Does anybody here have any experience with vacation rentals? My mother has expressed interest in buying a house in the Kitty Hawk area of NC as an investment property. I don't know who to ask for advice on this topic, and I don't want to steer her wrong on the decision. I figured this board has an answer for everything, so I thought I would start here.
I've rented houses and I know someone who bought a beach house as investment property. Does that count? 
Lots of people do it. Buy a solid house at a fair price, get a trustworthy property management company to rent it and pocket the moneys. Nothing to it. Well, unless something goes wrong...
Hurricane insurance is NOT cheap
If she does, get ready for an education. Taxes will be sky high. A lot of local communities will charge you the same per day accomodation fee, just like it's a motel. My F-I-L had a tough time convincing Surfside Beach they did not rent their house.
Keep in mind that a beachside home requires a lot more maintenance than a home not near the ocean. The salt in the air degrades everything metal--- be sure the home you buy doesn't need new windows / fixtures / plumbing, etc. Or if it does, that it's priced accordingly.
I rent a house at the beach from time to time.
Most of the properties are handled by well-established property management companies that also have maintenance guys on staff. I can't imagine it is cheap to go through them, but for an absentee landlord they probably work well.
The hard part will be keeping the place rented enough of the time to make money.
never rented a house at the beach.. but I lived there for decades. the Salt air will destroy metals.. but generally the only metal on homes is either aluminum or Copper.. and not too much copper anymore. Overall, my parents did not do that much more maintenance than houses inland. It is the high winds, high water, and renters themselves that you have to contend with.
Most homes are built up high enough that high water will not enter them, but anything on ground level (storage areas, outdoor showers, and the like) will get submerged at least once a year. Winds will rip off weak roofs and siding. Down in the outerbanks, I have noticed that many homes have roll down shutters over the windows that can easily be deployed in the case of a storm.. this will keep the glass safe.
The biggest point of wear and tear will be the renters. We are not talking long term renters here who have to live there for a year.. we are talking people who stay a week and have no interest (other than a security deposit) in keeping the place neat, clean, and unbroken. Much like a rental car, these folks will slam doors, leave the fridge open, let the water run, put holes in walls, sand in the carpet, and basically try to ruin the place because "it is not theirs"
That is the biggest issue you will face
Based on my sister-in-law's experience I would say don't do it. Mad-Machine's point about renters is very valid. They seem to chalk up the security deposit as part of the cost of the vacation.
Secondly, If you want to deduct the expenses on your taxes you are limited in the amount of time you can use it yourself (IIRC, ~2 weeks a year).
Third, you will probably need to have a rental agent to handle things. They can be good or disappear owing you several thousand dollars in rental income(SIL's experience). And they don't work for free.
If anyone would like to buy a nice chalet in Sevierville(Pigeon Forge)TN I can put you in touch with my SIL!
rustyvw wrote: My mother has expressed interest in buying a house in the Kitty Hawk area of NC as an investment property.
I will focus on the word investment.
Does your mother want a house that will turn a profit?
Or
Does your mother want to rent out a house as a way of reducing her expenses of ownership and thereby allowing her to vacation there at a reduced expense?
Lets say she loves the area and likes to spend time there. For argument sake, lets also say that the busiest week and her favorite week of the year there is the 4th of July.
The best money she can get is that 4th of July week. If profit is her goal then she will need to rent it out on that week. This means that she will likely never get to be there on that week. What she will be left with is a bunch of low dollar, less interesting weeks where she can be there herself.
If her goal is just to offset some of the expenses then she can be in the house for herself on the great weeks because she will be happy with the lesser income that she can get on the lesser weeks.
This version will likely mean that renting out the house does not cover the houses expenses but rather just offsets some of the expenses. Of course, this is much less of an "investment" property.
In reply to JohnRW1621:
It would primarily be an investment. I can't imagine the family using it more than one or two weeks a year in the off peak seasons. The biggest concern is how much a property management company would end up getting. I'm usually the one to handle repairs, but I can't drive 4 hours to fix a leaky faucet.
Also you have the question of how is she going to buy the house. If she has the cash to buy it outright there is a fair chance of it turning a profit. If she has to take out a mortgage to buy it, almost no chance at all.
That said, I've had a LOT of relatives become landlords of various properties and all have significant horror stories about tenants that make you hate humans for their general stupidity and nastyness.
KyAllroad wrote: That said, I've had a LOT of relatives become landlords of various properties and all have significant horror stories about tenants that make you hate humans for their general stupidity and nastyness.
QFT
-J0N
I moved to a coastal area last fall and had ideas of living on the beach, but the extra wear and tear on the houses, plus the high percentage of rental houses in the neighborhood, plus the extra costs associated with being right at the beach in terms of sales price plus insurance plus maintenance, steered me to a place that is on the backside of the island along the ICW. I've rented beach houses in a few places in the outer banks as well as on the Gulf of Mexico and think that people are either crazy or have more money than they know what to do with to get into that type of landlord business.
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