When asking yourself Is a beach house a good investment?, many contrasting thoughts can come crashing into your head (pun intended). These questions and concerns can sway your opinion, and it’s not always for the better. While it’s inevitably intimidating to invest in rental property, buying a beach house to rent out can actually be a very stable source of income and a great vacation spot for your own family!
To answer your doubts, we’ve done the research for you. We’ll take a look at why these properties are booming in popularity, some of the pros and cons of owning a beach rental, and what the average income is. Whether you’re looking to buy a villa or a condo, you’ll be able to make an informed and fact-based decision on whether investing in a beach property is the right thing for you.
Are Beach Rental Property Investments Smart?
If you’ve ever spent a week soaking up the ocean breeze in a beach rental, you’ll know why the demand for these properties is so high. The psychology of why humans are attracted to the beach is simple – the environment is extremely calming, there’s a variety of invigorating activities that can be done, and our bodies benefit from the different elements. From vitamin D boosting your serotonin to magnesium from the ocean water calming your nervous system, you’re bound to feel at ease.
However, loving the beach isn’t a good enough reason to buy a rental property so let’s get down to the nitty-gritty.
Pros and Cons of Owning a Beach Condo or House
Before you dive into buying a beach property, you should know the pros and cons that come with renting it out.
Pro: You can make money
There’s a reason why the vacation rental industry continues to expand. According to Statista, revenue is expected to grow by 36.7% in 2021. This implies that there’s potential for earning income and creating a full-time job from your rental business.
Con: Your income might depend on the location and season
If your beach rental experiences all seasons, you’ll have to be very strategic when it comes to setting your prices during the spring and summer. Without preparation, you might struggle to cover the winter months when demand is lower. This isn’t always the case; many beach rental owners find that the income earned during peak seasons is more than enough to hold them over the slower periods.
It’s also important to note that due to the pandemic, travel trends have shifted significantly. With the increase in workationers and families looking for a change of scenery throughout the year, rules and expectations from the past no longer apply. This means that beach rentals are getting booked year-round, regardless of the weather.
Pro: You can spend your holidays in the rental
One of the perks of owning a beach rental is that you can use it for your own holidays. Keep in mind that if you’re planning on depreciating the property and deducting expenses as a business, you should only occupy it for personal use less than 10% of the time it is rented.
Con: The insurance fees will be costly
Since beach rentals are prone to more damage, expect to pay higher insurance fees for your property. This includes mandatory flood insurance, which according to Investopedia can add up to over $10,000.
Pro: Marketing your property will be easy
Having a picturesque property near the ocean makes marketing a whole lot easier. I mean, who doesn’t like watching Instagram stories of people having a picnic at the beach or seeing underwater pictures? While professional photography is always recommended, being near the ocean will give you a great advantage when it comes to promoting your rental.
Make use of social media, whether that’s Facebook or Instagram, and start strengthening your online presence from day one.
Con: Maintenance fees and taxes will add up
Renting out a property near the beach also tends to get quite messy. Not only do you have to focus on getting rid of the sand that will eventually make its way into your rental, but you’ll also have to deal with corrosion as a result of the salt in the air. This can affect both the interior and exterior of the home and will lead to more frequent repairs.
Aside from maintenance and cleaning fees, it’s crucial to know that beachfront rentals face much higher taxes than most properties because of their value.
What Is the Average Beach House Rental Income?
The amount of money you can earn with a beach rental depends on a lot of factors. These include the number of listing sites you’re using, whether you’ve invested in a vacation rental property management software, your marketing strategy, and the property itself.
Vacation rental software can help boost your income for a number of reasons. First, you can create your very own bookable vacation rental website. With access to a channel manager, you can sync your calendars and bookings from both your website and top listing sites like Airbnb and Vrbo. This means you can save time and get more visibility without risking overbookings.
It also means that you can automate guest communication and provide top-notch customer service for all your guests. Build your reputation and watch average daily rate grow.
What to Look Out for
By knowing the risks that might surface as a beach rental owner, your strategy will be much more efficient and successful. Here are a few things you should look out for before diving into your investment:
As previously mentioned, if you’re looking to buy a beach property in a place that experiences all four seasons, you’ll have to work extra hard during the warmer months. The area that surrounds your property is also very important, so ask yourself the following questions:
- What’s the weather like throughout the year?
- Is there an airport nearby?
- Is the property accessible by public transportation?
- Is there a variety of activities for guests to participate in?
- Is it a tourist destination? What is the population like?
Before buying a beach house or condo, be sure to check out the local laws regarding vacation rentals. Some states don’t allow short-term rentals at all, and others require a license. So get familiar with the regulations and be fully informed before making any decisions.
There you have it – an overview of beach rental investments! Whether you decide to go forward with your investment or not, know that there’s an abundance of free resources online to help guide you through the process of owning a vacation rental. If you’re currently a beach rental owner, feel free to share your tips and tricks with fellow readers in the comments section below.