Myrtle Beach Real Estate and Community News

 

April 8, 2024

8 Key Metrics for Analyzing HOA Budgets: A Guide for Out-of-State Investors

Investing in real estate, particularly in HOA-managed properties, can be a lucrative venture, especially in sought-after locations like Myrtle Beach. However, for out-of-state investors, understanding the intricacies of homeowners association (HOA) budgets is crucial for making informed decisions and safeguarding their investments. In this guide, we'll explore essential metrics that out-of-state investors should consider when analyzing HOA budgets.

Operating Expenses Ratio: One of the first metrics to assess is the operating expenses ratio, which compares total operating expenses to the revenue generated by the HOA. For out-of-state investors, a lower ratio is preferable as it indicates efficient cost management and financial health within the community.

Reserve Fund Contribution: The reserve fund is crucial for funding future major repairs and replacements within the community. Out-of-state investors should examine the percentage of HOA fees allocated to the reserve fund to ensure adequate savings for long-term maintenance and improvements.

Budget Variance: Monitoring the budget variance helps identify discrepancies between budgeted and actual expenses. This metric provides valuable insights into spending patterns and allows investors to address potential overspending or unexpected costs effectively.

Delinquency Rate: The delinquency rate, which measures the percentage of homeowners behind on their HOA fees, is a vital indicator of cash flow and collections effectiveness. Out-of-state investors should pay attention to this metric to assess the financial stability of the community.

Capital Improvement Projects: Understanding how funds are allocated towards capital improvement projects is essential for assessing the long-term value and appeal of the property. Investors should evaluate the impact of these projects on property values and resident satisfaction.

Emergency Fund: Having an emergency fund in place is crucial for handling unexpected expenses or emergencies such as natural disasters. Out-of-state investors should ensure that the HOA has set aside funds for such scenarios to protect their investments.

Professional Management Fees: Assessing the portion of the budget allocated to professional management services provides insights into the association's reliance on external expertise. Investors should evaluate the effectiveness of management practices and their impact on overall financial management.

Budget History: Reviewing historical budget data allows investors to identify trends, patterns, and areas for improvement in budgeting and financial management practices. This insight is valuable for making informed decisions and optimizing investment strategies.

For out-of-state investors considering investing in HOA-managed properties, understanding key metrics for analyzing HOA budgets is essential. By evaluating operating expenses ratios, reserve fund contributions, budget variances, delinquency rates, capital improvement projects, emergency funds, professional management fees, and budget history, investors can make informed decisions to safeguard their investments and ensure long-term financial stability within the community.

Call today to discuss your next Oceanfront Condo purchase in the Myrtle Beach Real Estate Market: 843-360-1737

Disclaimer: All information given is meant to be educational. I am only passing on historical information shared with me by owners, rental companies, and various publications. I am not guaranteeing these numbers, nor can I guarantee future rentals or appreciation. This information is not intended to replace your own research, or to provide legal, investment, or financial advice. Please consult an attorney for legal advice.

Posted in Real Estate News
April 8, 2024

Look for Certified Audits of HOA Financials Before Buying a Condo at an Oceanfront Resort

Have Your Broker Send You the Meeting Minutes and Budgets.

Always review the meeting minutes before buying an oceanfront condo at a beach resort. Now, here’s one thing you MUST find under the finance section of the most recent meeting minutes, a statement like this:

“On page 22 of the handout Mr. Wheeler stated that the certified audits have always come back favorable.

This is SUPER important because it helps to ensure the financial health, compliance with regulations, and governance practices of the HOA governing the Oceanfront Condo Resort you’re about to buy into. This level of transparency helps maintain trust within the community of owners at the Oceanfront Condo Resort.

Once You See How a Certified Audit Works, You’ll Understand Why It’s Important.  

Certified audits of HOA (Homeowners Association) financials are conducted by independent certified public accountants (CPAs) to provide assurance about the accuracy and completeness of the association's financial statements. Here's how they typically work:

Engagement Agreement: The HOA hires a CPA firm to perform an audit of its financial statements. An engagement letter is typically drafted, outlining the scope of the audit, the responsibilities of both parties, and the agreed-upon fee.

Planning Phase: The CPA firm conducts an initial meeting with the HOA's board or finance committee to understand the association's operations, risks, and financial reporting requirements. They assess the internal controls in place and identify areas of potential risk or material misstatement.

Fieldwork: The CPA firm collects and examines evidence to support the amounts and disclosures in the HOA's financial statements. This may involve testing transactions, verifying account balances, reviewing contracts and agreements, and confirming balances with third parties such as banks and vendors. They also assess compliance with relevant accounting standards and regulatory requirements.

