Do you often wonder what it would be like to own a beautiful house by the ocean? You’re not alone. Whether it is a bungalow, cottage, or vacation home, many people have bought beach-side property at low cost and transformed their dreams into a reality.
With prices plunging as low as 50% in some coastal cities, this may be the best time to find and acquire your dream house by the beach. However, buying the right beach house for your specific needs can be a daunting task. For instance, if the home is for vacation and is not your primary residence, you’ll need a solid credit rating and enough cash to make two mortgages.
Other important considerations include the following:
- Look for a house that fits your needs: You are likely to become very popular after buying a beach house. You can use this investment as a special gathering place for your family and friends. Be sure to do your homework though. People often use their second homes for summer vacations, so you need to think about how many bedrooms and bathrooms you’ll need. Additionally, you should consider the style of the house and any maintenance issues it has, such damage from saltwater or sand.
- Beach house maintenance: You will need to ensure the quality and safety of your beach house through regular maintenance. These maintenance costs can get expensive, especially if you overlook critical issues. Be sure to always figure in potential maintenance costs on your cost/income balance sheet. It would be a clever idea to hire a local person to periodically check the property, especially if you plan to rent it out.
- Beach houses can be a wonderful way to increase your wealth: For most Americans, your house becomes the most important asset of your wealth. If your current home may someday be worth $600,000, then buying another home can make you a millionaire! This scenario can easily be achieved if you rent out your property. The passive income generated from renting your beach house can diversify your portfolio, increase your overall return on investment, and provide you with a cash cushion for any damages or repairs to your beach house. You’ll need to make sure your beach house is the right size, condition, and location for renting. So long as you get a positive cash flow, it will be a worthwhile investment.
- Should I pay cash or get financing? Generally speaking, around 30% of second home sales are paid in cash. Paying in cold, hard cash actually increases your chance of scoring a deal. In some cases, a seller may accept a cash bid that is lower than the asking price because financing deals tend to take up a lot of time or fall through. It is important to remember that in today’s financial environment, you will need 20% down, and total costs for your primary and vacation homes should consume no more than 33% of your monthly gross income.
- Your beach house can become your retirement home: Your beach house can not only provide you with years of added income but can also become your future retirement home. If you buy a second home now, manage it right, and pay it off, you’ll have a nice little nest egg for you and your loved ones to enjoy in their later years.
A beach house can be a huge responsibility, but it can also provide you with huge returns if you are careful in finding the right home. These special homes can provide a sense of relief from daily pressures, and your coveted beach-side property may just pay for itself if you rent it out for others to enjoy!