Buying a Rental pitfalls (renters, HOA, insurance)

[jeffkellbush]

I am considering a purchase on Beach area home to rent now and live in after retirement? Please advise if you have personal knowledge? Thanks in advance.

[spbbound]

The most important variables are the condition of the property so you have a good idea how much maintenance expense you can expect, expense associated with a management company if you won't be dealing with that aspect yourself, liability insurance and flood insurance if the home is below FEMA base flood elevation or not built to the proper specs for the flood zone type it's in (a zone, v zone, etc). Also form an LLC to purchase it; gives you much better protection as long as you don't do anything negligent.

I would not carry less than $1 mil in liability. I have rental property and had a slip and fall incident once; it was a big mess and I'm very happy I had adequate insurance coverage or that one issue would have lost me the property and any profit I had ever made from it.

You may want to find a management company you feel comfortable with first, if you're going to go that route, and ask for their guidance on where they have beachfront properties that seem to stay rented consistently, then target those areas for your purchase. If you're doing it yourself, you can still use things like Zillow, AirBnB, etc. to watch rentals in a given area; AirBnB is particularly useful because if you find a bunch of properties around one area that all have a lot of reviews, you can assume you'd be able to keep it rented fairly regularly. If you're looking more for long term renters, a Realtor may be advisable.

[071402]

Originally Posted by spbbound

The most important variables are the condition of the property so you have a good idea how much maintenance expense you can expect, expense associated with a management company if you won't be dealing with that aspect yourself, liability insurance and flood insurance if the home is below FEMA base flood elevation or not built to the proper specs for the flood zone type it's in (a zone, v zone, etc). Also form an LLC to purchase it; gives you much better protection as long as you don't do anything negligent.

I would not carry less than $1 mil in liability. I have rental property and had a slip and fall incident once; it was a big mess and I'm very happy I had adequate insurance coverage or that one issue would have lost me the property and any profit I had ever made from it.

You may want to find a management company you feel comfortable with first, if you're going to go that route, and ask for their guidance on where they have beachfront properties that seem to stay rented consistently, then target those areas for your purchase. If you're doing it yourself, you can still use things like Zillow, AirBnB, etc. to watch rentals in a given area; AirBnB is particularly useful because if you find a bunch of properties around one area that all have a lot of reviews, you can assume you'd be able to keep it rented fairly regularly. If you're looking more for long term renters, a Realtor may be advisable.

spbound - just curious - do you ask your tenants to carry their own policies when renting from you? I had a similar situation. thanks a bunch.

[spbbound]

The rental agreement places the responsibility for any loss or damage to their belongings on the tenant. Renters insurance I've heard is fairly reasonable for folks who rent but do need to insure their property.

[lavender]

Beach area home is a broad name. Do you mean near to the beaches, on the beaches, home - single family home/condo?
Rent - long term/seasonal/vacation? These are all things to consider. Insurance is definitely a big thing, if you rent you have to have liability. If you have a mortgage you have no choice, you should state its an investment property (or you could negate your insurance and loan) if its long term the insurance is slightly diff to if you have a seasonal rental. If long term you need to be clear that renters know they have to have renters ins. Always ensure long term renters know all the HOA / Condo/whatever restrictions and rules are in place. if you are doing long term and want to be near the beaches, then look at some areas close to waters but not in flood zones, that will help with ins too. Hope this helps Good luck to you