When purchasing a second home in an exciting place like the 30A, you have the unique opportunity to double your property as a getaway for the family as well as a financial investment for their future. Between the property’s growing value and renting the house to tourists, there are multiple avenues of revenue available with owning land in such a valuable area as South Waldon. Check out these four factors to consider when buying an investment property so you know what to look for in your future house.
Often, the most significant determining factor of a house’s property is the land it sits on. Especially when talking about a coastal area like the 30A, the property’s location will dramatically sway the value. The most valuable and exclusive properties will be ones directly on the water. Not only will the resale value increase, but you can also charge renters more for beachside locations.
However, that’s not to say there isn’t tremendous value in any home located in the South Waldon area. There is only so much land along the 30A, so as more and more land are developed, there will be a higher premium on surrounding properties. Due to this rising demand, a parcel of land in one of our local beach communities should only keep growing in value regardless of its proximity to the ocean.
Also, it’s helpful to understand that even neighboring lots can have gaps in valuation due to their proximity to specific amenities or ocean views. Therefore, make sure to consider every aspect of a home’s location before making any final decisions.
Increased Down Payment
The mortgages for investment properties work differently than when you’re buying a typical home. Rather than being around or below 10%, investment mortgages usually require a down payment between 15% and 20% of the total cost. Then, on top of that, there will be stricter approvals as lenders want to be assured that you have the capital necessary to see the investment through without going bankrupt. The final cost of your down payment will be determined by your income, credit score, and debt-to-rate ratio.
The 1% Rule
There is a rule in real estate investment referred to as the 1% rule. This rule states that you should make back at least 1% of the total cost you paid for the building every month. So, if you spent $300,000 on a property, you should be getting back $3,000 in total rent each month. While there can be expectations, this method for determining rental prices will help you stay on track to getting a positive return on your investment without underpricing a unit or home.
Once you have an investment property ready for short- or long-term rentals, you’ll need to determine how to manage the building and provide maintenance when necessary. If you have no training in property management, there are numerous classes and seminars available to teach you the tools. You’ll need to learn or hire someone to handle short-notice maintenance needs, along with booking and managing guests if you’re unavailable. For those that can’t do this themselves, you can use a trusted third-party property manager like Overseas that can manage the day-to-day running of your investment home.
If you feel inspired to find a parcel of your own after exploring the four factors to consider when buying an investment property, check out the listings at 30A Local Properties to view Prominence 30A homes for sale!