Reply to explain to me the finances of owning a rental property in the OBX

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[quote=Anonymous][quote=Anonymous]houses for $900K seemingly can bring in $80K+ rentals.  Even with high flood insurance and high management fees (20%), it seems like an easy way to cover your expenses and get a vacation week in the summer and plenty of vacation weeks in the late fall covered by others.

What is the catch?[/quote]

How do you get to $80k? Houses in OBX rent well seasonally. Assume rental market is $3,000 a week. Assume 12 to 15 week rental window a year. Realistically you won't have 100% occupancy during this time, perhaps 70% at best. So your gross profit is on the order of $30k to $40k, but let's be generous and say $50k.

A good half of that will go to service your debt (assuming you can put down a large %). Against that take management fees, higher insurance, maintenance (no joke on homes exposed to salty air, wind etc - take it from us we have one). If that doesn't eat most of your funds, it'll eat a large %, and poof your house is perhaps just break even. Against that though you should take the opportunity cost of those funds as well - if say you put in $500k on an $900k house, that $500k could throw 5% in market (on average). [/quote]

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