Outer Banks Investment Property & Cash Flow Homes

Real estate has always been a good way to diversify your investment portfolio. Typically, an investor would buy an apartment building, shopping center or rental home based on the capitalization rate or the possibility of appreciation in the value of the property. Nothing exciting but still a good solid investment.

Investment real estate done right, is a multi pronged strategy where the investor can leverage their money while earning income with capital appreciation as the end gain. Stocks can vaporize, real estate lasts forever and historically, has seen positive gain spread out over time. Real estate is not a short term investment.

The typical commercial real estate investment requires the investor to own a shopping center, office or apartment building or a rental home where someone is trying to live. Alien property with no intrinsic value other than investment possibilities. If you own a shopping center or apartment building your investment can deteriorate simply by a change in neighborhood traffic patterns. Stores come and go. Owning homes where people are trying to live puts you in the position of playing landlord trying to collect rent and dealing with the inevitable evictions. Solid investments but messy to own and the best you can do is drive by and look at them or shop at one of your tenants establishments.

Here on the Outer Banks, investment real estate has possibilities not available in most areas. Here you can own a vacation rental home that you can enjoy the use of while simultaneously enjoying the investment benefits of the typical real estate investment. By maximizing the rental potential during the summer vacation season, you can realize income and still get to use the house in the off season.

Vacation Rental Homes

Adding a rental home to your investment portfolio comes with benefits not available to other types of investments. Rental homes on the Outer Banks are not like those where you live. A vacation rental home is only rented during the vacation season, so it ends up being empty for most of the year. Vacation renters pay in full before they check in to your house, so they are never behind on the rent. What other type of investments offer you the opportunity to entertain family and friends in the surroundings of your beach house?

Leverage

Use your 20% invest to earn the appreciation on 100% of the cost of the property. Lets look at a $500,000 house as an example. A 20% down payment of $100,000 will enable the investor to leverage a $500,000 asset and over time, let the equity build. You can postpone when you realize the appreciable gain on the entire $500k by waiting until you retire to sell, thereby taking advantage of the lower tax bracket retirement brings and preserving more of your profit.

Financing

If you live a considerable distance from your potential vacation rental home then you might qualify for a second home loan. A 2nd home loan has the combined advantages of a lower interest rate plus a smaller down payment required. An investor loan has a higher interest rate, requires a larger down payment but you can use the proven rental income to help qualify for a loan. So while an investor loan might be more expensive on the front end it might yield higher returns on the back end due to being able to leverage your investment with the rental income.

Positive Cash Flow

The ultimate real estate investment is when the rental income covers all the expenses. If there is profit left over after holding costs then it is called Positive Cash Flow. Instinctively, investors want to buy a house and have the house pay for itelf. This train of thought is encouraged by the endless stream of advertisements claiming positive cash flows for new developments. This is almost always just hype. If a property truly is paying for itself, we would not see many houses come up for sale. Why would an owner get rid of a house that pays for itself?

Due to the overwhelming popularity of the Outer Banks, it is very rare to find a positive cash flow home. Of course, there is always a point where an increased down payment can turn any home into a positive cash flow.

Most of the time, however, the rental income will help cover some or most of the holding costs. Oddly enough, the more expensive a home is, the greater the odds of achieving positive cash flow. This is because the pricier homes are usually located closer to the beach which is popular with renters.

Holding Costs

This is the true untold story for most people when they invest in real estate. It is the savvy investor who knows what to look for (how to find) the not so obvious costs associated with real estate investments. These hidden cost can seriously affect your Potential Gross Income (PGI).

The obvious expenses being utilities, insurance, maintenance, and property taxes. A lot of so called Positive Cash Flow properties don't look so good when you factor in the often overlooked rental commission. To befuddle you even more, some rental companies will charge a lower commission and then charge fees for services not included in the commission but necessary to manage the property. These fees can cover such items as linens, pool maintenance, credit card costsThis can sometimes add an additional 5% to 10% to the stated commission. Once you have a true picture of the holding cost you can look at the Effective Gross Income and how it will help or hurt your situation.

Cash Flow Worksheet

Here are some sample Proformas to help you analyze your available options and see if this is the course you would like to proceed with. If have heard of these proformas by some other name such as Investment Examinations, Investment Analysis or even the classic 'Performa' they all share one thing and that is the same lack of accuracy.

Every effort has been made to provide accurate data but it needs to be stressed that these proformas should only be used as guidelines. If one of these proformas is your guiding light and is convincing you to follow through with this investment, then please take this Proforma to your accountant. None of us here are accountants and we all hire professionals to do our taxes. Everyone's situation is different so please consult with your personal accountant.

