If you are planning to buy a beach house property, you should think about a few aspects before purchasing it. Stick with us to know more-
The short form of a condominium is known as a condo. The square footage of a condo is smaller than a single-family home. Basically, a condo is in a complex of buildings or in a single building. This housing facility is best suitable for people who are looking for low-cost housing close to or in the city. The maintenance cost is also quite affordable.
The thought of having a getaway destination of your own with additional income from the rent is the perfect investment. It will be one of the investments where you have to pay once to enjoy the unlimited benefits.
Benefits of Having A Beachfront Condo
The best thing about buying a beachfront condo is you can both use it for personal use and rent it. Continue with us to know about the other benefits –
Profitable Investment Option
The investment market of the regular property tends to fluctuate often. The prices and demand keep changing almost regularly. On the other hand, beachfront condos or vacation rentals present a different scenario. Furthermore, a vacation rental might give you more investment return than a mainstream real estate property. If you do not want to rent your beachfront condo, you can use it only for personal use for a couple of years. Then, you can sell it again at a higher price and make some extra profit from the investment.
Rental Facility
Visitors from the colder regions who often crave some sunshine have increased the demand for beachfront vacation condos. If your beachfront condo is located in the right spot, you will be able to have an outstanding return on investment from the rent alone. A resort that is located in the perfect spot is Compass Cove Resort.
Even the hotel industry itself expects the demand for vacation rentals to go up in the upcoming years. In addition to that, the income from the peak tourist season alone is more than enough to cover the maintenance cost and taxes for the rest of the year.
Tax Facilities
You may be able to get some extra tax write-offs for your beachfront condo on the basis of the type of your rental service and the location of where you are running your business. Suppose you are using the beachfront condo mainly as a personal vacation spot and not taking full advantage of the mortgage interest deduction facility already. In that case, you may be able to enjoy some additional tax benefits. Furthermore, you will be able to enjoy the same potential tax exemption facilities as the regular rental property owners if you use the condo as an actual vacation rental. This facility includes depreciation, repairs, mortgage interest, etc.
In order to take the tax advantages, there is no other option except declaring the rental earnings as income which may have a positive or negative impact on your personal income tax situation.
Higher Selling Price Than Initial Investment
If you want to sell your beachfront condo after a couple of years, naturally, you will be hoping to sell the property at a higher price than your initial investment. Before selling, you have to remember, you will definitely get a higher price as the demand for prime beach properties are high, and everyone wants to own one.
Own Escape Spot
If you own a beachfront condo, you can enjoy a family holiday during the off-peak season when tourists visit less. A tourist spot where you can visit whenever you want without paying any rent makes the stay more enjoyable. Moreover, the income from the peak season rent will cover the expense of your stay.
Easily Convertible into a Full-Time Residence
A peaceful view of the ocean far away from the hustle and bustle of city life is a dream for many people. If you already own a beachfront condo, you can do that more easily. Moreover, the tax expense might be less for the permanent residents of that location. However, the tax expense varies from area to area. So, before settling permanently in your beachfront condo, talk to other residents and a professional agent about the living facilities and related tax expenses.
Companionship Opportunity for Similar people
No matter how old, you will need to interact with other people to live happily. Most of the condominiums are built with foster communities. Some of them also offer companionship to residents belonging to a similar stage of life, such as – singles or retirees. They also arrange several events which will help you to know your neighbors better.
Risks of Having A Beachfront Condo
The lucrative perks of having a beachfront condo are plenty, but it does come with its own set of different challenges. You should not forget that higher investment returns require higher stakes also. Some risks and downsides relate to owning a beachfront condo are given here-
Higher Down Payment
The large down payments required to acquire beachfront condos are one of the biggest reasons for losing new investors. The down payment is actually excessive for the new investors as you have to pay at least 20%-30% of the total property price initially as a down payment. In addition to that, you have to pay for the insurance along with that. Furthermore, you have to pay a higher mortgage rate for beachfront condos than traditional real estate properties. The price will also be higher for the condos located in a popular tourist spot.
Natural Storms and Hazards
If you buy a property near coastal areas, you have to be prepared for natural disasters such as hurricanes, flooding, and cyclones. If you face any of the disasters once in a year, the property will be damaged badly. However, you will not have to pay for the exterior damage. The cost of the damage to the landscaping, roofing, and outdoor space will be covered by the HOA fees. Still, you have to fix the interior damage of your property. Try to buy a condo that is situated at a higher level from the ground, and it will also protect your property during a flood.
Damage of the Property
Your beachfront condo can get impacted by both natural and human components. Climate, the frequency of rental opportunity, and the location of the property will decide your capability of bearing the damages.
Let’s discuss some common types of hazard you should be prepared for –
Mildew and Mold
The salty ocean air and humidity of the coastal area are the most suitable environments for molds to grow and breed. Molds can grow more quickly and spread more widely in the beachfront condos than any inland houses. The inner surface and carpets will be full of mildew and mold within a week if you do not clean them regularly. The molds tend to grow more rapidly during the off-peak seasons as the inner surface remains unattended for long. Leaks from roofs and pipes can also lead to similar damage.
Damage to the Flooring
If you own a ground-floor condo, you will have to be prepared for the flooring damage too. The occasional flooding and high tide can damage both the wooden and non-wooden flooring. In addition to that, salty seawater and beachgoers’ traffic from outside areas can bring back sand, which will damage the flooring material if it soaks up the moisture of the woods.
Damage Due To Corrosion
The humidity can cause damage to your furniture and other housing tools also. It can cause corrosion to your wiring system, hardware, metal furniture, and even light installation. Such types of damages can cost you a good amount of money if they are left unattended for long. However, if you have to repair or replace them more frequently, it may cost more than your rental income. To avoid huge amounts of cost at once, you have to check them regularly and if you notice any corrosion, fix them immediately before they become a mess.
Damages Done by the Partying Renters
Usually, we rent the regular properties for a long period, and they are used by the same user for years which makes them less susceptible to damage. On the other hand, beachfront condos are rented for a short time, and most of the renters use them for partying and get-togethers. Naturally, it becomes hard to keep them in pristine condition. They tend to damage the flooring area and indoor settlements, which increases the maintenance cost automatically.
Another problem is, the partying renters make unnecessary noise which disturbs the neighbors. Such loud noises can lead to conflict with the homeowners association or condo management association.
Though buying a beachfront condo can be a great plan to add to your real estate portfolio, you should think about the benefits and risks again and again. The decision can turn into both a successful investment and a horrible nightmare.It all depends on your personal situation and risk tolerance. Before reaching any conclusion, discuss the investment options and opportunities with a trusted investment professional.