Average ROI on a Vacation Rental

IMO, $532/week (average over 52 weeks) isn't very much rental income for a $370K home. My friend lives next door to a house that is rented out at least 60% of the year at $120/night. It is a $170K house. If I were investing that much, I would look for something that isn't going to be a seasonal rental.

These days 7 % is the norm...used to be 10 % but price appreciation has cut into that.

I would advise getting a time machine and going back to 2014 and buying one.

Wish I would have had money to buy more than one back then. Best advice to maximize rate of return is to buy a 1 bedroom. Occupancy rates are much higher and furniture last longer than bigger ones that multiple families room together in.

Depreciation would be about 13K a year. Add in interest expense and you are definitely showing a net tax loss.

Not the worst thing in the world, if you are betting on appreciation, and you are getting some personal use out of it.

I can't imagine buying a beach rental today and imagining you are going to make money off of it each year. Buy it because you want to use it a little bit, rent it a lot, and long-term appreciation.

And don’t forget to factor in the loss of the interest of the 75k you are using as a down payment

So don’t look at this as an investment, because thre are far better ways to invest your money, if a beach property is something you really want....,, look at this as a way to help you pay for it, but be ready for headaches, maintenance and assessments

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I can't imagine buying a beach rental today and imagining you are going to make money off of it each year.

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Beach condo rentals should be viewed differently than other investments. First, only buy one if you just want to own a beach condo and have someone else subsidize the expenses. Unless you put 50% down, you aren’t going to have physical income more than likely. Second, if you have other types of real estate investments that generate income, having something that loses money on paper can be beneficial. This negative income offsets positive income on other properties from a tax standpoint. In reality, you have a beach condo, others are helping with the payments, it has a net reduction on your income taxes and all mileage and trips to the beach are a business expense.

You need to study this investment more. Look at your monthly mortgage and escrow expense. And you’ll have management and repair/maintenance expenses with a rental.

From experience (with a mountain property) , if you don’t put 50% down, do not expect net return anytime soon.

This is not to say the investment is a bad idea...it can be a great investment. Just don’t expect a moderate down payment to cash flow.