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Old 08-22-2018, 02:33 PM   #61
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My grandparents, then my parents all owned condos in SW Florida. The most wonderful memories in all our lives were made on winter vacations there. To leave dark cold Ohio on a snowy February morning ....and a quick 2 hour flight to Fort Myers....would find us on the beach before noon! We took our kids nearly every year from the time they were babies. Now they have babies!

My grandkids love it and can’t wait to go the first 2 weeks of November. We love it.
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Old 08-23-2018, 12:16 PM   #62
Recycles dryer sheets
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I'll wade in with some lessons I learned with buying a condo last year in Myrtle Beach...hopefully there will be some nuggets you can use.

I bought an oceanfront, 1-bdrm condo last Nov as a way of diversifying my investments for retirement. I have one other small rental (not at Myrtle Beach) and the rest of my retirement savings are all in the stock market. So, I wanted a way to invest outside of the market. Hence, the rental condo.

We bought this primarily to be rented. We can use it up to 14 days for personal use without losing any deductions for taxes. But, you also get to visit/stay in your condo for any maintenance & repair trips, incl writing off the mileage and cost of supplies. We've done 1 of those trips this year to make some minor fixes (patio chairs coming apart, a/c cover rusted over, etc) as the condo mx handles most other repairs.

We learned by asking realtors about purchasing a condo for rentals purposes, and they guided us to 1-bedroom condos as the bread-n-butter of the rental scene, not the 2- & 3- bedroom condos. The gross receipts don't add up very well vs the price point for those condos, generally speaking. So, you're buying the 2- or 3-bedrm for you w/ the potential of subsidizing some of the costs. The gross rental income for this 1-bedroom last year was $27K, and we purchased it for just over $100K. You'll need to check past gross rental income as it will vary widely by resort and units within that resort. We just happened upon (after many months of looking at units) an end unit with an open balcony that an investor was unloading right in the heart of Myrtle Beach action.

Now, you have to deduct the 40% property mgmt commission which seemed waaayyyy steep until you understand what that covers. They act like a hotel operations in renting your condo, front desk and all. They handle reservations, housekeeping, repairs, operations of the resort amenities for all to use, and they also cover the required business license the City of Myrtle Beach required you to have if you're renting out a property (didn't know about that part until just recently when I got a notice from the city...whew, they had it covered). They handle all the accounting and paying of the many resort/sales taxes each month and you get monthly statements from them. Each month, they send you your remaining share of the rental proceeds. They will also block out any dates you want to reserve for your own use.

The HOA fees you pay separately, and they vary by resort, so do your homework. Someone previous mentioned to check the HOA reserves...look for at least a 10% reserve vs their annual HOA receipts. This is to cover resort upkeep and repairs. There are Myrtle Beach resorts adding "special assessments" on top of their HOAs to cover major repairs. Just beware and check into this for the resort you're considering.

All told, a 1-bedroom oceanfront unit brings in about net $6k per year (average) if it's fully paid for. So, roughly 6% return on a $100K'ish investment...but then you get the tax deductions on top of that, so that will add a few more nickels in your pocket.

I hope there are some useful notes in here to help you in your search!
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Old 08-23-2018, 02:44 PM   #63
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I never really checked into it but I had a friend who once claimed that he could buy a condo in Myrtle Beach, use it for Nov-Apr to get away from NE winters (MB during that time is similar to fall in NE according to him, other than periodic cold snaps) and that rentals from May-Oct would carry the cost. True in your experience?
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Old 08-23-2018, 05:35 PM   #64
Recycles dryer sheets
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Quote:
Originally Posted by Parr0thead98 View Post
I'll wade in with some lessons I learned with buying a condo last year in Myrtle Beach...hopefully there will be some nuggets you can use.

I bought an oceanfront, 1-bdrm condo last Nov as a way of diversifying my investments for retirement. I have one other small rental (not at Myrtle Beach) and the rest of my retirement savings are all in the stock market. So, I wanted a way to invest outside of the market. Hence, the rental condo.