Reporting Phase: Once the fieldwork is complete, the CPA firm prepares a report summarizing their findings. This report typically includes:

1.    An opinion on whether the financial statements are presented fairly, in all material respects, in accordance with generally accepted accounting principles (GAAP) or another applicable financial reporting framework.

2.    An assessment of the HOA's compliance with relevant laws, regulations, and governing documents.

3.    Any significant findings or recommendations for improvement identified during the audit.

Communication with the Board: The CPA firm presents the audit findings and report to the HOA's board or finance committee. They may also provide recommendations for strengthening internal controls, improving financial reporting processes, or addressing any areas of concern identified during the audit.

Filing and Distribution: The audited financial statements, along with the CPA firm's report, are typically distributed to the HOA's members and may also be submitted to regulatory authorities or lenders as required.

Follow-up and Action: The HOA's board or finance committee reviews the audit findings and recommendations and takes appropriate action to address any issues identified. They may implement changes to internal controls, financial reporting processes, or operational procedures based on the CPA firm's recommendations.

Overall, certified audits of HOA financials provide transparency and assurance to members regarding the association's financial health, compliance with regulations, and governance practices. They help maintain trust and accountability within the community and support informed decision-making by the HOA's leadership.

Call today to discuss your next Oceanfront Condo purchase in the Myrtle Beach Real Estate Market: 843-360-1737

Disclaimer: All information given is meant to be educational. I am only passing on historical information shared with me by owners, rental companies, and various publications. I am not guaranteeing these numbers, nor can I guarantee future rentals or appreciation. This information is not intended to replace your own research, or to provide legal, investment, or financial advice. Please consult an attorney for legal advice.

Posted in Real Estate News
April 8, 2024

Myrtle Beach Condo Investment: 10 Tips to Evaluating Oceanfront Condo HOAs Before Buying

Evaluating a homeowners association (HOA) before buying a condominium, especially one on the oceanfront, is crucial as it can significantly impact your living experience and financial obligations. Here are some steps to help you evaluate an HOA:

Review the HOA Documents: Request copies of the HOA's governing documents, including the declaration of covenants, conditions, and restrictions (CC&Rs), bylaws, rules and regulations, meeting minutes, financial statements, and reserve study. These documents will outline the rights, responsibilities, and restrictions of both the HOA and its members.

Financial Health: Examine the HOA's financial statements to ensure it is financially stable. Look for reserve funds, operating budgets, past dues collection rates, and any pending or recent special assessments. Adequate reserves are crucial, especially for oceanfront properties that may be prone to weather-related damages.

Insurance Coverage: Verify the extent and adequacy of the HOA's insurance coverage, including general liability, property, and directors and officers (D&O) liability insurance. Ensure that the coverage is comprehensive enough to handle potential risks associated with oceanfront properties.

Maintenance and Upkeep: Assess the HOA's track record in maintaining and repairing common areas, including the exterior of the buildings, landscaping, amenities, and oceanfront features such as seawalls or beach access points. Look for any pending or planned maintenance projects and how they're funded.

Reserve Fund Study: Review the reserve study, which evaluates the long-term capital needs of the HOA and determines whether the reserve fund is adequate to cover future repairs and replacements. This is particularly important for oceanfront properties, which may have unique maintenance requirements due to exposure to saltwater and harsh weather conditions.

Rules and Regulations: Understand the HOA's rules and regulations regarding property use, noise restrictions, pet policies, rental restrictions, architectural guidelines, and any other regulations that may affect your lifestyle or investment plans.

Community Reputation: Speak with current residents or neighbors to gauge their satisfaction with the HOA management, community atmosphere, and any ongoing issues or disputes. Online forums or social media groups can also provide insights into the community's dynamics.

Management Quality: Assess the competence and responsiveness of the HOA's management company or board of directors. Look for any history of mismanagement, conflicts of interest, or legal disputes.

Future Assessments and Projects: Inquire about any planned or anticipated assessments, renovations, or construction projects that may affect your financial obligations or living conditions in the future.

Legal Compliance: Ensure that the HOA is compliant with all relevant state and local laws, including regulations specific to coastal areas, such as environmental regulations or zoning laws.

Your Action List.

·      Make sure the HOA has a Certified Audit of its financials.

·      Make sure resort does not allow construction during Peak Season.

·      Make sure HOA Reserves can offset Special Assessment Expenses

·      Make sure HOA Budget Revenues exceed Expenses.

·      If buying into Resort with major projects, get a bargain. 

By thoroughly evaluating these aspects of the HOA before purchasing an oceanfront condo, you can make an informed decision and minimize potential risks and surprises associated with living in a managed community.

