Beach Rental Property (Orange Beach AL) tips/advice requested

[Casey Lodes]

Good Afternoon Everyone!  This is my very first post within the forums and am hoping to get some updated recent knowledge regarding beach properties.  I know they can be scary, but am excited to hear what good news/horror stories/tips/advice you all might have to offer.

My family and I normally vacation in Orange Beach AL.  I have gone to Gulf Shores from a very early age and we slowly transitioned to the OB area.  We typically vacation in late September to take advantage of better rates/nice weather/minimal wait to eat.  As we sat on the beach and watched my children play, my wife and I discussed that maybe its time to look into a property at the beach.  We can stay away during the peak times, and take advantage of those rental rates during those times

I have heard horror stories about HOA's and insurance/natural disasters. I am wondering if anyone has any advice for someone looking to take the plunge. Bonus points for any local Gulf Shores/OB owners and recommendations for property maintainers.

[Mike Shemp]

@Casey Lodes

We have a cottage that is oceanside in the Outer Banks. We have unobstructed ocean views because all the homes in front of us were taken by prior storms. This cottage was our 1st STR, so I was totally afraid to take the plunge. Here is what helped me, and what I have learned about beach properties:

1.  We went into the deal with an extra large operating expense budget.  Even though I know I wasn't putting that excess cash to work in other investments, sometimes there is no better investment than being able to sleep well at night.  So we went into the closing with still extra cash in our bank account.  I'm very glad we did as there were some things the home inspector missed that needed to be addressed, so this strategy worked for us.

2. Maintenance is much higher at the beach.  Being anywhere near salt water makes everything wear out quicker (anything not stainless steel or brass), HVAC systems, etc.  In your spreadsheets make sure you have accounted for extra maintenance depending on how close you are to the ocean.

3.  If you are in an island setting, check how the local government handled Covid and if they were or were not allowing non-resident owners on to the island.  Something important to know should this ever come up again.

4. We have lost revenue several times due to storms/hurricanes coming to the Outer Banks where there was either a state of emergency called, or our guests were not comfortable staying.  In either case we give refunds for any nights that couldn't be used.  But you could also have a situation where a storm PREVENTS access by guests to your area, so you need to factor in that potential lost income as well.  We mitigated this by paying extra on our insurance policy for income loss.

5. As for flooding, our home is elevated so it's less of an issue.  If the area floods and can't be used, we would rely on the insurance policy / income loss we are paying for.

6. If you area is seasonal, you may find that smaller homes rent year round, and the larger homes are more seasonal.  This is because huge groups of people aren't getting together in the winter to go to the beach and stuff like that.

Hope that helps!

Mike