Beachfront?

[Jason Merchey]

What is your opinion about putting 25% down on a 2nd row or beachfront house and paying it off over 30 years? The ability to get a 4.0% fixed rate mortgage is attractive, and if I could get the right on at the right price, I could probably pay for my expenses in most years. Management would, so I hear, be top-notch with Dunes Properties in Folly Beach, SC. Expenses will probably be like 55%, but the gross is about 10% of sale price, so there is probably $1 in cash flow at about 30% down, give or take. Obviously, I would primarily want to do this so I could enjoy the house for free 150 days a year. And to use leverage. I don't currently have any leverage.

My question probably centers around: the continued desirability of the beach; the flood potential and flood insurance cost issue with a house that, say sits 12' high; and the risk that rising sea levels will inundate the Lowcountry (Charleston) and reduce demand in 20+ years. The Realtor I discussed this idea with is affiliated with said property management firm and he is quite sure he can nail down the ROI and rentability.

This is contrasted with the investing opportunity in say, a small commercial building, a few residential SFDs, or the like.