Rental Property Investor 路 Washington, DC 路 Member since 2019 路 13 posts 路 2 votes
Hey all,
Does anyone currently (or recently used to) own a vacation home in OBX (Corolla more specifically) that is willing to speak to a few items and general feedaback:
1. Vacation renal income norms over the last 2-5 years. ROI. Are you covering your cost consistently?
2. Impact (if any) of what seems to be a change in the weather patters (hurricanes reaching the area more often) *Thats not meant to be a factual statement, just seems like it.
3. Type of insurance recommended to carry in a Zone X flood area.
4. And finally, if anyone has experience renting in the Corolla 4x4 area - does the beach driving impact your rentability? What's the general consensus? Are vacation renters nervous to rent up that far north without pavement roads?
If there are any other facts or things a potential new investor should consider with OBX - I welcome your thoughts.
Rental Property Investor 路 Washington, DC 路 Member since 2020 路 9 posts 路 4 votes
5y
@Del Crockett to answer your questions
1) Ours does well. And covers our costs consistently to include a profit. Buy on the right terms and understand how the HOA works. Many HOAs in OBX are broke. Ask for the numbers.
2) Hurricanes come every year, a solid policy such as encouraging guests to purchase hurricane insurance helps mitigate the risks of loosing rental income.
3) In a condo, you'll need HO6 policy or a commercial policy that covers STRs. Make sure you have enough liability coverage. Master Flood Policy held by the HOA should cover flood insurance depending upon where your building sits. Not all properties are required to carry if they are in Flood Zone X.
4) As far as 4x4 locations, there are folks who come to this area every year who love those destinations. However, it limits the pool of folks and if a hurricane comes through often the roads may remain close for the day until they can be cleaned.
Olympia, WA 路 Member since 2016 路 8k+ posts 路 7k+ votes
5y
Hey @Del Crockett, I have no idea about most of your questions, but on the insurance, make sure what ever mortgage company you use accepts Lloyd's of London for flood insurance. FEMA was roughly 10x more costly for us.
Our first look at STR was in Lincoln City, OR and located in 100 year flood zone less than 1/2 a block from the beach on the bay. Lloyd's of London was about $500 more a year for the flood insurance. FEMA was $5910 for the year. Our mortgage company wouldn't accept Lloyd's even though it was superior to FEMA.
We were very new to the idea of vacation rentals so we just through in the towel on that one.
Rental Property Investor 路 Washington, DC 路 Member since 2020 路 9 posts 路 4 votes
5y
@Del Crockett to answer your questions
1) Ours does well. And covers our costs consistently to include a profit. Buy on the right terms and understand how the HOA works. Many HOAs in OBX are broke. Ask for the numbers.
2) Hurricanes come every year, a solid policy such as encouraging guests to purchase hurricane insurance helps mitigate the risks of loosing rental income.
3) In a condo, you'll need HO6 policy or a commercial policy that covers STRs. Make sure you have enough liability coverage. Master Flood Policy held by the HOA should cover flood insurance depending upon where your building sits. Not all properties are required to carry if they are in Flood Zone X.
4) As far as 4x4 locations, there are folks who come to this area every year who love those destinations. However, it limits the pool of folks and if a hurricane comes through often the roads may remain close for the day until they can be cleaned.
Ellicott City, MD 路 Member since 2017 路 30 posts 路 7 votes
4y
Dell
I recently visited Corolla area. More specifically Swan and Carova beach. Also interested about buying a rental property there. From the data I gathered from some agents there, it seems like rentability is not much impacted between Corolla area (communities before the paved road ends like Whalehead commuity) and Swan/Carova beach. Lands are still available and cheap. But construction cost is little higher. I am trying to gather more information. I was wondering if you already bought something there or still researching that area. Let me know if would like to have a quick chat to share experience. Seems like you are from DC area. I am not that far away. I am in Ellicott City. Thanks.
Vienna, VA 路 Member since 2016 路 8 posts 路 2 votes
4y
We vacation in Corolla a lot. It's probably our favorite part of OBX and I bet homes purchased awhile back do fairly well because of how popular it is. Prices have significantly increased everywhere though so it's probably harder to make numbers work now. We have family members who have owned rentals in other sections of OBX and it's not easy having positive ROI on beach houses with how high all the expenses are.