Call today to discuss your next Oceanfront Condo purchase in the Myrtle Beach Real Estate Market: 843-360-1737

Disclaimer: All information given is meant to be educational. I am only passing on historical information shared with me by owners, rental companies, and various publications. I am not guaranteeing these numbers, nor can I guarantee future rentals or appreciation. This information is not intended to replace your own research, or to provide legal, investment, or financial advice. Please consult an attorney for legal advice.

Posted in Real Estate News
March 30, 2024

Unlocking Paradise: Investing in Ocean Reef Resort Condos Unit 1126 in Myrtle Beach, SC!

About Ocean Reef Resort

Located at 7100 Ocean Blvd. N, Myrtle Beach, SC 29572, Ocean Reef Resort in Myrtle Beach, SC, is renowned for its prime oceanfront location, luxurious accommodations, and extensive array of amenities catering to families and vacationers.

Some of its notable features include:

Oceanfront Access: The resort boasts direct access to Myrtle Beach's sandy shoreline, allowing guests to enjoy the beauty of the Atlantic Ocean right at their doorstep.

Luxurious Accommodations include spacious suites to cozy rooms, all designed to provide comfort and relaxation for guests during their stay.

Amenities: The resort features a variety of amenities to enhance guests' experience, including multiple pools (indoor and outdoor), a water park with slides and splash areas, hot tubs, a fitness center, and on-site dining options.

Family-Friendly Environment: With activities and facilities catering to families, Ocean Reef is known for providing a fun and enjoyable vacation experience for guests of all ages.

Hospitality and Service: The resort is praised for its attentive staff and excellent customer service, ensuring that guests feel welcomed and well-cared-for throughout their stay.

One Reviewer said, “Very nice stay. Employees were awesome!”

Overall, Ocean Reef Resort in Myrtle Beach is celebrated for offering a comprehensive vacation experience, combining relaxation, entertainment, and seaside luxury.

The Resort has 3 sections:

Ocean Reef Resort North Tower

Ocean Reef Resort North Tower Penthouse II

Ocean Reef South Tower

Unit 1126 is located in Ocean Reef North Tower PH II.

Units Range from Efficiency to 4-bedrooms, having both oceanfront and Oceanview units, and offer square footage as low as 307 square feet and as high as 1,940 square feet.

While smaller units may be perfect for couples, larger units that have expansive multi-bedroom layouts could be ideal for families and larger groups.

About Oceanfront Condo Unit 1126.

Welcome to your slice of coastal paradise at 7100 Ocean Blvd. N, Myrtle Beach, SC 29572– an investor's dream! Introducing an exquisite corner oceanfront condominium perched on the 11th floor of the renowned Ocean Reef Resort along Myrtle Beach's Golden Mile. Revel in uninterrupted ocean views from every angle in this immaculate unit, boasting fresh carpeting, stylish furnishings, and coastal décor. Floor-to-ceiling windows flood the living area and master bedroom with natural light, while a sprawling wrap-around balcony invites you to soak in the splendor of the Atlantic Coast. With a plethora of amenities including indoor/outdoor pools, a water park, and fitness facilities, this condo is the epitome of luxury beach living.

Accommodation & Amenities.

Accommodations vary by room type but some include Alarm Clock, 2 TVs, Coffee Maker, Complimentary Wi-Fi, Dining Table, Washer and Dryer, Free In-Room Coffee, Hair Dryer, Iron & Ironing Board, In-Room Safe, Kitchen, Private Balcony, Sleeper Sofa.

Ocean Reef Resort in Myrtle Beach, SC, features an onsite restaurant called "Cafe du Port." This restaurant offers a variety of dining options, including breakfast, lunch, and dinner, with a focus on coastal cuisine. Guests can enjoy both indoor and outdoor seating, with views of the ocean adding to the dining experience.

Guests enjoy indoor and outdoor pools, water park, fitness center, on-site dining, direct beach access, kid-friendly activities, business center, meeting spaces, laundry facilities, free Wi-Fi, concierge services, parking facilities.

Onsite Vs Offsite Property Management

Some Oceanfront Resorts won’t allow an owner’s tenants to use onsite amenities if the owner uses offsite property management. However, at Ocean Reef Resort, even if you use offsite property management, your tenants can use the amenities.

What does the HOA Include?

The HOA includes Electric Common, Water and Sewer, Trash Pickup, Elevator Service, Pool Service, Landscape/Lawn, Insurance, Manager, Common Maint/Repair, Electric In Unit, Internet Access, Pest Control.

How Does the Location Serve My Guests?

