Have you been dreaming about a beachfront vacation home? One that you get to enjoy, but also pays for itself with rental income? Are you ready to take the plunge, but not sure where to start here in the Tampa Bay area? I'm here to share some tips on buying a property at the beach.
#1 LOCATION, LOCATION, LOCATION It's the first rule in real estate for a reason, and very much applies to vacation rentals. There are two things to consider when evaluating locations. What type of location do you want for your own use, and what will renters want? As you drive down the beach areas in Pinellas County, there are different towns with totally different vibes from St. Pete Beach to Clearwater. Put yourself in a renter's shoes - what's important to them? A nicely updated, beach front condo with easy access to shops and restaurants probably won't have trouble renting.
#2 MINIMUM RENTAL RESTRICTIONS This is a big one. If you're looking at condos, please know that nearly every condominium association has specific rental restrictions you will have to follow. Some allow for short term rentals, but others only permit longer time periods like six months or more. What you'll notice is that the more populated beach areas tend to allow more short term rentals, but the sleepier towns tend to favor longer rental periods. Considering a single family home? Be sure to check the rules of individual towns or villages as some of them do have rental restrictions - especially for short term rentals or renting out rooms in homes.
#3 PROPERTY MANAGEMENT Most of my clients who have purchased beach rental properties don't have the time and desire to advertise the home, handle the lease, collect rent, pay taxes, and deal with ongoing maintenance issues. Property managers tend to charge between 8 - 10% of the monthly rent for their services. It may sound like a lot, but it can save you a lot of headaches and keep you out of trouble - especially when dealing with state and local taxes. Owners that rent out a condo/home for less than 6 month periods are required to collect both a tourist development tax and sales tax - 13% in Pinellas County.
#4 COSTS There are quite a few costs to consider from condo association fees, property taxes, insurance, property management fees, and general maintenance. These costs can add up, so crunch the numbers to see if you will actually net a profit. While you're doing that, it would benefit you to consult an accountant who can advise you on deductions and tax implications. It is also helpful to consult a property manager to get estimates on how much you can charge for rent. For those who aren't necessarily looking to make a profit, just wanting to defray the costs of ownership - it's still recommended that you go over the finances to know what you're getting into.
#5 KNOW YOUR SEASONS Rent prices vary depending on the season. Obviously, the winter months of January, February, and March are peak times for beach rentals. That's also when most Northerners want to actually use their beach house. If you're looking to maximize your rental profit, you may need to use your home during off-peak seasons. Some clients I have worked with choose to balance this out by using their home for a month or so during peak season, then renting it out for the remainder.
BONUS TIP: Make sure you are working with a knowledgeable realtor with expertise in the areas you're looking to purchase in.
Melanie is a Tampa Bay area Realtor with Smith & Associates. She loves Tampa Bay area area, houses, and helping clients buy and sell real estate.
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