So, you’re finally ready to start the process of purchasing an investment condo in Ocean City, MD (or the surrounding beach areas). Chances are, you’ve been thinking about this for a few years now. You likely have friends or family who have a beach place, and you’re wondering if purchasing real estate at the beach and enrolling your property into a rental program is worth it. More importantly, you’re probably wondering how to even get that process started.

No matter what else we share, and what else you read, the absolute best step you can take is to contact a great local Ocean City Realtor! If you don’t have one you love, rest assured, you’ve got one right here!

Before you take that oh so important next step, we’ll be giving you some important information to consider before you purchase an investment condo, townhome, or single-family home at the beach. While it may seem easy to invest in vacation rentals because of our town’s tourism industry and steady stream of potential renters, there are a number of things you should consider first. Vacation rentals ARE NOT a “get rich quick” scheme… they are a long-term investment. When you embark on your new vacation rental investment journey, it’s important to understand YOUR financial goals, what types of properties are good for vacation rentals, and how to ensure you get a good return on your investment. THIS is where the experience that a great LOCAL top realtor in Ocean City, MD can come in handy. As one of the best realtors in Ocean City, MD, a lifelong local, and majority owner of what I, and many others consider the best vacation rental management company in OCMD, Central Reservations, I can help you navigate the waters of investing in vacation rentals. Without further ado, let’s dive in!

Step 1: Understand & Identify Your Goals

We are starting with this step because it is 100% the most important step in investing in vacation rental properties in Ocean City. Understanding and identifying the LONG-TERM goals and plans for your beach investment property is imperative. If you don’t understand your goals, you have no way to quantify your investments success. Take a good amount of time to brainstorm what you want to achieve in your new venture. Do you want to rent for 1 year? 5 Years? Or 10 years? Do you want to rent for the whole year, or just the summer? Are you going to be using the condo during the summer? Do you know what vacation rental manager you would like to work with? All of these questions are important to ask yourself when identifying your goals. TAKE YOUR TIME with this step… you’ll be glad you did in the long run.

Step 2: Get A Good Grasp on Costs & Your Current Financial Situation

This step is rather self-explanatory, and you’ve probably already thought about it since you’re thinking about investing… but we wanted to mention it, nonetheless. You absolutely 100% positively NEED to understand ALL the ownership costs associated with real estate at the beach. The best realtors in Ocean City, MD will help you do so, but having a good understanding of these things will without a doubt make this process more seamless. Before you start condo shopping, make sure you know that every month you need to account for your mortgage payments, property taxes, HOA dues/condo fees, so on and so forth. Not only do you have to account for these ownership costs, but you should also account for other unexpected expenses that may occur when renting your property to vacationers. If you have a fully booked summer, your condo is going to be being used heavily. There may be unexpected hiccups along the way. When creating your budget, you’re going to need to account for things like appliances needing maintenance, other general maintenance (fixing doorknobs, cabinets, etc.), and a little bit on top of that… just in case! The next thing you want to keep in mind is how much money you currently have for a down payment on your home. Generally, the more you can put down, the better. This will help lower your monthly payment and you won’t have to pay as much interest on your loan. You want to have a good grasp on how much home you can afford, and what home price makes sense for you with your current and projected future financial situation. A good way to get started on this front is to contact a LOCAL lender. They can help you get pre-approved for a loan, which will make your home buying process much easier in the future and help elevate your potential offers above others. All in all, make sure you, your CPA and your top OCMD realtor do some number crunching, so you know your investment is one that’s bound to be fortuitous.

Step 3: Begin Your Condo Search (with a few things in mind)

After you’ve identified your goals, have a good grasp on your budget and current financial situation, it’s time for the fun part… searching for beach condos! Before we totally jump the gun and start looking at some of the beautiful pieces of real estate Ocean City, MD has to offer, you need to have a few things in mind. Make sure you have a top realtor in Ocean City, MD that mentions the things we are about to mention. They are absolutely paramount when deciding on a property for your vacation rental business. First, we feel that it is important to highlight that for a vacation rental, the “wow factor” is a HUGE part of a property’s (and its owners) success. There are thousands of beautiful vacation rentals in OCMD. When vacationers are using sites such as VRBO, or centraloc.com, they are looking for a stunning condo that is going to be their family’s home for a great vacation week this summer. You absolutely need to have something that makes your condo stand out. When you are searching for your vacation rental the next thing you need to do is to put yourself in the shoes of a vacationer. Would you rather stay in a condo that resides in a building with an indoor & outdoor pool, a sun deck, on site security, an elevator, maybe even a fitness & game room, or a condo that is simply just a condo with no extra amenities? We think the answer to this question is pretty simple, and most people would agree they would choose the first option. We’re not saying that a townhome on the bayside of Ocean City won’t rent well. That’s not the case at all. There is a wide range of clientele that vacations here. We’re simply saying that if your budget allows for it, you will likely be able to produce more income in a building with these added on amenities. Next, you will want to consider location. How does the old saying go about businesses? Location, location, location. Well, that rings true for vacation rentals too. Generally speaking, a condo in an oceanfront building on the boardwalk with all of the amenities we mentioned earlier will rent for more than a bayside townhome without any water views! With all of that being said, this is why doing some good number crunching and having a budget that makes sense for you is so important! Last, but CERTAINLY not least, you will want to consider a buildings HOA rules and financial health. When you call a top local realtor in OCMD, make 100% sure they are doing research on a buildings reserve study and HOA rules… BEFORE YOU BUY. Some buildings and/or communities have rental restrictions. These rental restrictions may say you can only rent on a long-term basis, which would make that a not so good vacation rental investment. They may also say you can only do weeklong rentals with a check-in on Saturday. Needless to say, you have to know these regulations! You also want to make sure the building you are considering purchasing in has “healthy” finances with enough funds to cover general common area maintenance over the next 5+ years. If they don’t, this could result in your condo fees going up dramatically, which could in turn decrease your return on investment. No bueno.

All in All…

The goal of this blog was to help give you an understanding of some of the things that really matter when you are considering purchasing a property in Ocean City, MD with the goal of earning some vacation rental income. We also hope that while reading this blog you realized this can be an investment that has a lot of nuances and steps you need to take in order to ensure you are making a sound investment. This is why we highly encourage you to consul professionals in this area. If you have questions about vacation rentals and the current vacation rental market, and what you can do to get started, contact our friends at Central Reservations (info@centraloc.com). If you are ready to start the home buying process, contact a great local lender, and the best realtor in Ocean City, MD! I would love to assist you and help you work through the process of buying an investment property at the beach. Thanks so much for reading! We hope you enjoyed.

 

See you at the beach soon!

Grant Fritschle

Cell: (410) 430-5880

Email : grant@grantf.com

Office : (410) 524-6400

Jon Barker

Cell: (410) 935-3810

Email: jon@markf.com

Office: (410) 524-6400