Beach Properties: Buying on the Low End
A common question that I get from prospective buyers looking to buy an investment property at the shore is whether or not the current market can provide a profit. The answer is almost always no…unless, you buy at the low-end.
The low-end of the shore market provides a great opportunity for several reasons. First of all, there will always be a market for low-priced properties in a beach town. The lower the price, hte more people there are who can afford beach properties And since everyone wants to be at the shore, you’ve always got a great market. Second, even if there is a market correction at the high-end, it normally doesn’t affect the low-end, so your investment has a sturdier foundation. Third, there is much more room for appreciation, even after a run up in prices like we’ve seen lately. Fourth, you are more likely to cover expenses and even mortgage for cheaper properties than for expensive properties. The range of rental rates during the summer is smaller than the range of prices for purchase. So, with a $200,000 property you cover a larger percentage of your costs through rentals than a person would with a million dollar home. You may even make a profit.
So, the next time you’re looking for an investment beach property, consider looking at the lower end of the market. It makes better investment sense.