What's nearby

Grande Dunes Marketplace - 3 min drive

Myrtle Beach Boardwalk - 7 min drive

Broadway at the Beach - 7 min drive

Myrtle Beach Convention Center - 7 min drive

Apache Pier - 8 min drive

Airport

Myrtle Beach Intl. Airport (MYR) - 19 min drive

Restaurants

Starbucks - 2 min drive

Fiesta Mexicana - 6 min walk

River City Cafe - 3 min walk

McDonald's - 2 min drive

Mango's On The Beach - 5 min walk

Golf

8 Minutes from Top Golf

12 Minutes from River Oaks Golf Club

13 Minutes from Myrtlewood Golf Club

14 Minutes from World Tour Golf Links

Other Attractions

3 Minutes from Family Kingdom

12 Minutes from Medieval Times Dinner and Tournament

12 Minutes from Market Common/Savannah’s Playground

10 Minutes from Coastal Grand Mall, Costco, and Best Buy

10 Minutes from Springmaid Pier

16 Minutes from Pirates Voyage

Groceries

8 Minutes from Walmart Supercenter

4 Minutes from Publix

Shopping

14 Minutes from Tanger Outlets

Medical

16 Minutes from Grand Strand Medical Center

How Do My Guest Navigate the Area?

Take Bus 17 North to reach North Myrtle Beach and Little River

Take Bus 17 South to reach Surfside Beach, Garden City, Murrells Inlet and Pawleys Island.

Take Bus 17 to Hwy 501 to go inland towards Forestbrook (14 Minutes), Pine Island (15 Minutes), or Carolina Forest (25 Minutes) Communities to reach Conway, SC (32 Minutes)

Take Hwy 501 to Hwy 31 and go north to reach Carolina Forest and North Myrtle Beach

Take Hwy 501 to Hwy 31 and go south to reach Socastee

Take Hwy 501 to Hwy 17 Bypass South to reach Garden City and Murrells Inlet

Take Hwy 501 to Hwy 17 Bypass North to merge into Bus 17 and reach North Myrtle Beach and Little River

Depreciation.

Assuming that the purchase price of Unit 1126 is the same as the appraised value at $590,000, when this appraised value is divided over 27.5 years for depreciation, this gives you an annual taxable income deduction of $21,454.55 for this rental property.  If that doesn’t get you excited, just wait until you see how this unit has appreciated!

How did Ocean Reef Appreciate?

In 2014, the average unit across all types had a purchase price of $146,029. In 2023, the average unit across all types had a purchase price of $198,917. This an increase in appreciated value of $52,888. In the last 10 years, Ocean Reef across all unit types appreciated 36%.

However, in 2014, a 4-bedroom unit had a purchase price of $280,000. In 2023, a 4-bedroom had a purchase price of $590,000. This an increase in appreciated value of $280,000. In the last 10 years, Ocean Reef appreciated 74%.

What are Occupancy Rates Like in Myrtle Beach South Carolina?

Currently, there’s plenty of room to increase the profitability of your rental property by increasing your annual occupancy. Let’s take a look at how 4-bedroom rental properties perform across all property types in Myrtle Beach, SC and then compare 4-bedroom units across all property types in Myrtle Beach, SC to Oceanfront Condo unit 1126.

4 Bedroom Units Across All Property Types

The average 4-bedroom rental in our market across all property types averages 145 nights booked, which is 42% of the year, has a daily average rental rate of $312 and brings in between $56,082 and $77,428 each year in Gross Rental Income. 4-Bedroom rental properties make up only 6% of the Myrtle Beach South Carolina rental market. There’s not nearly as many 4-bedroom units in our market as the 1, 2, and 3-bedroom oceanfront units, and when supply is lower, you can expect to pay more for these units.

All Rental Types Compared to Oceanfront Condo Unit 1126

The 2023 Avg Gross Rental Income for Unit 1126 is $104,400.12. By investing in Oceanfront Condo Unit 1126, compared to all types of rentals in Myrtle Beach South Carolina, you come out making atleast $26,972.12 more but could stand to make as much as $48,318.12. It’s clear to me that Oceanfront Condos are the way to go in our market.

Which unit type should I invest in?

The top performers in our market were a 3-bedroom unit that booked 272 nights and a 4-bedroom that had an average daily rate of $501 according to Evolve property management. However, this question is much larger than occupancy and average daily rate. Are you playing the appreciation game or the income game? Are you more interested in how well the property appreciates so that when you sell it you can maximize on the increased value or are you interested in a property that generates great projected profitability annually so that you can bolster your current income? This is one of the initial steps to understanding which oceanfront condo is right for you.

Offer Vacation Packages to Increase Occupancy.

