Myrtle beach vacation condo profit? (spring break, short sale, real estate)
Myrtle Beach - Conway areaHorry County
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What kind of return can one expect from an oceanfront condo in the $100-200k range? Probably 1-2 bedrooms. Do these tend to rent year-round (even in the winter) short-term, or does anyone rent them on a yearly basis? Looking for a real estate investment to mostly rent out now but to owner-occupy at least half the year in retirement. Confused as to what would be most profitable: a conventional property inland or this "vacation" option already in a rental program. Thanks for any input from current owners.
Not enough to make money. If you will be using your condo, and enjoy that...go for it. The rentals will help, but they will NOT pay for it! There is so much "wear and tear" with a rental...your profits are eaten up keeping things nice. Renters are pigs, for the most part. Spills? So what...it's not THEIR carpet! Knock a picture off the wall...oh well...run into the corner and bend the corner bead....not my problem....the list goes on.
We've lost 3 remote controls, have had to do touch up paint constantly, and our carpet looks awful....will be replacing in 2 months....
During the summer, when rentals are more active and make better money, we are limited as to how much time WE can spend there....
Renters, especially short-terms/vacations, simply don't give a rat's ass about your property.
We've owned a vacation rental condo for almost four years. Here's how ours works:
Our unit is a 2 bedroom that we paid just under $150,000 for. We were fortunate enough to buy it as a short sale during the Great Recession, and the original owner paid almost $500,000 for it, which was obviously a very inflated price that was not sustainable, and probably most of the reason why he lost it.
We pay a monthly fee to the resort that covers everything from utilities (inside the unit and outside), homeowners insurance, pool and other recreational maintenance, to housekeeping. Ours is just over $900/month.
We rent out our unit year round, by the week from March-November, and then it is on a monthly plan from December through February. It stays rented pretty much all of the time, with the exception of a few weeks in November when the off season starts. The same lady has rented it from December through February every year since we purchased it, which is great because she seems to be an older snowbird type and is very neat and careful with it. The rest of the year it varies. We have no idea who will be renting it and we never meet the renters, that is all handled by our rental company, which gets 35% of the total income. This is not included in the $900/month fee, it is two totally separate expenses paid to two totally separate entities. Even if we didn't rent our unit out, we would still owe the $900/month to the resort. We get an itemized statement each month from our rental management company along with our rental check with the names only of the people who rented it and on which dates. We pay an extra yearly maintenance fee to them for air conditioning, along with a yearly fee for new bed linens. These are deducted from our rental payment, usually around May.
During the winter months, the monthly rent check does not cover the resort fee, but during the summer months, the check for one month has been as high as $3,500, so you have to learn to bank it and save it for the leaner months. The property taxes are due each January, and we pay them in fuil at that time. Do we end up with extra money in our pocket at the end of the rental year? Yeah, a little bit, but that isn't really why we bought the unit. We bought it for its appreciation value and so that we would have a place at the beach for us and our family to enjoy. We have regular rental property where we live that we depend on for a monthly income, but beach rentals don't work quite the same way, because there is way more overhead.
We typically use our unit for about two weeks out of the year. As the PP stated, most rental plans limit the owner to how many weeks you can use the unit during the peak summer months, but since we want to avoid the heat and crowds anyway, we always go in the spring or fall, so this has not been an issue. We are not retired yet, so the plan is to either not rent it at all when we retire and go whenever we feel like it, or just keep it open for the winter months so that we can be snowbirds. We will probably never move down permanently, as our kids and other family members are here in Michigan and we love the spring, summer, and fall weather here anyway.
In the almost four years that we have had the unit, we have never once experienced what the PP described, as far as renters damaging the unit extensively, spilling things on the carpet that stain it badly, or even roughing it up. We will occasionally have a monthly charge taken out of our rental proceeds for anything from a worn toilet seat to a missing spatula or a nonfunctioning coffee maker. We have never had any indoor furniture, walls, or appliances damaged or stolen. The biggest expense we have had to date is replacing the table on the balcony because the top on it cracked, and that was only a couple of hundred dollars. We live over 800 miles from our unit, so we only see it first hand when we stay there and it has always looked impeccable when we arrived. We were just there last October and the carpeting throughout the unit, which was installed in 2008, still looks almost brand new, with no discernible stains or worn spots. We are amazed every time that we go down how nice it stays, considering that it stays rented out pretty much full-time. I guess we have been blessed with good renters who take care of things up to this point. Our unit is in a quiet area of MB a couple of miles north of the Strip, so maybe we get more families and less partiers, IDK. I know our resort is selective about renting to people under a certain age, because when our son and his wife got married and we let them use it for their honeymoon, they had to have some kind of proof that they were related to us because they were under the age that this resort allows renters to be (they were both 22 at the time). Spring breakers are totally not allowed.
Anyway, that is our story. So far, it has been all good, and we have no regrets. We did pay cash for the unit, and I would not recommend getting a mortgage and making payments, because as you can see, the expenses are not small. Add in a mortgage payment and I think it would show an overall loss each year.
