What would it rent for as a long-term lease? If you needed/wanted to sell it after a year (capital gains would be over) or two, could you and for what price?
When fear sets in (and it does for all of us), do a quick review of the deal. Calculate what the gain would be if you left the money in a money market or CD - or even the stock market. And, then make your final decision. If you've chosen a solid market, know your cost to hold/maintain, know the market demand and resale history - let the self-doubt go. It may just be the best financial decision you've ever made.
Feel free to PM me if I can help you walk through the thought process. You waited five years to find the right property. Give yourself a chance to discover that you know what you're doing and you've done it well.
Thank you Patricia! I am sure some of what I am feeling is self doubt like you said. This was a big step for me and I am very excited to finally get started in the property investment market. I appreciate your post and advice!