Featured Investment: Surf Dweller Beachfront Gulf Coast Condo

This luxurious 3-bedroom, 3-bathroom penthouse unit, located on the pristine shores of Fort Walton Beach, offers a rare opportunity for savvy investors. Boasting stunning Gulf views, spacious living areas, and high-end finishes, this property is perfectly positioned to generate strong rental income year-round. Whether catering to vacationers seeking the ultimate beachfront getaway or those looking for long-term rentals, Unit 401 offers a turn-key investment with immense potential.

Financial Breakdown for Investors:

• Purchase Price: $1,100,000

• Downpayment (30%): $330,000

• Mortgage (70% at 6.5% for 30 years):

  • Loan Amount: $770,000

  • Monthly Mortgage Payment: $4,870

Projected Annual Rental Revenue:

• $100,000 in gross rental income annually

Annual Expenses:

• Property Taxes: $7,611

• HOA Fees (Quarterly): $4,855 ($19,420 annually)

• Insurance: $2,000

• Internet/Cable: $30/month ($360 annually)

• Total Annual Expenses (Excluding Mortgage): $29,391

Projected Cash Flow and ROI:

Gross Rental Income: $100,000
Annual Mortgage Payments: $58,440
Total Expenses (Including Mortgage): $87,831

Net Operating Income (NOI):

• After expenses (excluding mortgage), you have $70,609.

Cash-on-Cash ROI:

• Initial Investment: $330,000 (downpayment)

• Net Annual Profit (after expenses): $12,169 (Gross income - all expenses including mortgage payments)

• Cash-on-Cash ROI: 3.68%

This beachfront unit offers steady cash flow with potential for appreciation in a highly desirable vacation rental market. Fort Walton Beach's growing appeal ensures continued demand for luxury rentals, making 554 Coral Court UNIT 401 a strong addition to any investment portfolio.

While a typical cash-on-cash (CoC) return for real estate investors ranges between 8% and 12%, the 3.68% CoC return calculated for 554 Coral Court UNIT 401 represents a lower return based purely on rental income and expenses in the first year. However, this does not necessarily indicate a poor investment. There are several reasons why investors might still find this property attractive despite the lower immediate cash flow.

Factors Supporting a Lower CoC ROI:

1. Prime Location with High Demand:

   • The property is situated in Fort Walton Beach, a highly sought-after vacation destination. Beachfront properties like this one tend to hold value well and often appreciate significantly over time, even if their initial cash flow is modest.

   • Investors focused on long-term appreciation may accept a lower cash-on-cash return, knowing that the value of the property is likely to increase, which could lead to higher profits when they decide to sell.

2. Luxury Property with Strong Rental Demand:

   • High-end, beachfront properties attract premium rental rates, particularly during peak tourist seasons. While the CoC return based on annual revenue may seem low, there could be significant seasonal rental spikes, which, when leveraged properly, could improve overall cash flow.

   • Additionally, luxury units often enjoy consistent occupancy rates, offering stability in rental income over the long term.

3. Potential for Tax Advantages:

   • Investors may benefit from tax deductions such as mortgage interest, property taxes, depreciation, and other operational costs, which can substantially reduce taxable income. These tax benefits may not be reflected in the initial CoC return but can improve overall financial returns.

4. Long-Term Wealth Building:

   • Although the immediate cash flow yields a 3.68% CoC ROI, the long-term growth potential of a beachfront property could lead to substantial gains over time. In markets like Fort Walton Beach, it’s not uncommon for investors to see significant appreciation over 5-10 years, which can significantly boost overall returns when considering the property's appreciation along with rental income.

   • Investors seeking to build equity over time will focus less on the first year’s CoC return and more on how the asset’s value and income will grow, particularly in high-demand coastal markets.

Why Investors Might Still Consider This Property:

For some investors, cash flow is not the only factor when assessing an investment. They may prioritize long-term capital appreciation and the property's ability to generate significant profits upon sale. Given the desirability of beachfront properties and Fort Walton Beach's stable, year-round rental demand, the projected CoC return of 3.68% could be considered acceptable, particularly if the investor is aiming to balance cash flow with the appreciation potential.

Moreover, with proper management, there may be opportunities to increase rental revenue by optimizing pricing, improving occupancy rates, or adding value through property upgrades. The long-term strategy of holding this type of asset could yield a much higher overall return when considering both cash flow and equity appreciation.

Conclusion:

A 3.68% CoC ROI may seem low compared to industry standards, however, this property could still be an excellent investment for those with a longer-term perspective. The combination of stable income, appreciation potential, and tax benefits may make this a worthwhile opportunity for investors focused on building equity and wealth over time, rather than seeking immediate high cash returns.