Anybody have any experience in owning a condo in Myrtle?

[WhiteTailEER]

I'm thinking of buying a condo in Myrtle Beach.

Realistically, I can probably only use it for 1-2 weeks a year, and a long weekend or two, maybe more but it would be hard.

I'm wondering if anybody else has owned one and how did it work out regarding rentals when you weren't using it.

So far, it's looking like about $400-$500/month in condo ownership fees a month, so one week per month of rental would be mostly eaten up by that. I'm thinking that it will probably be empty Nov-Feb each year. Might get a week or two rental in March and April each (for golf season), and maybe October would be that way too, but that it should pretty much be booked solid for May-September. So that's only 5 months of steady use, 3 months of partial use, and 4 months of little to no use.

Anybody have experience with this? Did it end up paying for itself?

I'm 46 now, so I'm thinking about this while I'm earning so that it will be free and clear by the time I retire. It seems like if they made money or broke even on rentals that there wouldn't hardly be any for sale.

I think ideally I'd get a lock-out unit so we'd have both when we wanted to take the kids and then just one with the other available for rental when we went by ourselves.

 

[Motown Mounty_rivals]

I own a rental home on Hilton Head. Although it isn't rented every week of the year it is rented at least 85% of the time. A few things, make sure you have the best vacation Realtor available, if the Realtor provides maintenance of the property read ALL of the fine print. With my Realtor I can block out any time that I want.

Depending on how your Realtor does things you can actually set up different methods of payment. Some people ask to be paid for their rent yearly, quarterly, monthly, etc. I have mine paid after each renter leaves. Sometimes they rent for one week (I don't rent for less than 1 full week although I do allow weekends for golf from Feb 1st - last week of April) 2 weeks or even 3 weeks.

Will it pay for itself? It will but probably not as quickly as you may think. At 46 yrs old you will see it pay for itself and make you some money. The best part is it will be a very nice source of income for you when you retire to supplement anything else you have coming in.

I paid cash for mine so I was in the "recovery" aspect for a while but it brings in about $45K for me each year after taxes, fees, maintenance.

Since I retired rather young I find myself wanting to use it more and more. I am thinking about just hiring a maintenance company and listing it myself next year. I'm going to end up giving it to my kids anyhow.

 

[WhiteTailEER]

Originally posted by Motown Mounty:
A few things, make sure you have the best vacation Realtor available

Thanks for all your other information, do you have any advice on how to evaluate this aspect? I don't know anybody else (that I'm aware of) that have condos down there so I can't ask around to people I know.

By "paying for itself", I mostly just mean whatever mortgage/insurance/condo fees that I would have to have. If it at least breaks even for the year, that would be fine and I'd have it when it was totally paid off.

My other thought was to just buy local rentals and then use income from that to fund the condo. Basically, as you said, to set up some income streams for retirement (as well as just assets to sell if I want). I have decent retirement savings (both 401k and Roth IRA) but I'd still like to have more income generation. Maybe retire earlier than I had planned.

Thanks.

 

[WVUCOOPER]

As a tax preparer.....

My advice is to not plan on a positive cash flow from MB rental property. Certainly not in the beginning. Investment wise it is a horrible idea, but there are other factors.

 

[bamaEER]

My in-laws own a beach house in Emerald Isle NC.....

And the great news is they have a beach house on the water on a beautiful beach. Beyond that, it's a headache. First are the constant problems associated with the rental mgt company. Then the constant wear and tear ($$) on the house, then the phone calls at odd hours, etc.

It's more work than you may think and costs are ridiculous. Everytime a renter plugs the toilet, you're out $100. Then there's a chance of a hurricane and they charge you $800 to move patio furniture in and put plywood on windows.

 

[mneilmont]

We bought two units at Myrtle. We utilized the best realtor we could find to manage the properties. The intent was to break even after our initial down payment investment.

The realtor did quiet well on the financial end for himself. After a couple years, we divested and cut our losses. It is amazing the number of TVs you can go through. There was always some extraordinary cost when we thought we would have positive cash flow.

I am sure there is money to be made if you read all the fine print in the agreement with the realtor - definite maybe. Look at all the prior comments and accept them as potential. It would be a better business venture if you are there to assume the duties you are assigning to the realtor as an absentee owner.

 

[bornaneer]

We had a rental property in Cannan Valley for several years. It was totally booked from Nov to April. We were looking at it as an income stream. It did pay the mortgage and but the may issue were the fees and the constant nickel and diming above the fees. The resale market is something to keep in mind. I have friends who had properties in Ocean City, Outer Banks and other places and none of them were happy about the financial returns.

 

[WhiteTailEER]

Re: My in-laws own a beach house in Emerald Isle NC.....


I love Emerald Isle. I took many dive trips out of Morehead City. I know I definitely don't want a house. It's sounding like I probably don't want a condo either, but things like plugged toilet etc. I would assume would be covered by the building maintenance staff and part of the monthy COA fees.

I'm not overly concerned about positive cash flow at this point. I'd be Ok with anything close to breaking even. Right now it would mostly be about already having a place and not paying for a rental as well as building to the future and have the property to use or sell in retirement.

 

[mneilmont]

Coop, what are tax consequences


Depreciation life? Capital improvements v normal expense?

 

[WVUCOOPER]

Far too complicated to get in to on a message board....

Oh and the IRS "simplified" capital improvements v normal expense in 2014. Simplified is in quotes for a reason.

 

[mneilmont]

Re: Far too complicated to get in to on a message board....


Depreciation is absolute for such structure is fixed at this time, isn't it?

 

[Ft. MyEERS]

Re: My in-laws own a beach house in Emerald Isle NC.....


Building maintenance staff usually isn't responsible for fixing any internal unit problems. Condo fees are generally used for exterior and common area maintenance/upgrades.

If something happens inside your unit, it's your problem or that of your contracted maintenance company.

You also want to look at the history of condo fees, the % and timing of increases, how much they have in reserves and how often and by how much the owners have been hit for special assessments. Obviously, the older the building, the greater the likelihood of upcoming special assessments.