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I live in Philadelphia, my late husband and I own a vacation condo in OCNJ. here are my thoughts.
1) owning rental property is a long term goal. like a house the longer you own it the more equity to get in it and then your cash flow begins.
2) I use a realtor/property management firm. they charge 8% (a little lower than the standard 10% because we've been customers for a while). but they handle all the stuff I don't want to including maintenance and background checks.
3) Believe me, the Jersey shore most definitely has down season. you must be financially and emotionally prepared to weather the good times and the bad. After the 2008 economy tanked quite a number of folks lost money and went into foreclosure because the seasons were horrible. After Sandy hit, was another slow period.
The Jersey Shore has always been a place where you can rent a home for a week for the past few decades even before the internet. In the late 80's some friends and I rented a shore hose for the week, it was only 2 bedrooms (2nd floor of a home about 2 blocks from the beach) but a bunch of us stayed and some slept in the living room, even back then it was $2,000 a week, can't imagine how much it is now.
Plus that prom thing usually happens in June after the summer rentals weeks already started.
like anything it depends. I rented a place from July 22-29th, 2 bedroom on 24th street, actually 1 1/2 blocks from the beach for 1900 bucks. that included taxes and rental insurance. I don't use airbnb. I used Berger realty. love them.
Here's the issue with Air BnB and all the other online vacation rental places. If you do not have a vacation rental manager, then you must go yourself, every week, to make sure the unit is clean, launder the sheets, count the silverware, and look for damage.
You can't have the week two tenants come in and find chicken bones and dog feces on the floor, spaghetti sauce flung on the walls and human blood on the bed sheets, all left there by your week one tenants. If that happens they will destroy your online reputation and you can forget about renting though that website again.
Another possible problem: Be aware that many communities are now prohibiting short term rentals because companies like Airbnb are now so prevalent. And many HOAs and city councils are debating such prohibitions for the near future, which means even if your community allows them today, they might prohibit them in a year or two.
This has become a big issue in Williamsburg, where I live. Just this month my community joined the bandwagon. If I had bought my house with the intention of renting it out I would be SOL.
I am not sure if this is true. One way to test this is to search in AirBnB, HomeAway, etc. in the location of your choice. Select lodgings that are close to what you plan to buy; look at the calendars to check occupancy; figure out your average net annual income.
In my days in the US I saw a lot of disaster stories, based on unrealistic income and expense expectations, fanned by the flames of real estate developers and the cyclical nature of rental markets in vacation "heaven", and exaggerated by the fact that people are often forced into selling at the low end of the cycle...and losing their shirts in the process.
In fact AirBnB won't tell you much because it isn't the whole rental market in vacations heavens. It may only be small fraction of a much larger rental/hotel market in which rental owners have little or no market power by raising and/or lowering the rents they charge tourists.
Heed the words of an old friend of mine: "You can't make money in Paradise".
And that's just the beginning of the list of problems. In Williamsburg, they had problems with trash, noise, petty crime, people breaking rules about visitors, parking on the streets, and speeding. Things came to a head when some little kids crossing a street in one residential neighborhood almost got hit by a tourist.
Can't speak for all vacation towns, but Williamsburg is an example of a tourist town that has banned them.
You will not cover your cash flow. If you can afford the vacation home without rental income, you will be fine. If you need a perfect rental season to afford the house, you should skip buying.
We owned vacation property and knew going in that in a good year the rentals might cover 3/4 of the cash flow. In bad years it covered 1/4 of the cash flow. You also need to account for higher wear and tear on floors, furniture, appliances, plumbing, HVAC, etc, and the unexpected breaking at the wrong time. Your water and power bills will be much higher. In some areas, local authorities will tax your property at higher rates than full time locals. Depending on your income, you may or may not be able to take losses on your tax return. Unless you are close to the rental, you will need to pay for on site management.
We are happy for the 25 years we had our 2nd home and we also happy not to have to deal with it anymore.
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