Tax Benefits

The mortgage on a 2nd home is written off just like it is on a personal residence. All maintenance and operating costs are also write offs. There might be depreciation and other benefits depending on your personal situation, so the smart move is to consult with your CPA.

Investment Homes For Sale

Below are some cash flow real estate investments. The investment homes listed below are located fairly close to the ocean and as a result, they tend to produce higher rental income. Oddly enough, the pricier properties are usually cheaper to own. While all real estate is a good investment, rental homes can generate 5%-8% Gross Rental Performance which goes a long way to contributing towards the carrying costs. If a home can generate 10% of the purchase price in annual rental income, then it should get real close to paying for itself.

If you are not sure where you fit in or you are not sure what your options are, give us a call 800-647-1868 and let us help you figure out the best possible scenario for you.

114 E Tuckahoe Drive, Duck
Asking: $699,000
Beds-4 Baths-2 SqFt: 1680
SWEET BEACH COTTAGE! AWESOME LOCATION!! Light and bright, open and spacious, this 4 bedroom beach home is just 5 lots from the ocean in Tuckahoe! Enjoy the amenities of Tuckahoe incl MORE
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104 Cook Drive, Duck
Asking: $749,900
Beds-4 Baths-2 SqFt: 1710
SEASIDE STYLE, SOUGHT-AFTER SPOT! Sitting HIGH in the dunes of Duck, a tasteful transformation--Seller did it right in this cute-as-can-be WALK-IN READY remodel, fully-furnished with a MORE
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1353 Duck Road, Duck
Asking: $805,000
Beds-4 Baths-3 SqFt: 2670
This 4 bedroom, 3 full and 1 half bathroom beach house is walking distance to the beach without crossing any busy roads! Located in Duck’s Carolina Dunes Oceanside community and s MORE
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104 Old Squaw Drive, Duck
Asking: $880,000
Beds-5 Baths-4 SqFt: 2769
Beautiful Oceanside Home in Prime Duck Location! Just a short walk to the beach or the sound. Carolina Dunes has three ocean accesses and one sound access. Recreation room on the grou MORE
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101 E Sea Hawk Drive, Duck
Asking: $927,500
Beds-6 Baths-6 SqFt: 3699
The Sands is a spacious home on a large, fenced corner lot conveniently located close to the shops and restaurants of Duck Village. Good rental performance and 10 weeks already schedule MORE
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152 Whistling Swan Drive, Duck
Asking: $1,175,000
Beds-6 Baths-6 SqFt: 4461
This custom built home sits on a lot that is 28 feet above sea level, resulting in stunning views of the ocean, the sound, and the village of Duck. The first floor features a game room MORE
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120 Vireo Way, Duck
Asking: $1,399,000
Beds-5 Baths-4 SqFt: 2476
A RARE FIND - 5 BEDROOM SEMI-OCEANFRONT (2ND TIER OCEANFRONT) IN SANDERLING!! NO STREETS TO CROSS TO GET TO THE BEACH! Enjoy stunning ocean views and direct beach access from this love MORE
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148 Scarborough Lane, Duck
Asking: $1,449,000
Beds-5 Baths-4 SqFt: 3230
Location, Amenities & Views ... this Oceanside home in the Seapines community of Duck has it all! From the roof top Ocean view deck (NEW in 2014) to the low maintenance vinyl shake sid MORE
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129 Plover Drive, Duck
Asking: $1,728,125
Beds-6 Baths-7 SqFt: 4378
“La Vita Bella” means “The Beautiful Life”, which is what you’ll experience owning this luxurious home. You will be captivated with Italian marble, bamboo floor MORE
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140 Skimmer Way, Duck
Asking: $1,899,000
Beds-5 Baths-5 SqFt: 3486
GORGEOUS OCEANFRONT CUSTOM BUILT IN 2014 BY TODD COYLE! SWEEPING OCEAN VIEWS AND STUNNING SUNRISES! ATTENTION TO EVERY DETAIL WITH UPSCALE FINISHES THROUGHOUT!! STRONG RENTALS!! This MORE
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100 Marlin Drive, Kitty Hawk
Asking: $1,998,000
Beds-6 Baths-6 SqFt: 7206
Are you serious??? The highest quality built Estate, in the best prime section of Duck, for less per square foot then anything else! You can earn over 12% or much more on your investmen MORE
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180 Ocean Way, Duck
Asking: $2,495,000
Beds-8 Baths-7 SqFt: 3895
