Couple Loses Renters for Condo
In Beach Town and Sells at a Profit

Editor's Note: This is the seventh installment of "Resale," a feature that profiles vacation-home owners and their residential investments. We'll take a look at homeowners' purchases, expenditures for improvements and/or mortgage costs, and their final gains upon resale -- and compare their profit to home-price appreciation rates in the area.

Purchased:  May 2002 for $126,000

Sold: July 2006 for $300,000

Home-price appreciation over four years: 138%

Area home-price appreciation over four years: 49.3%

Bethany Beach, located along the southeast portion of Delaware's Atlantic coastline, is one of the state's three coastal towns that make up its "Quiet Resorts." Watching over the town is “Chief Little Owl," a 26-foot totem pole. The town is within a two- to three-hour drive from Baltimore, Philadelphia, New York City, Wilmington, Del., and Washington, D.C.

The property: The two-bedroom and two-bath condo has 1,050 square feet and backs to pine woods. The beach, a little less than a mile away, can be reached via foot or trolley. The unit was bought and sold completely furnished, right down to the dishes. The community has a swimming pool and tennis courts. The sellers paid $126,000 for the condo in May 2002 and rented it out during the summer seasons for $700 to $950 a week.

The sellers: Mary Desmond, Ph.D., is a research scientist at Villanova University, and her partner, Sandra Malard, Ph.D., is a senior analyst for Lockheed Martin. They visited their vacation home just about every other weekend in the fall and the spring. “You have to be a beacher to go here,” says Dr. Desmond, 66. “That’s what it is about.” Bethany Beach is about a two-and-one-half hour drive from the couple's home in Devon, Pa. They purchased the unit after several visits to a friend's house in Bethany Beach. The town has only about 1,000 year-around residents, but swells to 8,000 to 10,000 in the summer, according to town officials. Drs. Desmond and Malard, 65, put their unit on the market after it become difficult to rent it out as several of their regular renters bought condos when local development picked up.

Improvements: About $5,000 was spent for several fixes, including new tile for the fireplace and fresh paint on the mantle, a new stackable clothes washer and dryer, a couple of chairs and some new pots. Televisions with built-in DVD players were added to the bedrooms, as well as cable TV.

Transaction:  After 93 days on the market at a $304,900 list price, the unit was sold in July to the first bidder at the owners' “wish price” of $300,000. Not including their association dues of $3,200 a year, city and county taxes that came to about $1,100 a year and the rental income they generated, the couple made $174,000 on the investment. Since they had paid off their mortgage after two years, they used the proceeds from the sale to completely pay off the mortgage on their primary home. They have no plans to buy another vacation property at this time, they say.

The bottom line: Given the 138% home-price appreciation the couple saw over a four- year period, they were happy with the sale and even more so since they got the price they were hoping to receive, Dr. Desmond says.  “It was a good investment for us," she says. Price appreciation for the Bethany Beach area has tripled in the last three years, says their real-estate agent, John Merryman of Tidewater Realty in Bethany Beach, whom they used for both the purchase and the sale of the home. “The supply is small and the demand is strong,” he says. The four-year home-appreciation rate based on the price of all condos in the area is 49.3%, with lower-priced condos appreciating at a faster rate than higher-priced ones, he says. In the past few years, he says, properties under $600,000 have seen a 40% sale price increase a year. He says his clients' property fell right on target with the area appreciation rate for its price range.

Sources: townofbethanybeach.com, tidewaterrealty.com, scaor.com

Have you recently sold a second home that you think would make a good Resale profile? Email a description and a photo of your property.

-- Ms. Curry is a free-lance writer in Maple Grove, Minn.

Email your comments to rjeditor@dowjones.com.