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I am interested in purchasing a myrtle beach condo or home and was interested in any advice or guidance. I was hoping someone could help provide the pros and cons, as I've done some research. From my understanding the beach real estate seems to be very cheap in the myrtle beach area, which is caused from the crash in 08. A lot of real estate has lost the value and loans are not easy to get, which is really the only way to purchase is from cash only. I am interested in taking out a HELOC to purchase a beach real estate and was hoping someone could share their experiences. I would like to use the property a few times a year and rent out during the rest. I have heard cons...as the HOA chargers assessments constantly or the management company takes advantage of the owners each year. Any guidance would be appreciated, as I love the area, but don't want to get stuck in a money pit.
I think the MB market has stabilized. There are still new foreclosures every week but they are coming onto the market at a much lower rate than a few years ago.
I would recommend trying to sort out what type of property you want as there are distinct segments of the market in MB. The beachfront condos have a different buying and ownership dynamic than property in other locales. I wouldn't say that you can't get financing on a condo but the banks now look at the financial situation of the HOA before they will make a loan.
We need more Pittsburghers in MB to balance out the NY/NJ types, come on down!
When we bought our beach condo in MB, we had to pay cash because no one was lending for rental condos at the beach. It is a safety net for the bank, because a lot of people get into this because they want a place at the beach and don't realize the expenses that are involved and then it turns out that by the time they pay all of their monthly fees there is little or nothing left over for the loan payment, hence, foreclosure.
We have been able to keep our condo because we do not have a loan payment. During some months, such as the leaner winter months when rental rates are lower, our income is less than our cost. We make it up during the summer, but overall, this is not something to get into if you expect to pocket a chunk of money each month or have to be able to make a mortgage payment with the rental income. Virtually all beach condos have HOAs, and they are often all inclusive and not cheap. Ours is currently $905/month. That's the HOA fee that we pay to the resort, but then the rental management company also gets 35% of the rental income. A lot of people don't realize that there are two separate entities that must be paid in order to maintain a beach rental, unless you plan to attempt to rent it yourself, which I would never want to do. Then you would be dealing with the headaches of having to advertise, having people back out at the last minute, nonpayment of rent, destruction of your property, etc. Our rental company covers all of that for us, so for saving us all that trouble, I think 35% is fair enough. Because of them, our unit stays rented the entire year except for a few days in the late fall around Thanksgiving and the weeks when we are there using it ourselves.
Also Beach condos in general Flood Insurance rates are rising for most starting April 1, 2015 so at next renewal there will be some rate increases. Subsidized policies, grandfathered, pre-flood zone buildings will get higher rate increases.
Even if you pay no flood insurance yourself as on a higher floor, it is baked into the maint.
Also how much is property tax and Landlord insurance on the units? Plus you need to take out an Umbrella policy for at least two million to protect yourself from lawsuits.
Also Beach condos in general Flood Insurance rates are rising for most starting April 1, 2015 so at next renewal there will be some rate increases. Subsidized policies, grandfathered, pre-flood zone buildings will get higher rate increases.
Even if you pay no flood insurance yourself as on a higher floor, it is baked into the maint.
Also how much is property tax and Landlord insurance on the units? Plus you need to take out an Umbrella policy for at least two million to protect yourself from lawsuits.
Mind you these are expenses in a cash owned condo
That's true, I forgot to mention how we have to pay property tax every January. Ours is $3,600/year, so if we don't set money aside from the busy summer months' rental, we find ourselves paying that out of our personal, non-condo related, funds, which is not fun.
Our insurance is included in our HOA fee. I like that we don't have to go out and shop for insurance, and the HOA gets a better rate than we would as individuals, because they cover everyone in the resort.
OP, if your realtor does not advise you against getting a mortgage on a vacation rental beach property, i would be mighty wary. An honest realtor will tell you that it is almost impossible to maintain all of the required expenses and make a mortgage payment, unless you plan to pay it out of another source of income, such as your regular household income. And I am surprised that banks would be lending on these properties again. They weren't in 2011, because they learned the hard way when the housing crash happened.
That's true, I forgot to mention how we have to pay property tax every January. Ours is $3,600/year, so if we don't set money aside from the busy summer months' rental, we find ourselves paying that out of our personal, non-condo related, funds, which is not fun.
Our insurance is included in our HOA fee. I like that we don't have to go out and shop for insurance, and the HOA gets a better rate than we would as individuals, because they cover everyone in the resort.
OP, if your realtor does not advise you against getting a mortgage on a vacation rental beach property, i would be mighty wary. An honest realtor will tell you that it is almost impossible to maintain all of the required expenses and make a mortgage payment, unless you plan to pay it out of another source of income, such as your regular household income. And I am surprised that banks would be lending on these properties again. They weren't in 2011, because they learned the hard way when the housing crash happened.
The credit union near me on vacation condos to be rented wants 40% down min. But since a lot of condos are in the under 300K range and many in the under 200K range when you add up all the costs involved in getting a mortgage, fees, applications, appraisals and fact sellers may ask for a little more it is not really worth it.
Here is a real example in my condo building a buyer was going to pay 300K with a mortgage, but bank wanted 120K down. Then get a mortgage for180K. All in it was 6-7K in mortgage recording fees, appraiseals, closing costs etc and good chance bank would deny it. Then seller offered once buyer complained it may take two to three months to get a mortgage if he dropped mortgage contigency and did cash he would lower price to 290K.
So owner got it 17K less and clears arond 10K a year renting as opposed to maybe 2k a year renting after paying mortgage. In 18 years he will have back entire 180K he would have put down on a mortgage.
Yes, I wanted to buy a condo in Myrtle Beach too, but have read so many different stories about special assessments that it scared me, and now I dont know what to do either. Was just gonna pay for the condo cash but not rent it out. After googling and reading so many different things about HOAs it seems like a crap shoot lol. Maybe I will take the plunge anyways and see what happens.
I wish we could afford to not rent our condo out, and that is what we eventually hope to do, but for right now, a monthly HOA of $905 and yearly property taxes of $3,600 mean that we have to keep it rented out consistently except for when we want to use it ourselves.
I do have to say that in the almost four years that we have had it, the renters have been very kind to our condo. There has never been any major damage of any kind, just an occasional toilet seat replacement, toaster replacement, etc. The largest expense we have had so far is when the top of our balcony table cracked and had to be replaced, although I definitely think that a new sofa is in order pretty soon, as ours is looking a little flat in the cushions. The place always looks gorgeous when we go down to use it.
I have an off season tenant who stays nine months a year in mine. He covers the annual cost, if you have no mortgage and I uses the 3 peak months. I do in peak season rent it our for 2-4 weeks and that brings in 4-8K profit
Wow; ya'll make it sound like it's not profitable to own an oceanfront rental? Surely that's not the case... I'm also looking. I would be paying cash, renting it out as much as possible year-round, and using it only during down time (working the rest of the time until I retire, then traveling in my RV when occupied). I would certainly hope I could turn a profit? Money just sitting in the bank sure doesn't...
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