Good time to invest? (Myrtle Beach, Murrells Inlet: for sale, real estate, oceanfront)
Myrtle Beach - Conway areaHorry County
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Hi All, Looking to invest in a rental property in the Murrells Inlet/Murtle Beach area. My main concern is positive cash flow, be it a ocean front condo or a home in a gated community. My budget is up to 200K. I'm OK buying 2-100K properties if that makes sense. Any ideas?
Unless you live in the area and can manage the property yourself, positive cash flow is not the reason to buy a second property in a resort town. We bought a condo in MB last year, but we knew going into it that there would be months during the winter where the income would barely or not even cover the monthly management fee, but without a management company, trying to maintain and rent out a property in a town with thousands upon thousands of vacation rentals, especially from a distance away, would be a disaster.
We got into it for two reasons: to see it appreciate in value if we hold onto it long enough, and to have a place where we and our kids and their future spouses and kids can go for a beach vacation, and that we can eventually snowbird to. If you are looking for any bang for your buck as far as monthly income vs. monthly expenditures, then you would be better off to invest in rental property where you live, assuming that it isn't in the Grand Strand area, so that you can manage it yourself and avoid the hefty management fees. Also, the better the property, the higher the fees. Our property is four years old and has upgrades like granite countertops, stainless steel appliances, crown molding, and a balcony with an ocean view and is in a quieter, partly residential section of MB, and our monthly fee is over $800, plus the minor fees that are charged whenever something from the condo, such as our coffee maker a couple of months ago, grows legs and "walks away", or someone uses their credit card and there is a small VISA or MC fee. Oh, and we pay for replacement linens once a year (mandatory) and will soon need to replace the sleeper sofa. It all adds up, so positive cash flow is not the reason to invest in a resort town, long term appreciation and/or having a place to go for vacation are more realistic reasons.
ETA: If you are looking at renting out a single family home and would be able to find long term tenants and do it without an onsite property management company, your prospects for positive cash flow would probably be better than in a resort condo, but a condo would probably bring in more gross income since the rates skyrocket in the summer months and they rent by the week. If you're looking for monthly net income in your pocket, go the single home route and hope you find decent, nondestructive tenants.
Last edited by canudigit; 09-03-2012 at 08:51 AM..
canudigit, Thanks for the insight.I'm from CT so management Co is a must. I'm seeing 3-4 bedroom homes at gated communitys in the 100K-150K range depending on ammenidies. HOA fees anywhere from $150-250 per month. Most have a pool, tennis courts, and some a shuttle bus to a members only beach. It just seem like rents are all over the place. A decent amount of REO's on the market also. Whats your opinion of Murrells Inlet VS Sections of MB. I need to rent a 125K home for somewhere around $1500 per month or the investment doesn't work for me. Thanks for the help
If you are looking for a home priced at that level that will give you $1,500 per month ALL YEAR LONG forget it. You are dreaming and possibly being sold a "bill of goods" by a real estate agent. Look at your home market as I see no appreciation in the Myrtle Beach market for 10 years as there are too many properties for sale and a huge amount "off the market" that will keep prices where they are. Every uptick in the market prices will draw them out and forestall any real increases.
canudigit, Thanks for the insight.I'm from CT so management Co is a must. I'm seeing 3-4 bedroom homes at gated communitys in the 100K-150K range depending on ammenidies. HOA fees anywhere from $150-250 per month. Most have a pool, tennis courts, and some a shuttle bus to a members only beach. It just seem like rents are all over the place. A decent amount of REO's on the market also. Whats your opinion of Murrells Inlet VS Sections of MB. I need to rent a 125K home for somewhere around $1500 per month or the investment doesn't work for me. Thanks for the help
Sorry, but I'm not a local, so I have no real educated opinion on Murrell's Inlet vs MB as far as investment property goes. We just knew that we wanted to buy in a specific oceanfront area of MB well north of the S. Ocean Blvd. strip and the boardwalk area, so we kept checking listings and had a realtor sending us regular updates on new listings, until we found the property that we wanted. We got a great deal (paid roughly 28% of what the previous owner, who had purchased it in 2008 before the housing bubble burst, paid) but it was a short sale and took several months to close. We have no plans to buy anything else at this time, because we depend on our rentals here in Michigan for positive cash flow and our rental in MB for the things that I mentioned before: future appreciation (yep, I know it will probably take years, but that's ok) and a place for our family at the beach.
