YOUR GUIDE TO INVESTING ON LBI
Maximize Your Real Estate Investment Potential
The Advantage of Rental Investments on LBI
One of the biggest advantages of buying a home in the LBI real estate market is the strong demand for summer rentals. This consistent interest helps keep the market stable, even during economic downturns like 2008, and creates a valuable investment opportunity. Many rental properties generate enough income to cover ownership costs or even turn a profit.
The same attractions that draw homebuyers to LBI also appeal to renters, making location a key factor in ensuring full occupancy and long-term appreciation. Since many homes serve as both vacation properties and rentals, it’s easier to estimate potential income and expenses, helping investors make informed decisions about the security of their investment.
LBI Rental Investment Properties
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:
Purchase a home in an attractive location
Keep the property’s appearance top-notch
Budget for repairs and maintenance throughout the year
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.
Economics of Summer Rental Investments
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: $900,000
Annual Rental Income Potential: $75,000
Annual Mortgage Payment: $36,000
Annual Ownership Costs: $20,000
Total Gross Pre-Tax Profit: $19,000
In spite of what many people say, it is VERY possible to have a positive cash flow return on a summer rental investment property on Long Beach Island. The above numbers are a real world scenario and can be replicated under the right conditions.
LBI Rental Management Options
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.
Building A New House As A Rental Investment
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.
REAL ESTATE TIP:
Remember that rental income is taxed and must be declared. It is important to budget for this when planning for your expenses.