It’s simple. Just offer three different vacation packages to your tenants. One at $500, one at $1000, and one at $1500 and then fill those vacation packages with gift cards to the best restaurants, paid for attractions like shows, local events, and concerts, and even include more concierge options like rose pedals, bath robes, and gifts for him and her.  You’ll most likely find that your tenants will be thrilled that you put this level of work into their vacation, they’ll gladly pay the convenience fee of each package, and most importantly, want to return year after year.

What’s this do for you? Repeat and Loyal Business.

You’re more likely to have satisfied and therefore repeat customers who will rent your property year in and you’re out, repeatedly. Two-things impact your rental business because of the yearly repeat tenants: you can successively build your Gross Rental Income (GRI) each year upon the next year—growing your book of business—and, due to the loyalty of your tenants, you may be insulated from the ups and downs of the rental market. In other words, if the rental market has a bad year overall, because your tenants are loyal, you may not see a significant reduction in Gross Rental Income. They very well could choose to cut expenses elsewhere in their budget because they just don’t want to give up their dream vacation, even when the economy struggles along.

Run Facebook Ads Targeting Groups that Visit Our Market for Local Events and Golf.

Here are my picks for your top 4 groups to run Facebook Ads to in order to increase your occupancy:

1.    Golfers. Myrtle Beach has over 90 Golf Courses. Spring time is when golfers begin arriving.

2.    Marathon Runners. Myrtle Beach Marathon: Held typically in late February or early March, this event attracts runners from all over the country. It includes a full marathon, half marathon, and other races.

3.    Country Music Lovers. Carolina Country Music Fest: Held in June, this multi-day music festival features some of the biggest names in country music performing on stages set up along the Myrtle Beach Boardwalk.

4.    Bikers. Myrtle Beach Bike Week: Both spring and fall editions of Bike Week attract motorcycle enthusiasts to the area for rallies, rides, and entertainment.

Do I Buy an Oceanfront Condo as a Second Home or Investment Property?

Buying as a Second Home.

If you buy as a Second Home, you cannot rent the property more than 180 days each year.

You must occupy the property 3 weeks out of the year

You must qualify with current and new housing costs

Primary Residence can’t be within 75 miles of the Second Home

If you do buy as a second home, you should get a better interest rate and lower down payment.

Buying as an Investment Property.

If you buy as an Investment Property, you can rent the property for more than 180 days each year.

You do not have to occupy the property.

You may not have to qualify with current and new housing costs if the property has historical rental income.

When you buy as an investment property, you will have to pay personal property taxes on the furnishings in your unit.

If you buy as an Investment Property, you won’t get as good of an interest rate, and you’ll have a higher down payment, but you have the option of doing a 1031 Like-kind exchange.

Remodeling.

A smart approach for many investors is to buy a dated Oceanfront Condo for cheaper than market price, a unit that needs remodeling, and then remodel the unit so that it maximizes Gross Rental Income. When prospective tenants are searching online for the best vacation rentals, they’re more likely to choose the nicest, more updated units when comparing rentals.

Several things increase the desirability of the unit for tenants such a LVP flooring, fresh paint, new fixtures and faucets, backsplash, barnyard doors, wainscoting, fireplace inserts, flat screen Tv’s, and new furniture to name a few. You might even consider leaving a telescope on the balcony so that your guests can enjoy the stars.

I had a client once that listed their property with a different agent before me and couldn’t get it sold. Based on feedback from showings after the property was listed with me, we remodeled the unit. The property went under contract in only 23 days after the remodel, when before it wouldn’t sell.

For more information, please Click Here.

Ocean Reef Market Report.

This Market Report is as of 03-30-2023.

Active Properties.

31 Active

Average Price: $226,618

Average Days on Market: 127 days

Sellers are more likely to reduce their price due to high competition.

Under Contract.

0 Properties Under Contract

Sold Properties.

12 Properties Sold in last 6 months

Average Price: $190,083

Average Days on Market: 110 days

Properties are selling so don’t let another buyer get the best deal on the condo you want.

For current information, please Click Here.

Click Here for More information on Ocean Reef.

 

What is the Projected Profitability for these Units?

In 2023, this 4 Bedroom Oceanfront unit at Ocean Reef Resort brought in an Average Gross Rental Income of $104,400.12.

Paying with Cash.

As of 2023, this 4 Bedroom Oceanfront unit generated $104,400.12 in Gross Rental income. If using a property manager that charges 10%, your expense should be $10,440.01 which brings you to a subtotal of $93,960.11 after property management fees are paid.

With estimated taxes—based on 2020—at $5,316.35, cleaning services—based on 27 bookings annually at $250 per cleaning—at $6,750, and annualized HOA dues at $31,080, your estimated expenses are $45,146.35.

