The goal for most people when it comes to owning a vacation rental home is having the rental income pay for the cost of owning the home. Most of the time the rental income is not sufficient to cover all the costs and only a portion of the home’s expenses are covered. When the rental income is enough to cover all of the house’s expenses and leave a little income left over for you, the owner, we call it Positive Cash Flow. Luckily, oceanfront houses, all up and down the OBX, tend to generate enough income to create a Positive Cash Flow rental income stream.

The magic amount of rental income needed to achieve a positive cash flow is generally around 10% of the purchase price. The closer you can get to a 10% gross rental return on the purchase price of the house the closer you are to owning a positive cash flow home.

There are some tax benefits you can enjoy when owning an oceanfront rental home. You get to deduct all the expenses this house incurs including, mortgage interest payments, property taxes, insurance, depreciation, repairs, utilities, maintenance, and property management fees. In some cases, you might be able to deduct travel expenses.

Talk to your accountant or financial adviser about using a pass-through deduction as another method of saving on your tax bill. A pass-through deduction allows you to deduct up to 20% of your rental income on your personal tax return. Should you be so lucky.

Virtually all of the oceanfront homes for sale are being sold “Turnkey”. This means they will already be in a rental program and when you buy one of these homes, they almost always come completely furnished including, wall hangings, decorations, and a fully stocked kitchen. All you have to do is turn the key in the lock and start enjoying your new home, which is where the term Turnkey comes from.

While diversifying your portfolio with real estate you will also be leveraging your 20% down payment. With only 20% of the investment paid out on your part you can enjoy the appreciation of 100% of the investment letting you build long term wealth.

The best part of owning an oceanfront rental home on the Outer Banks is the memories you will be making and the free vacations you can enjoy.