Listing Courtesy of KELLER WILLIAMS REALTY
Become a landlord!
Be your own boss!
Build equity that someone else pays for!
These may sound like the kind of come-ons that you tune out when you hear them on the radio or TV, but, surprisingly, they’re actually more reality-based than not. Whether you're buying a Ocean View property for its rental potential, or preparing to turn a currently-owned property into an income-producer, the game plan is straightforward. Locate a suitable Ocean View property: one with the rental potential to create cash flow either as income, or to build real estate equity…or both!
So what’s the catch?
In fact, there is one. Becoming a successful landlord has more to it than spotting an appropriate Ocean View property and sitting back, waiting for someone to nail up an ‘Easy Street’ sign. In order to make the most of the opportunity an Ocean View rental property represents, you need to either already have, or develop, a requisite set of skills. Chief among them:
1. The relationship between landlord and tenant, and landlord and the tradespeople he hires, should be purposefully professional. Your tenants may also be fellow Ocean View residents (or even neighbors), yet skillfully establishing and maintaining an amiable yet businesslike relationship takes dexterity and finesse. Substituting an overly personal relationship instead of the more proper businesslike one can result in counterproductive consequences…like tardy rent payments or superfluous demands.
2. As much as any other business, successful landlords are usually ‘people people’: they don’t shy away from interactions on a face-to-face basis. Whether it’s dealing with renters’ concerns, interviewing potential tenants, or handling the personnel who help maintain a Ocean View property, great landlords have great leadership skills. They have the knack of bringing positive energy to everyday dealings. Good landlords exhibit authority without being overbearing, and they allow their tenants to feel the right degree of investment in what is their home, if only temporarily.
3. It may seem as if turning a property into an income-producer is an extremely simple task, but in fact it takes organizational skills to accomplish it efficiently. There are laws that have to be observed, and documentation to be maintained. People who cultivate clarity in such matters are nicely suited to the demands of running a rental property.
4. There are unavoidable time availability demands that mustn’t be ignored. A tenant with a maintenance emergency needs to have it addressed. Now. It’s one thing that even the most people-oriented, organizationally proficient business titan should be prepared to attend to without delay.
But suppose you lack some (or even all) of these traits? Should you just walk away from a Ocean View property—even after you’ve spotted one you know has great potential? Actually, there is a Plan B, which is to hire a property manager—a professional practiced in all the requisite skills. To explore the current crop of Ocean View property listings with serious potential, just give me a call! Call/Text me Russell Stucki at (302) 228-7871, email me at firstname.lastname@example.org, visit more listings at www.beachrealestate.com.
In Ocean View real estate, there are happy words (“sold!”) and there are troubling words (“default”). Because of the associations they conjure up, some phrases just automatically make us happier. Two of the leaders in the positive category are the magical words, ‘vacation home.’ All by themselves, they can trigger a smile. Why not? “Home” is comforting; “vacation” is fun. Put them together in “vacation home” and you’ve got a double positive. It’s a real estate equivalent of Jimmy Buffett’s Cheeseburger in Paradise.
As the economy recovers, some American families are doing more than just smiling at the idea. The Wall Street Journal says that vacation home sales jumped more than 50% in 2014—up from 717,000 the year before. Quicken Loans reports a jump “in both the number and dollar volume of second home mortgage applications.”
To a Ocean View homeowner with sufficient wherewithal, there are some practical, real life incentives for moving the idea from daydream to the ‘to do’ list. The primary motivation is what comes first to mind. Just as a vacation is a welcome respite from the day-to-day, a vacation home needs to qualify as a destination that is pleasurable in itself. Where that could be differs for everyone, but whether it be the beach, desert, mountain, lake, cultural metropolis or outdoor sporting mecca, any Ocean View homeowner’s vacation home should be a haven inherently suited to relieving the stress of the workaday world. Although it would seem to be properly classified as a pure luxury expense, vacation homes can be more financially sensible than that.
The Kiplinger web site has a number of observations for vacation home buyers. It finds that some mortgage interest rates on second homes have lowered to first-home rates. Another alternative is the “favorite source” for all-cash purchases: a home equity line of credit. According to Kiplinger, “Mortgage interest on a second home is deductible on as much a $1 million in principal for both homes combined.” If lenders calculate eligibility via the Fannie Mae and Freddie Mac guidelines, a borrower’s total debt payments should not exceed 36% of gross income…but if the second home is to be rented, that income can be part of the calculation.
Which brings up some other possibilities. A vacation home can not only cut down on vacation expenses (hotel and restaurant prices are rising, after all); if rented out some of the time, it can contribute offsets to its cost. To take advantage of IRS rules regarding personal versus rental classification, you should consult a tax expert. Since a quarter of vacation homes are rented out at least some of the year, it’s a tactic that deserves investigation.
Perhaps the advantage that’s talked about most for second home buyers is the contribution it can make toward retirement. If a retiree ultimately converts a vacation home to principal residence, profits from the former home can make a handsome contribution to the retirement nest egg. And if by retirement time that vacation home has been paid for in whole, it can make for an even more pleasing financial picture.
For an Ocean View resident with sufficient resources, purchasing a vacation home can be a practical as well as emotionally sustaining venture. If it sounds like an idea worth investigating further, talk it over with your financial advisor—and I’ll be standing by to help with any and all real estate considerations! Call/Text me Russell Stucki at (302) 228-7871, email me at email@example.com, visit more listings at www.beachrealestatemarket.com.