Owning Beachfront Property
Regardless of their destination, many people enjoy staying on the beachfront property while traveling and are willing to pay decent money to do so. This is good news if you are an investor who is considering purchasing beachfront property for rental. The demand for beachfront property is high while the supply is relatively low. Few types of property retain such high value over time as beachfront properties. This is true for properties in the United States as well as Costa Rica. This type of investment tends to stand strong even when the economy is weak.
Considerations When Renting Beachfront Property to Others
According to Stewart Technology Associates, it is important to consider more than one source of rental income when you decide to rent your property to others. One possibility is to rent your beachfront property out long-term the same way the owner of an apartment complex would do. You take a rental application from prospective tenants, research their background, draw up a lease, and collect rent each month. The downside to long-term rental is that you have to deal with frequent maintenance requests, tenant turnover, and the hassle of having to evict someone who doesn’t pay his or her rent on time. You can lose a lot of money if your beachfront rental property sits vacant for a month or more.
You can typically command a much higher rental rate with short-term vacation rentals than you can with long-term rentals. A Home Guides article in SF Gate notes that your primary expenses to maintain a vacation beachfront property are linens, furniture, utilities, and advertising. The article goes on to state that you can easily recoup these costs by keeping your short-term rental unit full throughout the year. Due to the high demand for this type of property during all four seasons, this is usually not a problem for most investors.
As part of their rental fee, tenants and guests expect you to keep the property clean and well-maintained. Make sure that you understand the unique issues of beachfront property and that you hire enough maintenance staff prior to your first rental.
How to Determine if Your Property is Making You Money
In order to turn a profit, you should plan to earn at least two percent of the cost of your property in rental fees every month. You may operate at a loss for a while until word of your beachfront property gets out and you can keep it rented consistently. It is important to have other sources of income or an alternative investment strategy until you reach the point of profitability. If you don’t plan carefully, you could be forced to sell your property at a loss.
Vacationing in Your Own Beachfront Rental Property
Because you invest a lot of money and time into your property, you may want to spend your own vacation there. However, you must take care to follow IRS guidelines regarding personal use if you want to write off your business expenses associated with the property. The personal use limit is currently 14 days. There is also a limit on the amount of your depreciation deduction based on your income and how many days you used the beachfront property for personal use.
This article was contributed on behalf of Stewart Technology Associates, your number-one choice when looking for mooring services. Check out their website today and see how they can help you!