We bought this primarily to be rented. We can use it up to 14 days for personal use without losing any deductions for taxes. But, you also get to visit/stay in your condo for any maintenance & repair trips, incl writing off the mileage and cost of supplies. We've done 1 of those trips this year to make some minor fixes (patio chairs coming apart, a/c cover rusted over, etc) as the condo mx handles most other repairs.

We learned by asking realtors about purchasing a condo for rentals purposes, and they guided us to 1-bedroom condos as the bread-n-butter of the rental scene, not the 2- & 3- bedroom condos. The gross receipts don't add up very well vs the price point for those condos, generally speaking. So, you're buying the 2- or 3-bedrm for you w/ the potential of subsidizing some of the costs. The gross rental income for this 1-bedroom last year was $27K, and we purchased it for just over $100K. You'll need to check past gross rental income as it will vary widely by resort and units within that resort. We just happened upon (after many months of looking at units) an end unit with an open balcony that an investor was unloading right in the heart of Myrtle Beach action.

Now, you have to deduct the 40% property mgmt commission which seemed waaayyyy steep until you understand what that covers. They act like a hotel operations in renting your condo, front desk and all. They handle reservations, housekeeping, repairs, operations of the resort amenities for all to use, and they also cover the required business license the City of Myrtle Beach required you to have if you're renting out a property (didn't know about that part until just recently when I got a notice from the city...whew, they had it covered). They handle all the accounting and paying of the many resort/sales taxes each month and you get monthly statements from them. Each month, they send you your remaining share of the rental proceeds. They will also block out any dates you want to reserve for your own use.

The HOA fees you pay separately, and they vary by resort, so do your homework. Someone previous mentioned to check the HOA reserves...look for at least a 10% reserve vs their annual HOA receipts. This is to cover resort upkeep and repairs. There are Myrtle Beach resorts adding "special assessments" on top of their HOAs to cover major repairs. Just beware and check into this for the resort you're considering.

All told, a 1-bedroom oceanfront unit brings in about net $6k per year (average) if it's fully paid for. So, roughly 6% return on a $100K'ish investment...but then you get the tax deductions on top of that, so that will add a few more nickels in your pocket.

I hope there are some useful notes in here to help you in your search!

Fully funded reserves!
Ten percent reserves? Last year's $6k return may be the only positive year for awhile if the HOA has a 10% reserve and an assessment rears its' head.


If OP is still considering a condo, he may find that a well managed HOA with fully funded (100%) reserves is the way to go. Read through the board minutes, study the financials and talk with owners and board members. Real estate agents can be good sources of information, but there's no substitute for due diligence.
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Old 08-25-2018, 07:02 AM   #65
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Originally Posted by CaliKid View Post
It seems you are missing important things on both sides:
- I don't see vacancy and I don't see capital expenditures;
- On the other hand I don't see anything for tax benefits such as depreciation and tax deductible trips to visit your property.
+1.
Let's not forget those who want to lock in today's real estate prices and let someone else pay off their mortgage for them. A younger person may eye the condo for a future retirement home, and consider mortgage paydown and tax benefits over the next 20 years a huge benefit.

Lots of ways to get more than 14 days a year, BTW. You could fly down to repaint, remodel, check the condition before and after a rental, make a repair, shop for new furniture, attend HOA meetings, etc. Of course, your flights and rental car could also be deductible. Your CPA has lots of ideas...
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Old 08-25-2018, 09:53 PM   #66
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FWIW - I am a landlord. I have found it works best for me when I am close enough to the tenants to see the whites of their eyes from my residence.

OK, I exaggerate.

My first rental property was at enough of a distance that it was really disruptive to manage, from the standpoint of instilling accountability in the tenants. You must rely on third party judgment to screen the tenants. The third party will never be as invested as you are in their integrity. E.g., you only need one instance of party animals - or druggies - or whatever - to instill animus amongst the neighbors, and to incur a $20K cleanup. Since you are not right there to exercise oversight, it's hit or miss whether or not you get your money's worth from the contractors.

No thanks. I'd rather rent a vacation place than own one, intending on rental income to offset costs, if it is further than an hour's drive.