DREAM LOCATION! This 8 bedroom (5 are master suites) 7 ½ bath home IN THE HEART OF DUCK is what you have been waiting for. RENTAL PROJECTION OF $200,000! Imagine being able to walk t MORE
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138 Sea Eider Court, Duck
Asking: $2,649,500
Beds-8 Baths-7 SqFt: 5517
Fabulous Oceanfront Home in the Heart of Duck ... walk to Downtown Duck! Home is situated on large nearly 80 feet wide and very deep lot with solid dune system ... located on Private an MORE
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163 Buffell Head Road, Duck
Asking: $3,950,000
Beds-8 Baths-7 SqFt: 5908
Exceptional oceanfront estate situated on half an acre with over 100 feet of water frontage and unobstructed views. This home has absolutely everything you could want. Each level has MORE
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178 Ocean Way Court, Duck
Asking: $4,490,000
Beds-8 Baths-7 SqFt: 6198
Elegant, updated oceanfront estate in the premiere downtown Duck neighborhood of Seapines. This property has been lovingly maintained by the owner. Ideal location to enjoy all Duck ha MORE
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118 N Baum Trail, Duck
Asking: $9,999,999
Beds-12 Baths-12 SqFt: 9893
One of the most well-appointed and premier homes on the Outer Banks, this oceanfront estate is almost 10,000 sq ft of living space and was constructed in 2018 in the world-class Palmer MORE
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3605 S Virginia Dare Trail, Nags Head
Asking: $1,299,000
Beds-3 Baths-1 SqFt: 950
Old Nags Head Style Oceanfront cottage on a premier oceanfront lot! Location, location location! This vintage cottage is located just south of the Nags Head Fishing Pier and close to MORE
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7009 S Virginia Dare Trail, Nags Head
Asking: $1,875,000
Beds-8 Baths-7 SqFt: 3568
Huge, 8 Bedroom and 7 Full Bath Oceanfront home in Nags Head; Greatly Increased income potential with some interior upgrading. $142,593 already booked for 2022 and should reach $172,2 MORE
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3915 S Virginia Dare Trail, Nags Head
Asking: $2,200,000
Beds-7 Baths-6 SqFt: 3122
"Ridge Retreat" is on the National Register of Historic Places in the Old Nags Head district. The home was built in 1979 to reflect iconic features of the unpainted aristocracy, and in MORE
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2701 S Virginia Dare Trail, Nags Head
Asking: $2,299,000
Beds-8 Baths-7 SqFt: 4000
A wonderful oceanfront property awaits with 200k plus in rental income, sensational ocean views and a stable vegetated dune for added protection! One of the best dune lines in all of Na MORE
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2509 S Virginia Dare Trail, Nags Head
Asking: $3,195,000
Beds-8 Baths-8 SqFt: 4999
Dressed in modern design and high-end finishes, Eleanor Dare offers world-class amenities. This luxury estate provides stunning views of the Atlantic with unsurpassed entertainment thro MORE
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824 Corolla Drive, Corolla
Asking: $675,000
Beds-3 Baths-2 SqFt: 1695
Sitting high above the crowds, you will feel at home as soon as you walk in. The home is clean, decorated nicely with an open and airy aura and some ocean view. The location is superb MORE
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1077 Corolla Drive, Corolla
Asking: $800,000
Beds-5 Baths-4 SqFt: 2784
Spacious 5th row home located in an X zone. Priced to sell. New fence installed around pool 12/13/2021. MORE
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770 Bayberry Court, Corolla
Asking: $930,000
Beds-7 Baths-7 SqFt: 3600
Rental Gem! Well maintained 7 Bedrooms/7 Full Baths/ 2 Half Baths. Ocean side corner lot with private pool. Minutes to the beach. Large open floor plan. MORE
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1015 Corolla Drive, Corolla
Asking: $950,000
Beds-7 Baths-5 SqFt: 3001
Lowest priced Corolla 7 bedroom 5th row home in popular Whalehead Club! Bright and airy great room with vaulted ceilings and newer LTV flooring!...multi level sun decks for total outdo MORE
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715 Spinnaker Arch, Corolla
Asking: $1,100,000
Beds-4 Baths-2 SqFt: 1840
SEMI-OCEANFRONT opportunity in Ocean Sands, Section Q!! Charming SEMI-OF BEACH COTTAGE just steps from the Atlantic ocean!! Well maintained two-story home with multi level decking, HUG MORE
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605 Saltspray Court, Corolla
Asking: $1,299,000
Beds-5 Baths-3 SqFt: 2346
