Q. How can you make 5% return on your investment?
A. Buy a real estate investment property in Rehoboth Beach, DE!
But before we get too far ahead of ourselves, it is important to begin by understanding the topography of the 1 square mile that is Rehoboth Beach. We already know there is a demand; the 15-week high season will attract an estimated 2 million visitors, dwarfing the 1,500 year-round residents. But it takes a little more expertise to know what combination of natural and physical features will provide the greatest return on investment.
Here are the top three factors to consider when buying a property for investment in Rehoboth Beach:
Distance from the Ocean
The greatest determining factor on your rental income will be how many blocks from the beach your investment property is located. There can be a difference of $1,000 per week between the 1st and 2nd block.
Visitors want to be able to walk to the beach and all the attractions of the boardwalk. They want no hassle to find parking, and want short stroll home after dinner at one of the award-winning restaurants.
Blocks from Rehoboth Avenue
Rehoboth Avenue is the main strip where all other crossroads and avenues meet. It's the heartbeat of the city with its boutique stores, live music concerts and colorful nightlife.
As an investor, the closer you can position your property to Rehoboth Avenue, the greater your potential to rent during the quieter periods of the year.
Rental properties located two blocks north or south from the avenue are more desirable during the shoulder months (May/June & Sept/Oct) and have a higher appeal to seasonal tenants.
Weekly renters are not looking so much for pristine home features. They're more willing to pay top dollar for convenience. The more people the house can accommodate, the more ways the cost can be divided. A property that is able to sleep 12 or more is the ideal scenario.
There are other ways to gain a little extra from each rental period. Having a pool can add an additional $1,500 during peak weeks. Allowing pets will provide an additional $200 per week while private parking spaces with additional on street parking permits will increase the overall appeal.
A 5/6 bedroom property within two blocks of the ocean and two blocks north or south of Rehoboth Avenue that includes a pool will return approximately $115K of rental income in a year. While other variations of factors will generate respectable returns, this combination is the “cash cow.”
Of course, there are only a limited number of homes to select from, which is why working with a local Realtor will help you combine the right variables for maximum returns.
The Nitan Soni Group
* Demographic data provided by Rehoboth-Dewey Chamber of Commerce
* Real Estate data is accurate as of time of blog