Rehoboth Beach: Buying a Vacation Condo - Questions

[Anonymous]

Anonymous wrote:OP. we bought a Rehoboth condo in March, and are excited about. We understand that the market is somewhat crazy now, and that prices may decline or flatline. But we figured it is a risk worth taking because interest rates are so low.

Why buy now instead of waiting? Who knows what prices are going to do in the future. They might keep rising! Plus, interest rates are low. If prices decline but interest rates go up, the monthly payment on a cheaper place might still be no lower than our monthly payment now with a great interest rate. And we get to build equity and enjoy it now!

Like you, we are planning on renting it for part of the summer, and so far have had no problem finding tenants.

We looked for:

1. A place very close to the beach, even if that meant that we get less space for our money. We figured that being close to the beach will help it hold value, and help with renting it.
2. A place with no ground rent - ground rent is a waste of money and ultimately you could lose your property.
3. A place with a low condo fee - reduces costs, and means that we don't have to rent it as much to cover costs.

I don't view it as an investment - I know there are better things I could do with my money. But we like having it now, and are really looking forward to using it more and more as we move toward, and into, retirement.

In which complex did you buy?

[Anonymous]

Anonymous wrote:We are seriously considering buying a beach home in Rehoboth. In order to afford it, we'd have to rent it out in the summer months, which we don't mind.

My questions are:

1. How important is it to buy close to the ocean? We need to rent it out, and I think the closer we are to Rehoboth Avenue, the better. That said, those places are very expensive. Buying a few miles away would be much more affordable, but do those units rent consistently in the summer months?

2. We are currently saving money for the 20% downpayment on the beach house. How much extra should you generally save for 2nd homes (I'm thinking of emergency repairs, etc)

3. Lastly, if anyone has a Rehoboth rental property - how do you like it? Is it easy to manage?

4. Any other advice for a first time vacation home buyer?

Owned in downtown RB for 17 years. House was $600k then, now worth anywhere from $1.2 to $1.5M.
Lots are selling for $1M four blocks back from the beach.

1. We bought as close to ocean as we could afford. If you can’t afford in-town, try to buy on the east side of Rt. 1 so that you can take bike trail into town. You do not want to have to go on 1 just to get to the beach.

2. It depends on the condition of the home. We had a budget for downpayment plus renovations, but it was an older home. We will be doing more renovations soon.

3. The family LOVES it; I do the brunt of the work and it is a lot. Either you do it yourself or you pay @ 15% of your rental revenue to property managers, which is a lot IMHO.

4. Better financially to buy a simple place and fix up overtime. I think townhouses are a nice low maintenance option. Traffic is bad - I would never buy far out or on opposite side of Route 1. You also will make much less money in rental income. Everyone wants either ocean front or the ability to walk or bike ride to the beach.

[Anonymous]

I don’t think a Mike or even a few mikes from the ocean is worth it. The numbers just don’t work. That far away isn’t walkable, and people who don’t mind driving to the beach don’t want to pay a lot for a week. We are renting a place is shoal harbour this summer. It maxes out at $3100/week, and they sell for about $740k. The math doesn’t work. Get a place in ocean city ocean front that will rent for $5000 a week or more at that price.

[Anonymous]

Anonymous wrote:We bought a Condo in Rehoboth in May 2019. We rent it out year round but block out times for ourselves too. 2019 we only got short rentals because we bought late in the season, last year Covid so didn’t break even. This year we are finally breaking even. We decided this year to allow dogs ( we have two of our own) and this has helped with off season rentals like Oct and November. Spouse manages it all thru vrbo. It’s in The Tides community so about a mile from downtown Rehoboth. It’s a gated area with a lovely pool and also backs to the bike trail. We’ve had no problem getting renters this year.

Would you mind emailing me your VRBO link?
Your place sounds perfect for next summer (hopefully you'll allow 2 consecutive weeks at a time?).

My email is [e-mail]

Thanks! 😊

[Anonymous]

OP, it doesn't make sense for you to buy. That far from the beach and you won't be able to rent it for much. Plus why buy if you won't even use it yourself during the summer? We own a place in Downtown Rehoboth, but it's for our personal use. You can't even break even renting a home full-time if you buy right now. Plus cleaners and contractors cost twice a smuch as in DC and are half as good.

You're much better off just renting a home or hotel a few times each summer plus a few times in the off season when it's inexpensive. It will cost you less and you'll avoid the headache of being a landlord.

[Anonymous]

I agree. I own a beach condo I bought 2013 for 290k. Today is worth $420k.

My unit is nice and in good shape. But after Sandy a flooded lower unit that was gutted went 180k up to my 290k. They were all cash purchases.

Today at prices if 400k on average. If putting down even 100k. And doing 300k mortgage you are competing with folks like me who own units outright.

They will fall in price (guaranteed) almost inflation adjusted.

As prices rise so does property taxes, flood insurance are rising in 2022 called Risk 2.0 and add in if mortgage rates rise and we are all back in office on 2022 them maybe 2023-2025 might be time to buy

[Anonymous]

As a frequent beach house/condo renter, I would not rent anything somewhere that wasn't less than 10, absolute max 15, minutes walking from the beach. Parking in the Rehoboth area can be an absolute nightmare so I'd only consider something in a more isolated area if there was deeded parking - it sucks moving your car when everything is packed.

[Anonymous]

bump