What can you buy for $300,000? Vacation homes to escape from the Beltway

This article was originally published by the Washington Post on Wednesday, February 22, 2012.

By Katherine Reynolds Lewis

Interest rates are still at historic lows. Real estate prices remain depressed in many areas. As you look forward to summer, you may be wondering whether this would be an opportune time to get a bargain on a vacation property that you could enjoy with your family while earning some rental income.

To answer that question, we looked at popular vacation destinations within a reasonable drive of Washington, D.C., to see what kind of escape from the Beltway you could purchase for $300,000. In some areas, sellers are stubbornly hoping that the market will rebound enough to reap the high prices they’ve set for their beach and mountain homes. In others, lower rental volumes and the tough economy have left property owners with limited resources for fixing up properties enough to make them irresistible to prospective buyers.

But we did find three appealing properties well located for a getaway from Washington that also hold the potential for cash from rentals. In North Carolina’s Outer Banks, we found a wood-shake beach cottage on Hatteras Island listed at $295,000 with four bedrooms, three bathrooms, a screened porch and an open air hot tub. On a peninsula jutting out into Deep Creek Lake, Md., we found a $269,000 three-bedroom log cabin minutes from the state park and a short drive to skiing and golf at Wisp Resort. If you’ve always wanted to swim with Virginia’s wild ponies, we found a charming beach house on Chincoteague Island with a water view, just blocks from Oyster Bay and listed at $339,000.

“A lot of people are not getting a great return on their money, whether it’s sitting in banks or the stock market, and are investing in real estate again,” said Chris Jett, a sales agent with Vantage Resort Realty in Ocean City.
Before jumping into a vacation investment, you should research the area and the rental history of the property itself or comparable properties. Just as with your primary residence, location is key. The closer the home is to the beach or other vacation attraction, the easier it will be to keep it full for the whole rental season. The view and ambience are also important.
Informed buyers wait for the perfect property to come on the market, sometimes taking a year or two to find the right opportunity, said Michael Davenport, a senior associate broker with Sun Realty, and president of the Outer Banks Association of Realtors. If your price target is around $300,000, you’ll need to make some compromises in location or size; you’re unlikely to get a big beachfront home in a prime vacation destination for that amount.
Look at how much you’ll spend on mortgage interest, maintenance and management fees, and calculate how much rental income you might receive to offset those costs. Be sure to consider the worst-case scenario: those recession years when people cut back on vacationing and your dream getaway sits empty for any part of those prime summer weeks from Memorial Day to Labor Day.
“The worst thing an investor has is a rental property that nobody wants to rent,” said Jonathan Hill, president of RealEstate Business Intelligence.
Read the full article in the Washington Post.