I think global warming is a bigger issue for OBX and any other barrier island though. I think Hatteras Island will be uninhabitable eventually and the mainland of OBX isn't going to fare well either. They were at least attempting to build that big bridge directly into Corolla so at least the local jurisdictions believed there was a future there, but it looks unlikely to ever get built.
Does anyone currently (or recently used to) own a vacation home in OBX (Corolla more specifically) that is willing to speak to a few items and general feedaback:
1. Vacation renal income norms over the last 2-5 years. ROI. Are you covering your cost consistently?
2. Impact (if any) of what seems to be a change in the weather patters (hurricanes reaching the area more often) *Thats not meant to be a factual statement, just seems like it.
3. Type of insurance recommended to carry in a Zone X flood area.
4. And finally, if anyone has experience renting in the Corolla 4x4 area - does the beach driving impact your rentability? What's the general consensus? Are vacation renters nervous to rent up that far north without pavement roads?
If there are any other facts or things a potential new investor should consider with OBX - I welcome your thoughts.
Thanks
Flood insure is not required in an "X" zone. Moreover, flood insurance is only required if you are subject to a federally backed mortgage and located in a FEMA Special Flood Hazard Area (SFHA). With Risk-Rating 2.0, the new method for calculating flood insurance premiums, many investment property owners are having unpleasant surprises due to significant rate increases. This also includes policies for properties located outside the SFHA (Preferred Risk Policy). Properties located in a "V" zone are seeing the highest premium increases. I would talk to your insurance agent for more specifics.
Hi! Great questions, I have the same! We absolutely love Corolla. From my research & speaking to others the 4x4 area does well & does not impact rentability. Did you end up purchasing, would be happy to hear the results. 馃檪
Real Estate Investor 路 East Falmouth, MA 路 Member since 2012 路 35 posts 路 15 votes
4y
Del,
I am heading to the 4x4 area with my family for the first time later today. As a renter, the appeal is that it is completely remote, unique, gorgeous and will force us to relax and unplug from life for a week. I believe there will always be people looking for that type of vacation , even though some people will not be interested.
As mentioned above, flood insurance would not be required in an X flood zone, so you could choose to purchase as extra protection if you wanted.
I've done extensive research on the market and believe it can be a great investment area if you build or buy the right house. It seems the best ROI are in 9+ bedroom houses, semi-oceanfront with all the top amenities. Pool, media room, hot tub, huge decks, updated kitchen, possibly an elevator. Most are $1M+, so it's a tough starter market but I do think the potential exists for a strong investment. 4x4 land is significantly cheaper than in the paved towns and while you can't charge quite as much, the rates still get very high during peak months!
Thanks for posting this Del! I have been looking at property in Topsail and I am losing some sleep over the concern about global warming and hurricanes.
I am concerned that even if you get decent flood insurance within budget, the insurer might not renew if the property presents too much risk. We are new investors so we have to personally guarantee. NC allows deficiency judgments in any financing situation we would likely be in. So I am just picturing a disaster scenario where we are left holding the bag for a unit that can't be occupied.
These parts of NC are so beautiful and I would love to find a reason why these issues should not hold me up.
Real Estate Agent 路 Outer Banks, NC 路 Member since 2019 路 168 posts 路 116 votes
4y
Hey Del -
I own a few STR rental properties in the Outer Banks and have had great returns on them. The area is continuing to grow in popularity and rental rates are rising as the home prices rise. The shoulder seasons (Mar, Apr, Sept, Oct) are getting busier and busier helping to add to your yearly gross. Flood insurance is not required in X flood zones and while hurricanes etc can be a risk, for me its been a risk I am fine taking with the returns I have received. The northern beaches (Southern Shores, Duck, Corolla) are a bit more elevated and protected than some of the beaches down south, especially on Hatteras Island. The 4x4 area as people have stated attracts its own renters because of the appeal of the area - the shoulder seasons might not be as busy but property prices are also lower up there so you may be able to find something and make the numbers work! I invest in and sell real estate down here so let me know if you have any questions!