Last edited by canudigit; 01-25-2015 at 07:24 PM..
A friend of mine just built a $1,000,000 8 bed 8 bath home on the Outer Banks as an investment property. Place rents for $10,000 a week and he says he gets ripped off every week. Pillows, blankets, cork screws and even art off the walls. With a joint that size and at that price you are probably putting 18 - 24 people in per week. That's a lot of "wear and tear", just think of the toilet flushes! I believe he is regretting this investment.
I can't imagine building something like that for renters to use!
It's too bad he's having such a problem with things "walking away", so to speak. We have been pleasantly surprised, because, as I said in my PP, we have never lost anything of any large value like a TV or even a remote control. No bed linens, no large dishes, no pots or pans. There is even a large, expensive looking (to me) artificial floral arrangement on our dining table that has never been lifted, ditto the artwork on the walls.
Oddly enough, we occasionally get minor charges (under $10) for small kitchen utensils like plastic spatulas. I don't know if people are actually taking them, though, or if they are just cheap and break easily.
I have to wonder, though, when homeowners get ripped off for large, expensive items, at least in a resort, can't the resort just charge it to the credit card that they required when the party checked in? I can see where that would be harder if you had a single home and rented it out yourself.
Last edited by canudigit; 01-27-2015 at 02:55 PM..
This is an interesting discussion. Canudigit, how do you budget for major capital items that won't be covered by your rental management company? At some point your appliances, kitchen cabinets and countertops, bathrooms, paint job, heat pump, etc. will have to be redone. Those are large, episodic expenditures that come up from time to time that affect your financial basis in your condo. Do you put something aside for them or just pay as you go?
We keep a separate bank account just for the condo. It's a lot easier to track what comes and goes that way, and then we (hopefully!) have money set aside when we do have a big expenditure. There are times, like this time of the year, when the total in that bank account dips because of lower rental revenues in the late fall, lower monthly snowbird rates in the winter, and property taxes being due in January, but then we build it back up somewhat in the summer months. There have been occasional months where we don't have quite enough in that account to cover the monthly resort fee, and then we have to dip into our main bank account. As many have pointed out on this forum, vacation rentals in MB are not the way to get rich on a monthly basis, and they will not put a lot of money in your pocket.
We are going to have to purchase a sofa sometime this year, because I noticed when we were there this past October that the cushions are getting kind of flattened. I don't think it was the most expensive sofa to begin with (it was in the unit when we bought it), so we knew we would have to eventually replace it. We will also need to replace the carpet eventually, and that will no doubt be our biggest expenditure of all. I doubt if we will have enough money in our condo account for that when the time comes, so then we will again have to dip into our main bank account.
We get postcards in the mail from time to time from the company that provides the furniture for the resort where our unit is. The goal is to have the furniture in each unit look as similar as possible to the other units for uniformity and so that people don't instill their own taste into the units, which may not be to others' liking. This doesn't bother me, I can decorate my own house how I want to. The particular sofas that they want us to stick with cost around $800 each, which is relatively inexpensive, and for that price they will deliver it and remove the old one.
The thing to keep in mind with replacing things like furniture is that, while they can't force you to replace things when they get worn, they do let you know that if your place starts to look a little shabby or worn, they will pass it over for rentals if the property isn't full and they can pick and choose which units to rent out. A shabby condo will not bring return business and guests will complain, so it's in the best interest of everyone to keep things looking newer and in good condition.
Nearly everything in my rental condo is either used or refurbished. I dont know how you can make good money buying brand new stuff all the time. Mind you my stuff looks great.
But for instance I bought my formal dining room set at a yard sale for $50 dollars. It only had three chairs. We refinished it for around ten bucks and two hours time and bought three matching chairs online new for 150.
That's good that you are able to do that and can find decent used items. In our case, it is expected that everyone buys the same furnishings so that each unit looks like the pictures in the resort's ads and on their website. If we were to buy furnishings that didn't match the pictures, our unit would probably only get rented when everything else was full.
That's good that you are able to do that and can find decent used items. In our case, it is expected that everyone buys the same furnishings so that each unit looks like the pictures in the resort's ads and on their website. If we were to buy furnishings that didn't match the pictures, our unit would probably only get rented when everything else was full.
What worries me a bit about this arrangement is what happened many years ago at "guerneys inn" out at Montauk Point on on Long Island.
They were fully furnished units oceanfront in a Timeshare type luxury hotel where management company would rent out unit for you when you were not there. Well it turns out occupency was a lot lower than expected and folks had units sitting empty while paying maint.
Well after several years owners figured out the units were rented and management company was pocketing the rent and charging maint. We are talking millions. Owners sued they declared bankruptcy and in bankruptcy court one their relatives bought it and put back in place same management company.
I am always curious what prevents the management company from pocketing extra fees and keepting rent on these arrangements.
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