Thinking of adding STR/vacation rental to our starting portfolio. We have the capital to invest at the moment but WAG'n these numbers is posing to be difficult. Anybody have any insight on estimated costs per sq ft for electrical, water, etc? Buy in the populated areas, or a larger home on the ocean away from the populated areas (Kitty Hawk vs Duck)?
Cost by SQ ft may be hard to find. Comparing by bedroom may be easier to dig up. It's the number if people that drive the showers, laundry, cooking, etc. For an example, I have a 3/2 in Kitty Hawk. The electric bill goes from $50/mon (winterized, heat on) to $300/month when guests are present. Water from $70/quarter to $180. When I added a pool and hot tub to my Nags Head house, it upped the electric about $100/mon in season (doubled the rent so well worth it). So add the amenity operating cost in with # of people in your estimate. My 4/2 in Nags Head seemed to add another $80/Mon for that 4th bedroom over the KH house. Water double overall vs Kitty Hawk since the cleaners empty hot tubs after every rental.
There are renters for both markets. The numbers on any individual property would drive my decision. The number one rule is as close to the beach and you can afford. I would go smaller by the beach vs larger a couple blocks off. My general impression is that rents are better on the upper banks than lower. Also the lower banks are evacuated more often with bad weather. But good rentals can be found all over. If I were buying now my sweet spot house is 5 BR. Big enough for two siblings + kids + grandparents. More rent per BR to cover the cost of your basic house systems. At 6+ BR you start needing bigger game room space, double up appliances or second kitchens, etc. Also up your maintenance costs. In 15 years I've never had a heat pump last more than 8 years. The salt and wind are brutal.
I do not buy condos for rentals in any market as I do not want decisions about my property to be made by a committee. The HOA fees are a sunk cost and compared to a SFH, the insurance seems higher. OBX is renter friendly so I believe there is less risk than other areas for HOAs deciding to kick out STRs in the future.
The REMAX Surfside office has an awesome website for researching OBX properties.
Thank you Glenna, that was very helpful. I understand that you say the Northern part of OBX is better but what about the new bridge that is being built to help with the issues you mentioned. It is a jug handle from pea island to Rodanthe. I was looking in Hatteras, but am fearful of the issues you mentioned as well. Who do you use to manage your property in OBX and have you consider switching from short term to long term renting? Thanks for your help.
Kim Philips, I don't think the new bridge will change the situation. There WAS a bridge there and H Sandy wiped it out. In the 60's there was a ferry across Oregon Inlet. The landings were moved as the sand moved. You don't leave the southern banks w/I a ferry and when the weather is bad, they close. The lower banks is simply more isolated hence emergency management will always be inclined to close the southern end first.
I've rented my 3/2 older beach box about half LT and half STR. LTR is a tough market on OBX as a prior poster has stated. Many tourism jobs disappear in the winter and there isn't much else to drive the economy. Of the 8 years I did LTR, 3 ended in evictions. After Hurricane Sandy, I converted the house to STR. The best STR house is not best for LTR. You pay a premium for the lot closer to the beach and you can't charge enough rent to cover it. If you do want to LTR on OBX get a cheaper off beach house with a legal apartment downstairs. The rents would be lower and you'll have a better chance of a long term paying tenant. My best LT tenants for my first tier house were special situations (someone moving to OBX but not sure which town and a company lease for a construction foreman).
There are bunches of property managers. The most important person to interview is the maintenance head since maintenance is the Achilles heel. I've paid for some really stupid maintenance calls from even "the best" PMs. Also consider size. How many houses do they manage? Does your property fit their inventory? When I was working I travelled 90% of the time was often some where with restricted phone or personal mail access so a PM was a must and they charged 15-18%.. Now I would self manage. There are now a few companies offering caretaker services. Smart because reservations are simple online but you must have someone reliable who can eyeball the property on very short notice.
