If you’ve been visiting the beaches of South Walton for a while, the thought of buying a vacation home would most likely be intriguing. The beautiful Emerald Coast of Northwest Florida is less than a day’s drive for many people and their families. For those who live a little further away, Beaches International Airport (ECP) in Panama City Beach is an easy 20 minute drive from our area.
It seems to make sense that if you plan on making it down to the Emerald Coast several times a year, buying may be a wiser option than renting. Why spend money on rent for a vacation beach house, when you could own your own? If you’re thinking of buying a home at the beach here are five questions to think about! Finding the right home at the beach depends on several factors including; the feel you want; if costs involved fit into your financial plan and whether or not you will rent out the property, or perhaps use it as a second home. The following are five key questions that buyers ask me frequently as they go through the process of purchasing a beach home here along Scenic 30A.
1. Where’s an ideal place to buy?
If you’ve spent any time visiting and exploring 30A, you may have noticed that every beach town has its own unique "flavor". Grayton Beach, Dune Allen Beach and Seagrove Beach all offer quaint historic cottages mixed with modern beach homes. You instantly get a vibe of living "the slow laid-back beach life" in these popular South Walton beach towns. If you are looking for a location with shopping, restaurants or event amenities, one of our "new urbanism" style beach communities like Seaside, Watercolor, Alys Beach or Rosemary Beach may be a better fit. Each of these 30A Beach towns were specifically designed to celebrate a vibrant coastal lifestyle while offering amenities within a quick five minute walk or bike ride.
2. Do you need rental income?
Many vacationers dream of owning a home that they can enjoy and make family memories for generations. However, owning a vacation home may seem cost prohibitive. But if you consider adding your beach house to the short term rental market, you may be surprised at how affordable owning a vacation home can often be. In working with vacation rental companies for many of my buyers, I’ve learned that homes in locations that offer convenient beach access and/or gulf and beach views and amenities, within walking distance to restaurants and shops tend to do much better as a vacation rental.
3. Can you afford to buy a second home?
If you know you will be financing, contacting an experienced mortgage broker is a key step to take early in the process. Generally speaking, second home and vacation homes mortgages have very different terms, rates and conditions compared to primary home loans. Due to all the variables involved, I encourage my buyers to meet with a lender prior to beginning a serious search for their dream beach house.
Owners should also plan and budget for additional costs including insurance, HOA fees, periodic maintenance and rental management fees, to name a few. If you’ll be renting your property, expect property management companies to charge between 20-30% of gross rental income. Maintenance on coastal homes may surprise out-of-state buyers. The salt air can be abrasive and dictates frequent exterior maintenance on roofs, porches, decks, air conditioning units and exterior surfaces. Rental properties can sometimes take a beating, so interior painting may be needed more frequently.
Once my buyers are ready to narrow down their choices, I like to provide “cost to own” projections tailored to each property. Additionally, I work with vacation rental companies who can provide projected rental incomes for specific properties. They also will often make recommendations with cost estimates for what might be considered to maximize the favorability for a rental property.
4. Is owning a second home financially right for you?
Vacation rental properties outnumber second homes in South Walton by a long shot and this trend is reflected on a national level according to recent figures from the National Association of Realtors (NAR). Investing a portion of your portfolio in tangible assets - real estate - is incredibly attractive for most. Building equity while covering costs through rental income makes financial sense at every price point and allows for buyers to "trade up" down the road into the vacation home that perhaps they thought not previously possible.
5. How will a second home affect my income taxes?
Consulting your accountant or tax professional is another important step to take before buying a second home or vacation rental property. Buyers should understand and plan for different ways that properties are treated for tax purposes depending on whether they are held strictly as a vacation rental property or as a second home used for personal use. It is additionally important to know how your taxes will be impacted in the future upon selling the property. Bottom line, be sure to consult your tax professional and be prepared for the tax implications of owning a beach house from the day you get the keys.
Are you ready to buy your “dream” beach house but not sure where to start?
Devereux Rogan, REALTOR® - RSPS - ABR
As a luxury Resort and Second Property Specialist (RSPS) and an Accredited Buyer’s Representative (ABR), Devereux is ready to help both buyers and sellers with all of their beach property needs. Whether it's a primary residence, second home or vacation rental property, Devereux is highly trained and prepared to assist clients in reaching their real estate goals.