On top of all that, when is the last time you got an unbiased answer from a real estate agent, when you asked him/her "Is this a good buy? Why or why not?" - The answer is always the same. "This is a SCREAMING deal and you'll make out like a bandit", lol!

Withal, as has been said here so many times before, anecdotal evidence is not probative. YMMV.
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Old 08-26-2018, 06:37 AM   #67
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While talking to a RE broker about the realities/ramifications of beach rentals, she said that in her experience, beach rentals are the best short way to go. Short term rates are more expensive, and wear and tear is less. A vacation renter drops his suitcases as soon as he gets there, puts their suits and flip flops on and heads to the beach. They'll eat in a restaurant. They might put some beer or wine in fridge, and the unit gets cleaned after a week or two. A long term renter, after coming home from w*rk, flops in front of TV, burns dinner while asleep at TV, and you clean up after them after they move out.

I have been landlording locally for 19 years.
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Old 08-26-2018, 07:22 AM   #68
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Originally Posted by pb4uski View Post
I never really checked into it but I had a friend who once claimed that he could buy a condo in Myrtle Beach, use it for Nov-Apr to get away from NE winters (MB during that time is similar to fall in NE according to him, other than periodic cold snaps) and that rentals from May-Oct would carry the cost. True in your experience?

Hard to answer this as there are so many variables...what size condo does he have? Which resort? What are his HOAs? Is he renting it out himself or thru the resort property managers? Does HOA cover hurricane insurance (not all do)?



One thing that stuck in my mind from our real estate agent, "During the summer, everything within 20 miles of Myrtle Beach will be rented, but the money making units are the ones you get rented year round." That's why we looked for months before finding this unit at the price point we did. Although we are nearing our first year of renting it, there has been a long-term renter for the month of Nov, some rental activity over Christmas, rented during bike week, and then rents picked up starting in Apr thru now, so far.


So, I suppose your friend could be right if the numbers truly added up like that, but not our experience so far.
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Old 08-26-2018, 08:04 AM   #69
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A vacation renter drops his suitcases as soon as he gets there, puts their suits and flip flops on and heads to the beach.
One place reported that the tenants returned dripping wet and sat on the cloth sofas. Make sure to supply lots of clean beach towels!
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Old 08-26-2018, 08:35 AM   #70
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6% per year is not too bad. If off all issue solve a hotel offcourse.
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Old 08-26-2018, 11:23 AM   #71
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Originally Posted by Winemaker View Post
While talking to a RE broker about the realities/ramifications of beach rentals, she said that in her experience, beach rentals are the best short way to go. Short term rates are more expensive, and wear and tear is less. A vacation renter drops his suitcases as soon as he gets there, puts their suits and flip flops on and heads to the beach. They'll eat in a restaurant. They might put some beer or wine in fridge, and the unit gets cleaned after a week or two. A long term renter, after coming home from w*rk, flops in front of TV, burns dinner while asleep at TV, and you clean up after them after they move out.

I have been landlording locally for 19 years.
I defer to your experience, and totally agree. When you are landlording locally, you are close enough to see the whites of their eyes, lol!
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Old 08-26-2018, 12:41 PM   #72
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I'm the opposite of some as I'm looking for an oceanfront condo in Myrtle Beach that the HOA prohibits short term rentals as I would prefer not to be living with all the transients, this is a very difficult search.
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Old 08-26-2018, 05:13 PM   #73
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I own and manage a condo in Panama City Beach, FL. It is not an investment. I could do better in the stock market. I paid cash for it and decided to rent it to offset my expenses. It is work and I refer to it as my side gig. I clear about 12,000-15,000 a year. I take half for my vacation fund and put the other half back into the condo. I love the beach and have enjoyed/utilized my purchase. Best 50th birthday present ever!! :cool smiley: Fast forward to our early retirement in 3 years...we plan to be snowbirds in the condo over the winter months/holiday season while we full-time rv travel.
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Old 08-28-2018, 04:28 PM   #74
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Two exceptions in addition to those that I read.
  1. $225K is VERY low for a beachfront condo
  2. You also need to add in the cost for a Hurricane Cabin in the mountains a few hours inland
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