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by Corolla Classic Vacations

Carolina by the Sea
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Topic: General Information

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Posted By: Mark

Subject: Buy vs. Rent

OK, most of us are facing a long winter before our next OBX trip. Here is a dicussion we'll be having around our fireplace here in Central Ohio this winter:

should we really consider buying a beach house or continue to rent. This year we took THREE OBX trips, April, June (for our daughter's wedding) and finally in late Sept.

On the last trip we spoke with a Realtor briefly on the pros and cons of ownership. Of course she was mainly on the pros.

I figure over the years we've spent around $65-$75,000 on renting houses. We generally do family vacations so we get larger ocean front homes on Hatteras Island, ones that are well out of our price range. If we bought, we would likely have to be something smaller, maybe Sound-side.

Figuring that to make the most on rental income we'd have to avoid using it in the prime, and maybe shoulder seasons. And even with that, our out of pocket expenses over say 20 years would probably be about equal to what we pay renting.

So my question for the group: What do you see as the pros and cons of ownership?

See you at the beach!

Mark

Message Replies:

29190: RE: Buy vs. Rent

10/18/2008 9:30:25 AM

Posted By: Guest

given the scenario you have put forth, ownership still gives you plenty of time that you may use the home, you can write off the intrest on the mortgage, while hopefully enjoying appreciation of the value of the property. additonally, you may have access to dozens of potential renters that you rental compnay does not have, hence enjoying even more rental income. there are many many pros to ownership, but i do in every instance reccomend that you speak first to your tax consultant, as every person's financial situation is different, to see if it is to your particular advantage to own as opposed to renting. the only real con i can see here is the occasional maintenance and the fact that you don't get to enjoy it all the time!

29191: RE: Buy vs. Rent

10/18/2008 10:45:05 AM

Posted By: Guest

I would really investigate the real costs of of buying to rent and determine how well houses like yours do as rentals--how many weeks rented, at what price, less blah blah and where do they stand at year's end. What is your cash flow pain threshold? I think you need to plan on a negative cash flow. Remember that the value of the house and land may increase, but that does nothing for you until you sell.
Some folks I know have houses that rent well and only use them themselves in the off season. The beach here isn't much fun in February.
Check with an accountant as to how much you can use your house without incurring a tax problem.
One last thing, sounds like your house wouldn't suit you for your vacation so you'll still be paying rent for the oceanfront rental.
BRK-B is a long term better investment I think.

29195: RE: Buy vs. Rent

10/18/2008 2:55:36 PM

Posted By: Guest

Do not buy to rent. I live here year round and know many folks that these realtors talked into buying these properties as a rental income investment, most have lost their shirts. The rental and sales agents here are DESPERATE and will tell you anything in order to get the commissions. If you want to buy here buy for yourself and family only.

29197: RE: Buy vs. Rent

10/18/2008 3:57:49 PM

Posted By: local

I live here year round and own a rental investment home also. We bought it 10 years ago and have never looked back. It has more than doubled in value and has been a GREAT tax savings for US. I would first and foremost talk to your accountant. In our case we save 7-9000 a year in taxes, but that money always goes back into the house. We never break even so get that out of your head. I am also a REALTOR here and have been in the business for over 20 years, yes some brokers will feed you a line but most are not desperate! I would never lie to someone to make a sale,but maybe some would. Your have to #1 want to own a beach home! #2 have 20% down #3 be albe to carry if when rentals are off. #4 don't expect oceanfront or oceanview but DO try and get as close to the ocean as you can!! Soundside just does not rent well. Lots to think about and i wish you luck. Be happy to help you or send you additional info.

29212: RE: Buy vs. Rent

10/19/2008 12:24:02 PM

Posted By: Justina

My question is "why are you questioning this". Just check out the realtors online. They will walk you through the steps of ownership and assist you with rental agreements so you can afford to make those monthly payments. In addition, you and your family will have a great vacation place. Not to mention, the house in outer banks will make a great retirement place. :-)

29234: RE: Buy vs. Rent

10/20/2008 9:48:20 AM

Posted By: Mo from Ohio

Also being from Ohio, my family always discusses the pro's & con's of renting. Since both my husband & I come from large families, we thought maybe we could get more family interest in purchasing a home in OBX as a family investment. Of course those who were not interested in purchasing an investment home were the first to say that wanted to 'use' the house (rent free of course) at least 1-2 weeks per year! That totally made those of us with an interest to purchase leary with losing out on income during prime months. Also being in the banking business, plan on expecting any mortgage/bank to expect at LEAST 20-30% downpayment. With the economy the way it is now, lending institutions are expecting verification of full assets/ income, higher credit ratings, and larger down payments from borrowers, especially for investment homes!