Subtracting from your subtotal (after property management fees) of $93,960.11, for your total estimated expenses of $45,146.35, your projected profit is $50,813.76.

Paying with Financing.

As of 2023, this 4 Bedroom Oceanfront unit generated $104,400.12 in Gross Rental income. If using a property manager that charges 10%, your expense should be $10,440.01 which brings you to a subtotal of $93,960.11 after property management fees are paid.

At a purchase price of $590,000, your 15% down payment is $88,500. Assuming an 8.24 interest rate for 30 years with a down payment of 15%, your principal and interest totals $46,668. With estimated taxes—based on 2020—at $5,316.35, cleaning services—based on 27 bookings annually—at $6,750, and annualized HOA dues at $31,080, your estimated expenses are $89,814.35.

Subtracting from your subtotal (after property management fees) of $93,960.11, for your total estimated expenses of $89,814.35, your projected profit is $4,145.76. Ocean Reef 4-bedroom Oceanfront Condos are some of the rare “Unicorns” that yield a projected profit even when financing!

Call today to discuss your next Oceanfront Condo purchase in the Myrtle Beach Real Estate Market: 843-360-1737

Disclaimer: All information given is meant to be educational. I am only passing on historical information shared with me by owners, rental companies, and various publications. I am not guaranteeing these numbers, nor can I guarantee future rentals or appreciation. This information is not intended to replace your own research, or to provide legal, investment, or financial advice. Please consult an attorney for legal advice.

 

 

Posted in Real Estate News
March 30, 2024

Are HOAs Ruining Affordable Oceanfront Condo Resorts

Affordable oceanfront condo resorts offer enticing opportunities for both lifestyle and investment. However, the presence of homeowner association (HOA) special assessments adds a layer of complexity to ownership. This overview delves into the intricacies of HOA special assessments at such resorts, examining their types, implications, and strategies for prospective buyers. Understanding these dynamics is key to navigating the nuances of coastal condominium ownership effectively and preserving your profit.

There are different types of homeowner association special assessments. First, There are special assessments that impact the resort as a whole so every owner at a resort must pay for the special assessment. Next, there are special assessments that impact the resort as a whole but are charged based on unit bedroom-type as a percentage of the overall special assessment cost. Finally, there are special assessments for multiple building resorts that will only impact the owners of a particular building.

Special Assessments that Impact the Resort as a Whole.

If the HOA issued a special assessment to cover insurance cost increases, every owner is going to have to pay the special assessment for the increased insurance premiums. This is impacting all the owners as a whole.

For example, let’s say that insurance costs are increasing by $54,000.00 at a resort that has 54 units. The owner of each unit can most likely expect a $1,000 special assessment fee to cover the $54,000.00 increase in insurance cost that the resort experiences as a whole.  

Special Assessments Charged as a Percentage of Unit Bedroom-Type

There are special assessments that impact the resort as a whole but are charged based on unit bedroom-type as a percentage of the overall special assessment cost.

For example, plumbing pipes that need to be replaced. In my experience, the cost of a special assessment like this relates specifically to the unit bedroom-type. If you have a 1-bedroom unit, you’re going to get charged a lower fee than an owner of a 2-bedroom unit. If you have a 2-bedroom, your fee will be lower than the owner of a 3-bedroom. If you have a 3-bedroom, your fee will be lower than the owner of a 4-bedroom unit for these special assessment repairs.

In a hypothetical example, a 1 bedroom might pay $3,000 for plumbing repairs, as where a 2 bedroom might pay $5,000, a 3 bedroom might pay $7,000 and a 4 bedroom pay $9,000.

Another Example Based on Fixing Foundation Repairs.

In my experience, Special Assessment fees can also be split across every bedroom-type unit at a specific percentage. Let’s say there were foundation issues that needed repair at an Oceanfront Resort.

If there’s an overall special assessment fee of $200,000 that needs to be paid, then smaller units pay less, and the larger your unit, the more you pay for the special assessment. For example, a 1 bedroom pays a special assessment of $20,000 at 10% of the overall special assessment cost, a 2 bedroom pays a special assessment of $40,000 at 20% of the overall special assessment cost, a 3 bedroom pays $60,000 at 30% of the overall special assessment cost, and a 4 bedroom pays $80,000 at 40% of the overall special assessment cost.

