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By Lisa Loy
Connie and Jerry Nunn accomplished the “Nunn Believable.” They loved their so-named Schooner Ridge oceanside home but couldn’t wait to sell it. They wanted to move closer to the ocean. They were pleased with the better view and proximity to the beach, and it gave Connie an opportunity to furnish and decorate again, a pastime she greatly enjoyed. The new home showed even greater success on the weekly rental program.
By 1991 the Nunn’s semi-oceanfront home in Schooner Ridge rented out by the week in the summer for $2,020 per week and it was called “Nunn Better.” But it did get better, in fact it got much better. So good in fact that the Nunn’s were confident enough to buy on the oceanfront in the same community. They sold their semi-oceanfront home to buyers that by 2001 were collecting $3,450 a week; they kept the name but changed the spelling to “None Better.” By 2004 the house was earning $3,975 per week.
Their oceanfront home, a 5 bedroom similarly styled home with a private pool this time, rented for $6,050 a week in summer. It was so successful that they moved up to Palmer’s Island at the north end of Duck and built again, the 8 bedroom “Nunn Forgettable” with uninterrupted ocean to sound views that brought in $9,200 per week in the summer.
How does all this apply to the full-time permanent community you may wonder? The Nunn family’s success at trading up resulted in the achievement of an even greater dream––to live on the Outer Banks when Jerry retired. And that is exactly what happened.
Higher Rents and Lower Payments
Many people think in terms of appreciation when they take the long view on homeownership. Appreciation, and reducing the principal balance on one’s mortgage, increases equity. But other factors exist that save and make money.
If you are an investor or second homeowner, rental income offsets the expense. But have you taken the long view on rental income?
In 1991, the owners of a 6-bedroom semi-oceanfront home in Carolina Dunes enjoyed an income of $1,990 per week in summer. Today, that same house brings in $3,775 per week.
Now consider the mortgage. In 1991 it wasn’t unusual at all to pay 11 to 13 percent interest on a second home mortgage. Today, a 30-year fixed rate is available for 6 or 7 percent. Most homeowners refinanced somewhere along the way to take advantage of the savings.
Rental income has helped builders too. Here on the Outer Banks, builders often sign their speculative homes up on a weekly rental program, often before it is even built. As the hammers bang, reservationists are manning the phones and the following season, an income stream is established. For the builder, it’s a safeguard if the house doesn’t sell. For a prospective buyer, it represents validation that weekly rentals really do offset the cost of ownership.
Weekly rentals also take the urgency out of a sale. A seller is less likely to tank on his asking price if he’s not stressed about making the mortgage payments. This helps hold property values up on the Outer Banks.
Even when economic times are low, families still take that two-week vacation. They might not fly to Europe, but they’ll still drive to the beach. Real estate companies with rental departments have a better opportunity to ride though those times when sales are low.
This type of investing hasn’t gone unnoticed by some Outer Banks homeowners. Many year ‘round owners have invested in vacation rental property too.
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