Many real estate investors are often reluctant to branch outside their market and this is often for good reason. No matter if your preferred method of real estate investing is buying houses quickly for cash in Lancaster or investing in commercial properties, once you have a good system it’s hard to take the risk in an unknown market.
If the fundamentals in your real estate market are starting to change and you are considering looking into new markets. This article is a great read for any real estate investors looking to branch into a new market, How to expand your real estate investing business into a new market.
It wasn’t all that hard for me. This is essentially the same plan I executed back in 2003 and 2004 when I felt this market just didn’t make sense anymore. The difference is that I’ve learned a lot of lessons since then, and I’ve grown much more confident in my abilities and investment criteria.
About a year ago, I actively started to lay the groundwork for my plan to start buying properties outside of our local market. These homes would be long rental properties and the target markets would have better returns and the prices more in line with local economic activity — for example, median household income and job growth.
One area that could be interesting for Philadelphia real estate investors looking to buy a coastal home is his opinion on buying coastal investments and the difference in insurance costs. It is also important to note on the maintenance costs of owning a beach home, you are likely to incur higher maintenance costs, the closer the home is to the water. So the length of the vacation rental season can be an important consideration.
Now there is a downside to this property. It’s in a coastal county, so the insurance is higher. You have to get a separate wind and hail policy even though it’s more than 10 miles from the coast.
The wind and hail more than double the price of the insurance costs. Eighty dollars might not sound like much, but it’s nearly 12 percent of my gross monthly income. That’s a big hit. Many markets have their own little unique surprises, and that’s a major danger of taking your investments out of town.
All of these expenses are key expenses that an investor has to account for. Many times they’re just best guesses. I relied heavily on the costs I was accounting for on my existing properties in the area.
Though costs can definitely be much higher, it is possible to find good investment properties along the coast from the Jersey Shore to the Outer Banks. As we’ve highlighted before it can be possible to buy a beach house that is cash flow positive or even own a beach home and look to minimize taxes long-term.