I own a second row ocean view beach house in coastal NC. We bought ours for $250k four years ago and have not seen annual profits from rent. Luckily it has appreciated nicely and the tax write offs have been advantageous. I have learned a lot from owning the house and would not buy another summer seasonal rental.
Take a close look at insurance costs, particularly flood insurance which has increased drastically over the past few years. My overall insurance costs almost exceed my mortgage.
Maintenance is another big expense to consider. The sun, sand, and salt are great for renters but terrible for your rental. Wood decks take a beating from the sun and routinely need $1-2k/yr in maintenance. Furnishings take a beating from wet swim suits and need to be replaced more frequently. AC fans need to be replaced every 5-7yrs instead of 15+. Washers/dryers the same. Outer doors need to be replaced from abuse from renters and the salt/sand.
Depending on the region, property management will take 15+% which does not include the cleaning fee between tenants, cost to winterize your home, and cost for mandatory pest control and other routine maintenance specified by the PM.
Repair costs can accumulate if you plan to own from afar and have a property manager coordinate repairs.
In my opinion, the high end summer beach homes will likely cash flow much nicer than a lower cost home. The benefit to a seasonal beach rental would be to rent during the peak season and use it for personal use during the offseason. My next investment though is going to be a more traditional buy and hold in a market not on the coast.
