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People from all of the country are buying property in our coveted little beach community of South Walton. It's obvious why people want to own property here, whether it's strictly for investment purposes or to have a get-away of their own. No matter what your reasons for buying are, and no matter what your goals are, you are making a good investment for your future.

What does the perfect beach investment look like? Short term or long-term? Which one is a better investment? From a monetary perspective, I'm going with long term rental investment property - hands down! With the continued growth in South Walton also comes the need for housing, particularly for the growing segment who are not in a position to purchase their own home. I can't understand why more investors are not seizing the opportunity to capitalize on this demographic.

Here are the pros of owning a long-term rental property:

  • You’ll likely get a better cash return on your investment.
  • You have limited overhead.
  • You don’t have to worry about trying to rent out the property every week.
  • You’ve got a security deposit in case someone damages the property.
  • If you have a mortgage on the property, essentially, a renter is paying your mortgage for you (it doesn’t get any better than someone else paying for your house. Like they say, free is the best price there is).
  • And best of all, and by the time you’re ready to sell, the property will be worth more than it is now.

So what are the cons?

  • You will not have use of the property during your holiday and summer vacations.

Here are the pros on short term rental property:

  • You’ve got the ability to use the property anytime you want to vacation (And That’s A Big Pro).
  • Your property will likely be closer to the attractions.

What are the cons?

  • You will not receive as large of a return on your investment (monetarily).
  • If you have a mortgage, it is very likely that you will not even cover your costs.
  • You’ll probably be lucky to rent out the property for 25 weeks of the year. There is more overhead because the property is being run almost as if it were a hotel.
  • More time and effort will be necessary on your part to keep the home rented.

Let's take a look at the math.

$214,000 Buy a 3 Bedroom / 2 Bath (1736 Sqft) Home for a long term rental
This is new construction on the North side of Hwy 98. You could conservatively rent this property for $1,800 a month yourself with no management fees making your gross profit $20,400 a yr. No utility expenses. $600 annual Assessment fee. Seller pays all closing costs. Total profit for the year is$19,800!

$215,000 Buy a 2 Bedroom / 2 Bath condo at Tidewater (1131 Sqft) for short term rental
These units were built in 2007. Let’s assume you are buying it completely furnished and no repairs are necessary (not too likely). Aggressively, you could rent this property for a gross profit of $27,000 a yr. Now let’s take out assessment fees of $5,840 a Yr, Utility fess of $900 a Yr and management fees of $8,100 (30%). This leaves you with $12,160 profit for the year. keep in mind we are not including repairs, cleaning fees or credit card fees.

$19,800 vs $12,160
Living in the area, I can tell you that this is by far the biggest missed opportunity! People are moving here left and right and looking for a place to live. Maybe they are not ready to buy. Maybe they are waiting to find their beach. Either way, if you are an investor this is a perfect market. Don't want to be a landlord? Management fees for long term rentals run about 10% a yr. Call Amy today for details and how to make it happen.

Amy Cope, Realtor
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