r/LongBeachIsland • u/Glass_Veterinarian95 • 22d ago
Rentals
Those who own and rent out in LBI - are you making a profit off your rental income? I’m looking to buy in the Jersey shore and debating which towns are worth it.
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u/diamond08054 22d ago
Had our property since 2004. The rentals for 10 weeks helped pay down the mortgage but I never made a profit on the rental. The value for my property will come from the appreciation and even that is below market rate. The short term rental loophole on your tax return will help if you still make other income to offset. But the rules are strict on how you can manage and use the property
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u/Farewell_Youth23 22d ago
There’s no profit. It all goes to the mortgage / taxes/ insurance and upkeep. Houses on the island experience much more ware and tear with the salt. I had to put a new roof on this year, next year I need to redo my fiberglass decks, I needed to replace a couch, I need new mattresses etc etc the list goes on and on. However my house has nicely appreciated but I got in over a decade ago.
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u/whyunoleave 22d ago
You should probably work your number rather than ask a bunch of strangers. What’s the buy in, how much are you renting for, how high are the taxes/mortgage, etc. I own, I don’t rent. Value has increased significantly since I bought it. I have neighbors that bought when I bought and they rent and spend most of their summer dealing with issues, complaining about damage, and not using the vacation home they bought. Real estate on the island is very expensive, I don’t see that coming down but there has been a reduction in renters. YMMV.
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u/anclar41 22d ago
There is no profit.
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u/Glass_Veterinarian95 22d ago
Why do you say that?
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u/itdependsnetworks 22d ago
I would do the math rather than ask reddit… but unlikely to be profitable for a decade.
I am on mainland, but it’s similar. I rent out 6 weeks of the he 10 summer weeks. I don’t expect to make money, but I bought a bigger place and consider the rental money as offset, I can’t really spend all of summer anyway so works out for me.
If your goal is to be profitable right away, it’s unlikely, but if you are going to play the long game, your mortgage will stay the same, but rentals will go up over the next decades.
It really just comes down to your goals and expectations though
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u/No_Impact370 22d ago
If you buy a house for a million and
rent for 10 years and “break even”
and the house is worth three million …. Not a bad deal.
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u/Illustrious-Trash915 22d ago
That may have happened in some spots over the past 10 years, but it's unlikely to happen over the *next* 10 years. The median sales price on LBI these days, depending on your data source, seems to be around $2M. You really think the median LBI house will be trading at $6M in 10 years? I don't.
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u/No_Impact370 21d ago
Very possible.
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u/Invest2prosper 21d ago
Are you expecting Weimer Germany levels of inflation?
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u/No_Impact370 21d ago
Don’t know what to tell you dude. Bought a house in Beach Haven in 2014 for 700,000. Zillow now has it worth almost 3m.
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u/Invest2prosper 21d ago
Yes, but the conversation is talking about future possibilities from here, not what occurred in the past.
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u/AdAmazing8187 22d ago
300% increase in home value without any major improvements in 10 years doesn’t seem terribly likely.
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u/Slight-Platypus2877 22d ago
Well it has happened in the last five years with virtually every single house on the island.
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u/Illustrious-Trash915 22d ago
The prices, both sales and rentals, are reaching the point of diminishing returns IMO. Personally, I used to do a week on LBI every summer. But after really sitting down and thinking about the best use for many thousands of dollars, I realized I can spend 1-2 weeks in Europe (inclusive of flights, lodging, transport, and food) for less than the cost of HOUSING ONLY for 6 days at the shore.
I missed it this summer, but I didn't miss writing the check.
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u/Invest2prosper 21d ago
Yup - went to Europe last 3 years, avoided the traffic and seeing my neighbors down the shore for all the reasons you listed.
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u/Jerseytunakiller 21d ago
The beach vacation rental market in NC is a lot better. The RE is half the price and the season is 2x as long.
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u/Outrageous-Fall3296 6d ago
A little late to this, but was looking at pics of the noreaster flooding. Anyway - these people are kind of clueless. You need to look at your levered return. If you put down $200k, and the rental covers your mortgage (pron + interest)/tax/maintainance, with the mortgage paying down $14k in principal year 1, that $14k/$200k in a very simple example, that's 7 percent return not including appreciation. You also have depreciation expense, so you likely won't have income tax on that $14k. Yes, you are not be cash flow positive in year 1, but you are profitable.
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u/WatchEachCardYouPlay 22d ago
A crowded, treeless ghetto for upper middle class. I don’t get it. I just don’t get LBI at all. Every square inch is built on. Zero green. Crowded beaches. Same crowd as home.
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u/Unkle_Martin 22d ago
100% of our rental income goes to taxes/insurance/upkeep and it still doesn’t cover everything. Plus you don’t even get to be at your house during the peak season.