Now, these numbers are reduced significantly based on the total number of each bedroom-type unit at the Oceanfront Condo Resort. For example, if there are 20, 1-bedroom units at your Oceanfront Resort, then the 10% of the total cost for the special assessment for 1 bedroom foundation repairs at $20,000 is now allocated across all 20 units reducing the fee each owner pays to only $1,000. Thus, 1-bedroom owners pay a special assessment fee of $1,000. Similarly, if there are 20, 2-bedroom units at your oceanfront resort, then the 20% of the total cost for the special assessment for 2-bedroom foundation repairs at $40,000 is now allocated across all 20 units reducing the fee each owner pays to only $2,000. Thus, 2-bedroom owners pay a special assessment fee of $2,000. This process is repeated—respectively—for all bedroom-unit types.

Special Assessments for Multiple Building Resorts.

If you’re in a resort with multiple buildings and the building that you live in does not have issues that need repairs, but a different building does need repairs, you’re most likely not going to be charged for fixing the other owners’ building. It doesn’t make much sense that you’d pay fees to repair a building that someone else lives in. However, every HOA is different and these facts must be confirmed.

Generally, multiple building resorts will only share expenses on things that mutually benefit them.

They will share expenses for things like:  

·      Shared marketing

·      Landscaping for entire community

·      Shared amenities

3 Tips to Beat Special Assessments When Buying an Oceanfront Condo

Tip #1. Have your Broker check the master deed to determine if special assessments for repairs taking place at other buildings will be charged to all owners at the oceanfront resort or just the owners at that particular building.

Tip #2. Sometimes special assessments will be mentioned in the HOA meeting minutes or Budgets but not be determined yet. If no determination has been made, have your closing attorney send a letter to the HOA asking for an outlay of the estimated fees or even a range of what the fees could be so that you’re an informed investor and not buying blind to the upcoming special assessment fees.

Tip #3. Have your broker ask how many contractor quotes the HOA received before moving forward with the more recent projects that resulted in special assessments. You want to make sure the board is doing their due diligence rather than just simply trying to get things done.

The presence of homeowner association (HOA) special assessments in affordable oceanfront condo resorts raises concerns about equitable cost distribution among owners. These assessments can vary based on factors such as unit size and resort-wide needs. While some special assessments impact all owners uniformly, others are proportionate to unit types, potentially burdening owners of larger units. Moreover, multi-building resorts may impose assessments differently, necessitating careful examination. To mitigate risks, prospective buyers should scrutinize HOA documents, anticipate potential assessments, and assess the board's decision-making process.

Call today to discuss your next Oceanfront Condo purchase in the Myrtle Beach Real Estate Market: 843-360-1737

Disclaimer: All information given is meant to be educational. I am only passing on historical information shared with me by owners, rental companies, and various publications. I am not guaranteeing these numbers, nor can I guarantee future rentals or appreciation. This information is not intended to replace your own research, or to provide legal, investment, or financial advice. Please consult an attorney for legal advice.

 

Posted in Real Estate News
March 30, 2024

3 Tips to Beat Special Assessments When Buying an Oceanfront Condo

What is a Special Assessment?

Special assessments at oceanfront condo resorts are additional fees or charges levied by the condominium association on condo owners to cover unexpected expenses or fund major projects related to the upkeep, maintenance, or improvement of the resort property. These assessments are typically imposed when the regular HOA fees or reserve funds are insufficient to cover the costs of necessary repairs, renovations, or other significant expenditures.

At oceanfront condo resorts, special assessments may be particularly common due to the unique challenges and expenses associated with maintaining properties located near the coast. Factors such as exposure to saltwater, wind, and storms can result in accelerated wear and tear on buildings, infrastructure, and amenities, necessitating periodic repairs or upgrades.

Special assessments are typically one-time charges and are separate from regular property taxes or monthly HOA fees. They are often necessary when unexpected expenses arise or when planned projects exceed the funds available in the association's reserves.

Special assessments are typically divided among all property owners within the affected community based on factors such as property value or square footage. They are considered legally binding obligations, and property owners are required to pay them within the specified timeframe determined by the governing authority. Failure to pay a special assessment can lead to penalties, liens on the property, or legal action by the association or government entity.

Common Reasons for Special Assessments at Oceanfront Condo Resorts.

    Hurricane or storm damage: If a hurricane or severe storm damages the resort property, extensive repairs may be required to restore buildings, landscaping, and other amenities.

    Building maintenance: Condo associations may need to undertake major maintenance projects, such as repairing or replacing roofs, windows, balconies, or building exteriors to ensure the structural integrity and safety of the buildings.

    Infrastructure upgrades: Upgrading utilities, such as plumbing, electrical systems, or elevators, may be necessary to meet current safety codes or enhance the comfort and convenience of residents.

    Beach erosion control: Oceanfront properties are susceptible to beach erosion, requiring measures such as beach renourishment or installation of seawalls to protect the coastline and preserve property values.

