End of Season Wrap-Up Questions
Is your investment performing well?
Generally, if your rental income is roughly 9-10% of your property’s value, congratulations — you’ve got a sustainable gross rental yield. For example, a 2-bedroom condo valued at $400,000 should see gross rental income somewhere around $38,000 to $40,000. (Remember, gross rental income does not include your expenses, such as cleaning fees, taxes, etc. It’s just the rent.) Of course, your owner usage will impact these numbers.
What was your net income?
Calculate your actual net income after all management, marketing, linen, and credit card processing fees. You should have retained at least 80% of your rental income. If your profit margin was lower, it may be time to consider your options — update or sell.
Is it time for an Update?
Your condo’s desirability, and therefore success, is directly related to its appearance. Potential renters want to know they’ll have a freat view of the beach and a clean, comfortable, beautiful place to relax. If your rental is underperforming and beautiful place to relax. If your rental is underperforming and it’s been a long time since you’ve updated the furnishings or decor, consider budgeting for a modern makeover.
Makeover budgets
- Full kitchen renovation (cabinets, granite counters, and new appliances): $15,000-$35,000
- New furnishings (furniture, carpeting, window treatments): $5,000-$20,000
- Quick refresh (bedcovers, pillows, and artwork): $2,000-$3,000
Is it time to sell?
Answering the question of when to sell depends on your goals. Is your family using the condo, or is it purely an investment? Does it need significant repairs or updates? It’s a seller’s market at the beach. Prices for Gulf-front condos have been rising since 2012, so you may have gained significant value already. Get a comparative market analysis to gauge prices of condos similar to yours. Compare those figures with your projected rental income to make an informed decision.