Is A Beach House A Good Investment For A Vacation Rental Business?

The short answer is yes. However, it should be noted that purchasing a beach house and renting it is not a get-rich-quick scheme. There are several things you’ll need to do to make this type of investment worthwhile.

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Investigate The Area Thoroughly

If you are lucky enough to win the Surf Life Saving home lottery then you’ll have a stunning house and you won’t need to worry about the location. It’s certainly worth entering!

But, for everyone else, before you buy a property look at where it is and how popular the beach is. If you’re planning a vacation rental then you’re likely to attract families that want to spend a holiday on the beach.

That means making sure the beach has a safe swimming area and there are surf lifesavers on the beach. Making sure the area has all the right facilities for a vacation is essential if you want to attract renters and create repeat customers.

Check The Rates

You need to verify how much you can charge for your beach house and how many weeks of the year it is likely to be occupied. Calculating this allows you to work out how much money you’ll have to pay the mortgage on your vacation investment.

Being conservative with your rental assessments and still covering the mortgage payments means you have found a good investment property.

Don’t forget, beachfront houses are usually in demand and you can attract a significantly higher rent for a property on the beach. But, the price tag for buying is also higher.

Secure Finance

If you’re confident that you’ve found a good beach house in the right area and with rental potential, you’re going to need to look at what equity you have and how you will afford the purchase. There are plenty of finance companies dedicated to business investments or you can enlist family/friends.

There is no right or wrong approach, just the one that works for you.

Consider Non-Rental

Before you commit, consider what will happen and how you’ll afford the mortgage if you don’t have any customers. This may sound unlikely but it’s possible. You only have to think of the covid-19 lockdowns to appreciate the amount of money you could lose.

Make sure you have a backup plan to cover issues like this.

Advertising

You can have the most stunning beach house in the world and a fantastic location, but you won’t have any customers if they don’t know about it. You need to think about how you are going to advertise your property and the best way to secure bookings and take payment.

You can affiliate with global sites such as Airbnb or go it alone. But, you do need a plan to ensure you have customers in your first year.

Maintenance

Ideally, your rental income will cover the mortgage, insurance, and maintenance. You’ll need to inspect the house and have electrical/gas inspections done annually. Make sure these are factored into your pricing equations to ensure your property is a good investment.