OCEANFRONT GEM!! THE QUINTESSENTIAL BEACH COTTAGE! SO CHARMING! SWEEPING OCEAN VIEWS! LOVINGLY MAINTAINED!! PHENOMENAL LOCATION...JUST STEPS TO THE BEACH! You will feel the love when MORE
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605 Skimmer Arch, Corolla
Asking: $1,450,000
Beds-6 Baths-4 SqFt: 3425
Enjoy the gorgeous panoramic ocean views from the loft. Professionally decorated and lovingly maintained by the seller. Siren Song a charming 6BR/4BA Oceanfront home that the entire fam MORE
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1060 Whalehead Drive, Corolla
Asking: $1,650,000
Beds-9 Baths-9 SqFt: 5436
This popular rental machine can hold a large crowd inside or outside with plenty of room. Outdoor space includes pool, deck, hot tub and tiki bar. Large great room with gourmet Kitche MORE
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473 Island Lead Road, Corolla
Asking: $1,750,000
Beds-6 Baths-5 SqFt: 3318
This beautiful, Pine Island home features 6BR, 5BA, 2 half baths. Just a Short Walk to Beach, Community Pool, Tennis, Basketball and Playground. Top floor has an open Great Room, Dini MORE
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467 Pipsis Point Road, Corolla
Asking: $2,495,000
Beds-6 Baths-4 SqFt: 3400
Pine Island. Oceanfront. Phenomenal Rental History. That's probably all we need to say about this 6-bedroom 4 and 1/2-bath home, but we'll give you a little more. Properties like this j MORE
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117 Cadwall Road, Corolla
Asking: $2,650,000
Beds-6 Baths-6 SqFt: 4362
Welcome to Carolina Sunset! Many oceanfront homes have a wonderful view of the ocean and of the sun rising over it in the morning, but only a select few can say that they also have a su MORE
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985 Lighthouse Drive, Corolla
Asking: $2,849,000
Beds-6 Baths-5 SqFt: 4013
Sea Oats Cottage is a gorgeous 6BR/5.5BA Corolla Oceanfront home located on a premium homesite in the extremely desirable Whalehead subdivision. Quality built by Olin Finch for maximum MORE
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948 Lighthouse Drive, Corolla
Asking: $3,300,000
Beds-12 Baths-12 SqFt: 6295
“TURN-KEY” RENTAL READY ELEGANT ESTATE TO BE BUILT NEW CONSTRUCTION 12 B/R, 12.2 BATH HOME TO BE BUILT AT 948 LIGHTHOUSE DR. ON A CORNER LOT OFFERING THE HIGHEST SEMI-OCEANFRO MORE
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101 Station One Lane, Corolla
Asking: $11,000,000
Beds-9 Baths-10 SqFt: 10967
A WELCOME RESPITE - The OUTER BANKS PREMIER LUXURY OCEANFRONT ESTATE! In the picturesque northern Outer Banks where the Atlantic Ocean and Currituck Sound nearly unite, there is a stunn MORE
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707 S Virginia Dare Trail, Kill Devil Hills
Asking: $3,500,000
Beds-12 Baths-11 SqFt: 6643
Turtles Nest has it all—enjoy the big house size for large groups AND a very high level of quality and attention to detail! Offered by the original owners, this home has the rental MORE
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807 S Virginia Dare Trail, Kill Devil Hills
Asking: $3,995,000
Beds-12 Baths-12 SqFt: 8200
KDH Paradise is an amazing oceanfront 12 bed 13 bath estate with incredible rental income YTD $375k+. Spacious layout, beautiful furnishings, vivid ocean views and top of the line amen MORE
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1507 N Virginia Dare Trail, Kill Devil Hills
Asking: $6,300,000
Beds-21 Baths-19 SqFt: 12126
Ocean Luxe is short for luxury on the oceanfront! This remarkable 21-bedroom is designed for rejuvenation, relaxation and caters to large events such as reunions, retreats, etc. Thro MORE
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1505 N Virginia Dare Trail, Kill Devil Hills
Asking: $6,400,000
Beds-24 Baths-18 SqFt: 12126
If you've ever wanted to live like Royalty this Oceanfront Estate is for YOU! The home is equipped with an expansive great room, a premium kitchen, an in home theater, custom wine loun MORE
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3 N Ninth Avenue, Southern Shores
Asking: $6,300,000
Beds-7 Baths-6 SqFt: 5911
This custom-designed 3 story vacation home sitting on one of OBX’s most premier lots features unobstructed views from the south, impressive 26 ft Berm protecting home from storm su MORE
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Outer Banks Investment Homes
Corolla Investment Homes
Southern Shores Investment Homes
Kill Devil Hills Investment Homes
Nags Head Investment Homes
Duck Investment Homes