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Buying an Investment Property on the Gulf Coast: How to Get the Best ROI

Tuesday, January 23, 2024   /   by Susan Carleton

Buying an Investment Property on the Gulf Coast: How to Get the Best ROI

When shopping for an investment property on the Coast, it’s important to know the market and the area you’re purchasing in. Are you looking to buy a condo or a house? What is the HOA like? Do you want to purchase a waterfront property or something inland? Sometimes the questions can stack up and feel discouraging, but we’re going to go over the best practices to make sure you get the highest ROI possible. 

Location Matters

The first and foremost consideration when investing in a coastal property is location. Research areas with a history of strong property appreciation, proximity to popular beaches, and access to amenities. Whether it's the serene shores of Gulf Shores, Alabama, or the bustling coast of Pensacola Beach, Florida,  understanding the local market dynamics is crucial in ensuring your investment stands the test of time.

Here Are 5 Areas on the Gulf Coast Where We’ve Seen Steady Economic Growth

Properties on the Gulf vs. the Sound

Which body of water your property is on or resides near is vital for ROI. Your audience will have their preference of where they want to be, and if you’re not a seasoned local, you may not see the difference between these distinct bodies of water. Let’s go over the differences so you have an idea of the pros and cons of each location. 

The Gulf of Mexico

A gulf is a large bay that is an extension of an ocean or sea and is surrounded by land on three sides, such as the Gulf of Mexico. When you step foot on Pensacola Beach, for instance, you’ll notice there are two bodies of water on either side of the beach. There’s the Gulf of Mexico, with larger waves, a stronger rip current, and crystal-clear emerald waters. This is where you’ll find deep-sea fishing as well as shore fishing. You can surf on this body of water, boogie board, and play in the waves. The Gulf of Mexico is what most people would call “The Beach” when they’re staying on the Gulf Coast, so don’t be surprised if tourists don’t know about the Santa Rosa Sound. Let’s go over the Santa Rosa Sound, and what is so different about it. 

The Santa Rosa Sound

In our last description, we went over Pensacola Beach with its two bodies of water, the other body of water you’ll see is the Santa Rosa Sound. A sound is a narrow sea or ocean inlet, typically between two land masses, that is much shallower than a sea or ocean. This water is perfect for families with small children, as there are no waves on the sound. It’s a vast incredibly calm body of deep tea-colored water, that stays much warmer than the Gulf of Mexico. If you’re looking for a shallow body of water to learn to paddle board, or some very calm conditions for fishing, this is the place. 

Market Trends and Forecasting

Now that we’ve gone over location, let’s jump into the market. The market trends on the Gulf Coast can seem volatile at times, but speaking with experts in the local market is your best bet to understand the ever-evolving landscape. Coastal real estate markets can be influenced by seasonal fluctuations, tourism trends, and broader economic factors that are completely out of your control. Utilizing market analysis tools, consulting with local real estate experts, and keeping a pulse on the numbers to make informed decisions about when and where to invest is crucial. 

Property Types and Features

Consider the type of property that aligns with your investment goals. Whether it's a beachfront condo or a waterfront home, each property type comes with its own set of considerations. Evaluate the features that appeal to your target demographic, such as proximity to attractions, water views, and amenities that enhance the overall experience. Don’t forget to check about flood zones and different factors that go into waterfront homes, each property will have its insurance policies to consider, and that may be the thing that pushes you towards one property type over another. 
Amenities are a huge factor to consider when you’re looking at the ROI of your investment property. Does your demographic prefer a pool over pickleball? Do you need a gym to keep your audience flocking to your location? Or do you want your property to be right on the beach to capture the best views all day long? Every property type on the coast will have its unique flair, so thinking about these factors before you purchase is a wise decision. 

Financial Planning and ROI Projections

Before diving into coastal investments, meticulous financial planning is essential. Factor in potential expenses like property management, maintenance, and seasonal fluctuations. Run ROI projections based on realistic rental income expectations, and explore financing options that align with your investment strategy. Understanding the financial landscape ensures a more secure and profitable investment. 

Local Regulations and Zoning

Coastal properties are often subject to specific regulations and zoning laws. Familiarize yourself with local ordinances related to vacation rentals, building restrictions, and environmental considerations. Compliance with these regulations not only ensures a smooth investment process but also contributes to the sustainable development of the coastal community.

Building a Reliable Support Team

Investing in a coastal property involves collaboration with various professionals, including real estate agents, property managers, and mortgage brokers. Build a reliable support team familiar with the nuances of coastal real estate. Their expertise will guide you through the intricacies of the process, from property selection to successful management. Let’s go over some of the experts you’ll need in your corner when purchasing an investment property. 
    • Real Estate Agent: Your real estate agent is your key to the Coast. They’ll have extensive knowledge of the area and the local market, and they’ll be able to direct you on how to make the best ROI for your investment property. Picking the right real estate agent is vital for a smooth purchase, so make sure to vet your prospects before you pick the right agent for you. 
    • Property Manager: Property management is the face of your business, so you need a professional with integrity and smarts to make sure your property is well taken care of. Your property manager is also going to help you get the best price for your investment rental, and they’ll know if any last-minute details would help push your income to a new level with affordable additions. Picking the right expert for your property is crucial, so be picky when you’re shopping for different companies. 
    • Mortgage Broker: Your broker can be picked out independently of your agent, but if you want a smooth transaction, we recommend going with your real estate agent's preferred lender. Not only will this help your purchase go smoothly, but they’ll have a working relationship together, making them better equipped to provide tailored financial solutions that align with your specific needs.

Are You Ready to Find an Investment Property on the Gulf Coast?

If you’re in the market to find an investment property on the Gulf Coast, you’ll want the top experts in your corner. The Pointe South team is here to help you find the best possible investment property for ROI. We specialize in real estate and property management and have a dedicated team from Gulf Shores, Alabama to Destin, Florida. Whether you want to find a condo or waterfront house, we can help you find the perfect property for your investment goals. If you’re curious about a certain property's value or are curious about what your property is worth, try our property estimate tool. Contact us today to start your investment property search
Pointe South Inc
Susan Carleton
13578 Perdido Key Drive
Pensacola, FL 32507

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