Home Buying in Ocean City>Question Details

Susan Burke, Home Buyer in 21403

How much net income can we expect from a multifamily property in Ocean City, Maryland?

Asked by Susan Burke, 21403 Thu Feb 3, 2011

We are thinking of buying a multifamily apartment building in OC, Maryland, with probably 4-6 units. How can we find out what type of income stream we can expect from our investment? I know some costs are variable (like paying a rental company to handle bookings), but is there an "average" of seasonal net income to expect from weekly rentals? Also, is there an optimal number of bedrooms/baths per unit to maximize the rental potential for the season (1, 2 or 3-bedroom)? Thanks!

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Gary & Angie Carr’s answer
If you look at a multi-unit property, also consider leveraging your risk by keeping some of the units for seasonal (summer/monthly/weekly) rentals and others for a full year lease term. There are plenty of locals that are looking for rentals and new leases during the "off" season too. You may collect less rent per month during the summer time, but it will be less aggravating than having an empty unit.

Also, follow the advice below. When buying an investment or commercial property - be insistent on reviewing the financials of the current owner.
0 votes Thank Flag Link Tue Feb 8, 2011
Susan,
There isn't a one sentence answer to this question. There are many variables that go into determining net income. You need to find out all the income and expense numbers from the current owner. That is a start but doesn't always give you the answer your need. For example, lets just say that you find a six unit place, but the owner lives in one, or maybe converted two into one for his/her use. His income would be lower than you may get if you owned it and rented everything out. Also this can be the case with expenses. Maybe, because that owner lives in the property, he/she manages the rentals and doesn't use the services of a rental company. I think the best way to get an idea of what to expect is to put together a price range, location, and other preferences. That way I could send you a link of selected properties that fit your criteria. You cold look them over , pick one that you want me to investigate, then I can do a cash flow for you. That wold give you a sample idea of how it all works. Then if you decide to take the plunge, and become a resot property owner, I would be happy to help you find the best property for you. I hope this helps to answer your question.. If you have further questions, please feel free to contact me at terry@terrylooney.com.

Good Luck,
Terry Looney
0 votes Thank Flag Link Fri Feb 4, 2011
Susan,
If you're buying a building that's already an income producing investment , you should ask for a minimum of the last 2 years worth of financials. The best indicator of what you can expect (income wise) is to look at what they've been getting in the recent past.

There is a difference between a traditional apartment building (with yearly leases) and a weekly vacation rental. When you buy a multifamily building, the active leases are also conveyed. I'm not sure about a seasonal rental complex, but I would think you could ask for the list of past renters. It would be worth reaching out to them to see if you can get them back year after year.

I assume the number of bedrooms is already determined if this is an existing building. But in general, for a vacation or weekly rental, I would think a 1 BDR would not be in high demand.

Hope this helps!
Stacy Carter
Associate Broker
Better Homes & Gardens Real Estate Metro Brokers
678-641-6631
0 votes Thank Flag Link Thu Feb 3, 2011
Susan,

If the property you are considering has had a previous income stream, I would request to see what rental income it has generated in the past. That will be the best way to determine your future potential. Also, has there been repeat tenants that come back year after year.? Very good information to gather.

Each multi family property will be different. There are many variables to evaluate to help determine your expenses. For example, the age of the building will help you to work towards a cost for maintenance.

What is the cost of their existing insurance policy? Going to the current owner, who has these numbers readily accessible is the best place to start.

If I can be of further assistance, please be in touch. My husband and I have been selling real estate (commercial and residential) in Ocean City since 1976.

My best. Monica
0 votes Thank Flag Link Thu Feb 3, 2011
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