As a CPA and a finance executive, I was trained to look at net income, cash flow, return on investment (ROI), cap rate and other quantifiable measures when evaluating a potential investment in real estate.This is necessary but not necessarily fun. It is simply number crunching with very little emotion. The necessary and relevant questions are:
- What is the historical rental income?
- What are occupancy rates?
- What is the potential future rental income?
- What are the taxes and insurance, maintenance and HOA fees?
- What is the mortgage payment?
- Can the rental income from the property cover the operating expenses and mortgage payment?
- When the property is sold, how much will it have appreciated?
- How much gain will be realized?
- What are the tax implications?
- Is this a PRACTICAL investment?
Amidst all the number crunching, I looked forward to our annual escape to South Padre Island with our best friends. I always loved to come to the island, and I always hated to leave. Eventually my husband and I decided to purchase a condo and combine the place we enjoyed the most with a practical investment.
We made our “practical investment in fun”. In evaluating an investment from this different point of view, there is a whole new set of questions:
- Do you like the property?
- Can you picture yourself sitting on the balcony watching the Gulf, taking in the sunrise each morning…or watching the sunset over the bay each evening?
- Will you enjoy a walk on the beach within steps of our front door?
- Will you enjoy being able to jump in a car or on a plane without having to even carry on a bag because your owner’s closet has all you need?
- Will you treasure special moments with family and friends when they stay at your “Beach Home”?
- How much will you gain by being able to escape the usual more often to go to a place that you love?
- Is this a FUN investment?
The answers to these questions are always easy.
So, after 30 years in the big city business world, I landed (intentionally) on South Padre Island with a real estate license. Now it is my job to help others make practical investments in fun. The same property can meet both needs. Whichever approach you use to evaluate your investment, there are properties that fit. And I stand ready to help you evaluate your South Padre Island real estate investment from either point of view….or both!
Looking for a practical investment in fun? Call Eleana Jones.
We are pleased to report that the City of South Padre Island has passed a new ordinance that requires the registration of all short term rental properties on South Padre Island. Our broker, Eleana Jones, was a member of the Hotel Occupancy Tax Task Force that developed this new ordinance and was active in moving this ordinance forward because we believe that this ordinance is great for the island, great for rental property owners and great for rental guests visiting our island.
The ordinance requires that the registration number be posted on all advertising. This will bring creditability in the vacation rental marketplace for properties on South Padre Island. The Island has seen a large volume lately of fraudulent listings that are “scraped” or extracted electronically from legitimate websites such as ours or the MLS sales listings. Guests show up on the island only to find out that they paid for a rental that does not exist or is invalid which gives our island a bad reputation. Guests can now have a way to identify vacation rental properties that are reputable and in good standing with the City. Once it is assigned, the registration number stays with your property even through transfer.
- The ordinance requires a 24/7 contact number for a representative within one hour response time for all short term rentals. This will assist City authorities in enforcing our quality of life ordinances: noise, disturbance and fire code occupancy, by holding the rental owner or their rental agent accountable for the actions of their rental guests. This will also contribute to the enforcement of the quality of life rules that so many building HOA’s have enacted. Perhaps this will reduce the number of buildings that are turning toward extreme measures of severe rental restrictions.
- The ordinance provides the City with a means to enforce the collection and remittance of hotel occupancy tax (HOT) by requiring that all short term rental properties be registered with the City and file HOT tax reports. Property owners who are renting their properties at a lower total price by not collecting hotel tax will no longer have an illegal competitive advantage (14.5% discount) over property owners obeying the law. And of course, compliance will add to our tax base providing additional funds for promotion of our island.
- If you are represented by a vacation rental management company or agent, they should register your property for you, requiring no action by you. But you must check to make sure because you as the property owner are liable for any penalties from failure to register. At Padre Getaways, we take care of this for all of our property owner clients.
More information and registration forms are available online at <http://myspi.org/hottax>. The final compliance date is July 1st 2015. For questions you may call Customer Service: (956) 761-8382 or Email: HotTax@SoPadre.com<mailto:HotTax@SoPadre.com>