Amagansett Dune Cottage

Amagansett, East Hampton · Four-bedroom cottage near the ocean · $2,000,000

Recommendation

Balanced: income and growth.

7.8% a year over 10 years (4.8% after tax), with $3,263 a month to carry from year one. As a home: renting an equivalent home is about $2,954 a month cheaper; owning wins only if values grow faster than 4.8% a year.

Confidence: Moderate. Base case: 6.35% rate, 25% deposit, 10-year hold.

Net yield: 3.6%
Cash on cash: -6.5%
IRR: 7.8%
IRR after tax: 4.8%
Total return: 137%
Cash in: $607k

The property

A modernised 1968 cottage south of the highway, in walking distance of the beach, with a new pool and a two-car garage.

Provenance

Part of a 1960s subdivision of potato fields; the original owners were a painter and a set designer from the Springs colony.

Risks we weighed

Rates a point higher, a month more vacancy and values two points lower take the ten-year IRR to -2.2%. Flood exposure is moderate.

Summer rental comparables · 3 weeksFEMA flood map, AE zone boundary 40 m south · 1 month

This memo is live. Its figures update as rates and comparables do. Model your own properties the same way.

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