Nathan Colmer | Van Dyk Group
C: 609.290.4293 | O: 609.492.1511
Nathan Colmer | Van Dyk Group
C: 609.290.4293 | O: 609.492.1511
When determining your budget to buy a home in the LBI real estate market, include the short and long term costs of ownership. Long Beach Island is a unique market, and as a result, there are some unexpected costs of owning a home on LBI. By accounting for expenses like flood insurance, wind insurance, property taxes, and utility bills, as well as long term maintenance, you can better understand the actual cost of investing in a home on Long Beach Island.
As is the case with any home purchase, there are additional costs that must be planned for. This page discusses the cost of owning a home on Long Beach Island. This is different from the buyer's closing costs in an LBI real estate transaction, which are the expenses associated with the actual purchase of a home. You can learn more about buyer's closing costs by clicking here.
Flood insurance is an unexpected and little-understood bill for many buyers in the LBI real estate market. The good news is that flood insurance costs are very affordable for most homes on Long Beach Island. For specific details, please visit my flood insurance section of this website, but some rough numbers to use are $700-$1,500/ year for a home above Base Flood Elevation and $1,500-$3,500/ year for a home below base flood elevation. Remember, these are rough numbers, and an elevation certificate and a consultation with an insurance expert are needed for accurate pricing. There are different types of flood policies, each with pros and cons, so be sure to explore your options with multiple companies and providers to obtain the best rate. Recently, private flood insurance companies have entered the market, which opens up a wide range of policies and pricing. Homeowners on Long Beach Island may also be able to purchase "excess" flood policies to help provide added coverage for a price.
If you rent out a home on Long Beach Island, some additional expenses should be planned for. If you rent through a local real estate agent, the rental commissions will usually be in the 10%-15% range of the base rental amount (but keep in mind all commissions are negotiable in New Jersey). Alternatively, local "For Rent By Owner" websites like VRLBI will charge a flat fee in the $500-$1,000 range. There are also national rental websites such as VRBO and AIRBNB, both of which will typically charge a percentage of the rental amount. This percentage varies but is not much less than what the local real estate agents charge. You should also budget for repairs and weekly home cleanings if you do not plan to clean the property yourself. Cleaning prices will depend on the house's size and the cleaning service's quality, but for most homes on Long Beach Island, a cleaning will range between $300 and $800/week. A rental home will usually see some higher utility costs as well, most commonly electric and water usage, so you should budget around $1,000-$2,000 more in utility costs with a rental home in the LBI real estate market.
Be sure to budget for the annual maintenance of your LBI home. These expenses will vary, but typical items and estimated costs will include
If you plan to rent the house, there will usually be more annual expenses incurred. Some common items that must be addressed are small appliance replacement, occasional interior painting (especially in the staircases), and AC servicing.
Homeowners insurance has a wide range of prices depending on the amount of coverage and the financial strength of the company providing the insurance policy. As with flood insurance, it is best to speak with an insurance agent, as the specificity of a home's risk levels and the amount of coverage sought can create wide variations in the cost of insurance. Some rough numbers are $1,500-$2,500 for a Cape Cod and $2,500-$3,500 for a larger home with more amenities. However, these numbers can vary greatly depending on your coverage limits and the company providing the policy. Homeowner's insurance policies in the LBI real estate market can also vary depending on how the home is used. A home that is rented will usually see a higher rate than a second home will. Some companies mandate separate "wind" coverage (essentially for hurricanes) that may price differently than a simple homeowners insurance policy. Lastly, some condo buildings are seeing very high coverage expenses, which can be nearly cost-prohibitive to obtain!
Property taxes will vary between the different towns on Long Beach Island. A very rough number to estimate annual property taxes will be between $5,000 and $8,000 for a Cape Cod-style home and $10,000 to $35,000 for a newer construction. Beach Haven can, at times, register a higher overall tax rate, and Ship Bottom tends to be the lowest. A general but helpful way to estimate property taxes is to multiply the price of the home by 0.65%. This is only an estimate, but it will typically be in the range of property taxes on Long Beach Island. Keep in mind that often times, the taxes shown in the MLS are incorrect, especially in the case of a new construction on Long Beach Island, so it is very important to verify this information before buying a home.
Long Beach Island is serviced by New Jersey Natural Gas and Atlantic City Electric. The annual costs of each utility will depend on the size and efficiency of the home. Most Cape Cod-style homes will have a monthly heating cost of $125-$500 and a monthly electric bill of $150 to $600. Surprisingly, a newer home in the LBI real estate market is usually less, thanks to a more efficient design. For most towns, water and sewer are metered and billed quarterly. Trash service is typically factored into your property taxes and not billed separately unless you are in a condominium. Some condo associations on LBI will have a private trash service and bill accordingly. It is very important to remember that utility costs will vary on many factors, including the size of the home, the age of the home, and your personal usage. A winterized home will see a much lower utility bill since the house is "off" and there is little to no electricity or gas usage.
Comcast Cable typically services cable and internet, but there are a few other providers in the area. Most cable and internet packages will range $150-$200/ month. Many homeowners on Long Beach Island opt only to utilize the internet with streaming services, which can greatly reduce the monthly usage cost. For certain plans, there may even be seasonal programs to pay less in the off-season when the house is not in use. Overall, internet service through Comcast is reliable and fast on Long Beach Island.
