Nathan Colmer | The Van Dyk Group
C: 609.290.4293 | O: 609.492.1511
One of the advantages of buying a home in the LBI real estate market is the consistent interest in summer rentals on Long Beach Island. The ability to rent a home not only keeps the LBI real estate market stable, especially in times of major economic trouble as we saw in 2008, rentals also provide an interesting investment opportunity. LBI rental investment properties offer the ability to purchase a home and generate immediate cash flow. With such a strong rental market, it is not uncommon to see the entire cost of ownership covered by the rental income or a profit generated.
The activities and attractions that draw buyers the LBI real estate market are often the same activities and attractions that will draw perspective tenants. Keeping in mind the right location for your LBI real estate investment will go a long way towards ensuring full occupancy and long-term appreciation of the asset. Many homes on Long Beach Island serve as both vacation properties and rental investments so when buying an investment property in the Long Beach Island real estate market, you can typically have a good idea of what kind of income for a property will generate. This makes it easy to dissect the expenses and determine if the investment is secure.
Like many seasonal areas, Long Beach Island has some distinct trends throughout the year. Long Beach Island experiences a certain activity during the busy summer months of late June through early September which is flanked by the shoulder seasons of spring and fall. Winter sees little to no interest in the summer rental market on Long Beach Island. With such a small window of opportunity, it is important to understand the market and make sure the rental property is the best among its competition and remains a profitable investment. There are three ways to help accomplish this goal. They are:
While all locations on Long Beach Island will see interest in rental market, there are some ways to maximize perspective tenants interest. Oceanfront, ocean block, and Oceanside properties tend to rent more quickly than their bayside counterparts. Homes in Beach Haven or in close proximity to local attractions will also see increased activity.
Keeping property looking neat and clean is perhaps the most essential step in a successful LBI real estate rental investment. An investor should remember that there LBI home is not the dumping ground for old furniture. Rather it must be furnished and decorated to attract the proper clientele. This will increase the weekly rates and should the property more profitable.
A summer rental property on Long Beach Island is a business and therefore it is important to budget for annual expenses. As I mentioned above, keep the property looking neat and clean is very important and it is therefore prudent to allocate some funds towards keeping the property looking at its best. Budgeted allowances should also include servicing the air conditioning systems, cleanings and utility bills.
While every rental house will be unique in the cost to buy and to own I have enclosed an example of a simple LBI rental investment property. I can run specific numbers for any house on LBI to give you an idea of the detailed cost to own, rental potential and gross profit or loss on the LBI rental investment.
Purchase Price: $525,000
Annual Rental Income Potential: $40,000
Annual Mortgage Payment: $20,000
Annual Ownership Costs: $15,000
Total Gross Pre-Tax Profit: $5,000
If you are a homeowner on Long Beach Island and thinking of renting your house this is the place for you! You can explore the different ways to manage your summer rental home on Long Beach Island.
One of the most profitable rental investments in the Long Beach Island real estate market is to build a new home and rent it out. This can have a double gain as a new home should have immediate equity in the amount of roughly 20%-30% and the rental rates will be significantly higher for the new house. This can create a very lucrative option for those looking to invest in the LBI real estate market.
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