To the poster who seems to think that ocean side would pay out more rental income, I don't agree. We always rent on the sound side, with easy walking distance to the ocean. The rent is just as comparable from sound to ocean side rentals, but the easy access to both sound & ocean makes our vacations so much more enjoyable.

Only 291 days to our next OBX vacation!! Good luck with you decision!!

29235: RE: Buy vs. Rent

10/20/2008 9:50:14 AM

Posted By: Mo from Ohio

Also being from Ohio, my family always discusses the pro's & con's of renting. Since both my husband & I come from large families, we thought maybe we could get more family interest in purchasing a home in OBX as a family investment. Of course those who were not interested in purchasing an investment home were the first to say that wanted to 'use' the house (rent free of course) at least 1-2 weeks per year! That totally made those of us with an interest to purchase leary with losing out on income during prime months. Also being in the banking business, plan on expecting any mortgage/bank to expect at LEAST 20-30% downpayment. With the economy the way it is now, lending institutions are expecting verification of full assets/ income, higher credit ratings, and larger down payments from borrowers, especially for investment homes!

To the poster who seems to think that ocean side would pay out more rental income, I don't agree. We always rent on the sound side, with easy walking distance to the ocean. The rent is just as comparable from sound to ocean side rentals, but the easy access to both sound & ocean makes our vacations so much more enjoyable.

Only 291 days to our next OBX vacation!! Good luck with you decision!!

29264: RE: Buy vs. Rent

10/21/2008 7:44:14 AM

Posted By: Guest

I agree with the "don't expect the rentals to pay your morgage' that hasn't happened since the 80's and any good realtor will tell you that. you need to be able to carry the morgage on your own, and maybe the rent will pay for upkeep and utilities, (probibly not insurance though)

these are called investment homes becuase the the real value is in selling them, not renting them. It's not about timing the market, it's about time in the market. If you don't have the time and money to invest, then this is not for you.

29273: RE: Buy vs. Rent

10/21/2008 11:10:26 AM

Posted By: Guest

Wow, this was interesting, honestly, I did think rent generated enough money to pay the mortgage. I think the only way I would buy a home in OBX is if I didn't have to rent it out. Just not something I would want to get into. It's just a personal choice.

29302: RE: Buy vs. Rent

10/22/2008 5:38:28 AM

Posted By: Guest

As I know several realtors in the area all I will say is beware. They are desperate for sales and probably will not tell you the exact truth.

29323: RE: Buy vs. Rent

10/22/2008 1:02:55 PM

Posted By: Guest

My family looked into buying a beach home a few years back and sent for info. We got brochures from several sources which all indicated that the house would basically pay for itself. My husband was skeptical of this and eventually decided after much research to put his money elsewhere (we could put down a decent down payment but would have had to rely on regular rentals to make the entire monthly payment. I can see how people get the idea that these places pay for themselves since many realty companies give that impression. Anyone looking to do this should be very careful and do their homework before making a decision that will affect them for years to come.

29337: RE: Buy vs. Rent

10/23/2008 12:19:01 PM

Posted By: Guest

Hi, I just wanted to say that my mother is a realtor, and I remember even back in the 80's she ues to tell people that these homes don't "break even" and never did.

29353: RE: Buy vs. Rent

10/23/2008 8:27:33 PM

Posted By: Guest

Most realtors, not all, but most will say anything to get a sale. You can see them on here telling people the economy here is good or not bad. The economy here has been devastated.

29365: RE: Buy vs. Rent

10/24/2008 11:22:36 AM

Posted By: Guest

Sure, it would be great to own a beach house, only if it were to live in year round. If you rented it out then you would have to take care of maintenence issues, worry about stuff getting broken or stolen etc.. Too much to worry about. I say rent and enjoy being carefree for the time you are there.

29371: RE: Buy vs. Rent

10/24/2008 5:42:33 PM

Posted By: Guest

Speaking of rentals for any of you folks thinking about it in the near future should demand deep discounts or you will take your business elsewhere as a very large number of these homes have not been rented.

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