Triple Play, mortgages in rental units that are not your primary residence are extremely difficult to get these days, so unless you are paying cash this may be a pipe dream. Even cash buyers may not be able to cover their monthly fees year round. However, it is a good time to buy as prices are beginning to increase somewhat and may have bottomed out.
Last edited by Global Friend; 09-04-2012 at 08:48 AM..
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Triple Play, mortgages in rental units that are not your primary residence are extremely difficult to get these days, so unless you are paying cash this may be a pipe dream. Even cash buyers may not be able to cover their monthly fees year round. However, it is a good time to buy as prices are beginning to increase somewhat and may have bottomed out. You should work with a good realtor who can help you evaluate your options. Private message me if you are not working with someone and I can refer you to the best agent I know - my husband.
This brings up a good point as well. If you are going to invest in resort property, it absolutely must be a cash deal or you will never come out ahead. We couldn't have purchased our condo if we had had to get a mortgage, there's no way the income would cover the regular fees and a mortgage payment. Our realtor told us the same thing that this poster pointed out, that mortgages on resort rentals are extremely hard to get, most likely because of all of the foreclosures that resulted from people having mortgages on these types of properties in the past.
Lots of good advice given from other Board members and I'll agree that you'll never get $1500/month for a house that costs $125K. On top of that, as an out of state owner, your property taxes will be double what a resident pays and your homeowners insurance will also be higher.
Based on your description of a shuttle to the beach, etc. it sounds like you've been looking at Barefoot Landing? That's the only community that I'm aware of that does a shuttle. I'm not aware of anything in MI that offers that service as part of the HOA/community.
Unless you are doing a cash deal, it's going to be almost impossible to come out ahead. I'd also advise not doing ANYTHING unless you've been here, become familiar with the market and talked to other owners who are renting the house in the same neighborhood. Real Estate agents are very good at spinning stories...but reality sometime is very different.
Grande Dunes offers a shuttle to a section of the beach that is next to their clubhouse, and there are a couple of condos in the Marina Inn at Grande Dunes that are short sale priced in the $150,000 range, I think, but the monthly fees there are astronomical ($1,100 a month on a two bedroom that we looked at last year) and it's harder to attract vacationers when you're a couple of miles from the beach, even with the shuttle.
I don't know if the subdivisions in Grande Dunes also offer the shuttle service, but I doubt if you could buy anything at all in those neighborhoods for $125,000 except maybe a garage. Also, the section of the beach where the shuttle takes guests is not private, because it's right down the beach from our condo. in order for any part of the beach in MB to be private, it would have to be fenced off or something, which none of it is. Even people who live in multi-million dollar homes on the beach don't have a private section of beach, it's all public as far as I know.
I agree with CTyankee54, I can't imagine renting a $125,000 house for $1,500/month in MB. You would do better to find a short sale condo that rents by the week and can increase its rates seasonally. However again, if you have a mortgage, you still won't come out ahead after you pay all of the required fees.
Thank everyone for the comments! Well now that I'm back to reality, I have to reaccess where to invest. I will be paying cash for my purchase. Up north here its not hard to find income producing properties that will return 8-10% net yearly on your money. I'm now selling a small commercial strip mall for $630K. The buyer will net around 58K per year with almost no headaches. Its about a 9.25% return on cash investment. I would like to deversify in other areas of the country, but need a decent 7-8% return on cash or I'm kinda going backwards. I probably need to look in areas where job growth is strong and people are relocating too. Any suggestion?
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