Posted by David Krulac on March 03, 2005 at 21:35:42:
spend many a day and nigh at both Wildwood and Cape May.
The season is about 12 weeks from Memorial Day to Labor Day. You need to have the place rented all 12 weeks and you will probably have no rental income the remaining 40 weeks. Today its 18 degrees, nobody want a walk on the beach, even if the wind didn’t blow you into the riptide. The other alternative is to rent year round to one tenant, surprisingly the 12 month year lease and the 12 weekly rentals end up being close in income when you consider the clean up and extra maintenance/management with weekly rentals.
Most people thinks its real cool to have a beach rental because they like the beach. From an economic prespective virtually evry one that I’ve seen are negative cashflow and money losers. On the other hand beach property has increased dramictically in price in the last 5 years, aftre about 10 years of stagnation. If you have a bunch of extra cash and you don’t care if there is no cashflow, AND you think prices will continue at the pace of the last 5 years, then do it. but don’t call it a real estate investment if you lose money every year and maybe will make a killing in a decade. That’s not investing, that’s speculating. If you want to do that you can go up the Garden State to AC and put it all on red, or is it black?