    Amenities enhancement: Condo associations may decide to invest in upgrading, repairing, or adding amenities such as pools, spas, fitness centers, or recreational areas to enhance the overall experience for residents and attract potential buyers or renters.

Special Assessments can also be for addressing legal matters or lawsuits that involve the community.

In South Carolina, if you fail to pay your assessments to a Homeowners Association (HOA) or Condominium Owners Association (COA), they have the authority to foreclose on your home. This foreclosure can occur independently of whether you are current on your mortgage payments.

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It's important for condo owners to be aware of the potential for special assessments when purchasing property in oceanfront condo resorts and to budget accordingly for these additional expenses. Failure to pay special assessments can result in penalties, liens on the property, or other legal actions by the condominium association. Additionally, prospective buyers should carefully review the financial health and reserve funds of the condo association to assess the likelihood of future special assessments.

4 Tips to Beat Special Assessments When Buying an Oceanfront Condo

Tip #1. Always have your Broker check the most recent HOA Budget for their current reserves so that you best understand the financial position of the HOA and can determine how they’ll weather the upcoming years.

Tip #2. Longer established HOAs might be better positioned to weather upcoming years because they have established higher reserves as when compared to younger HOAs. Have your Broker identify older buildings that have been well maintained with little ownership turnover. If there’s little turnover, most likely the HOA is sharp and owners love it because the HOA is providing a great value to the owners.

Tip #3.  Have your Broker check several years’ worth of HOA meeting minutes so that you can identify any patterns of regularly increasing HOA Dues or continual special assessments. You don’t want to buy into a resort that has historically increased their HOA dues every year for the past 5 years because more than likely, they’re continue increasing HOA dues into future years, eating into your profits.   

Tip #4. Have your Broker confirm that the more recent special assessment projects have been completed during the off-season months and not during the peak season. This is one way to test the mindset of your HOA to make sure that they’re aiming to not disturb the resort and your guests stay during the resort’s busiest time of year. You want an HOA that’s considering your bottom-line when doing projects to at the resort.

How Special Assessment Help You Win!

The better maintained your property, the more tourists you should attract and keep. You want an HOA that has a healthy mindset towards maintaining the resort to keep attracting tourists but not go overboard with excessive projects that don’t add value to your resort.

When done well, Special Assessments can help to increase your occupancy rates, give a great experience to your guests, and turn your loyal guests into repeat business, year-after-year.   

Call today to discuss your next Oceanfront Condo purchase in the Myrtle Beach Real Estate Market: 843-360-1737

Disclaimer: All information given is meant to be educational. I am only passing on historical information shared with me by owners, rental companies, and various publications. I am not guaranteeing these numbers, nor can I guarantee future rentals or appreciation. This information is not intended to replace your own research, or to provide legal, investment, or financial advice. Please consult an attorney for legal advice.

 

Posted in Real Estate News
March 28, 2024

Holiday Pavilion Resort: Oceanfront Condo Investment Destination | #1 on Expedia.com in 2024

Ranked #1 on Expedia.com for the Top 5 Oceanfront Resorts in Myrtle Beach, SC

Holiday Pavilion Resort on the Boardwalk

1200 N Ocean Blvd, Myrtle Beach, SC, 29577-3757

Ranked 8.2/10

1188 online reviews

Popular amenities

Children's pool, Gym, Indoor pool, Lazy river, Outdoor pool, Spa tub, Bar/lounge, Coffee Shop/cafe, Poolside bar, Barbecue grill, Picnic area, Extra beds/cribs

Reviewer said, “Great location on the beach. Heated pool which grandkids enjoyed. Good eats near by. Great hotel for families.”

Investing at Holiday Pavilion Resort on the Boardwalk

For those interested in buying a unit at Holiday Pavilion Resort on the Boardwalk, units range from Efficiency to 1-bedrooms, having between 358 to 1,150 heated square feet, and come as both oceanview and oceanfront units.  

Efficiency Units

The average sold price of an oceanfront Efficiency unit in 2023 was $223,300 while the oceanview Efficiency sold at an average price of $199,000 in 2023.  

1-Bedroom Units

The average sold price of an oceanfront 1-bedroom unit in 2023 was $220,000 while the oceanview 1-bedroom sold at an average price of $165,000 in 2023.

Gross Rental Income (2023)

Efficiency Units

An Efficiency Oceanfront unit has a Gross Rental Income in 2023 of $32,400. However, similar units average $45,000 per year on the onsite program.

For a cash buyer, the estimated operating expense of an Efficiency oceanfront unit is  $22,708.70, this provides a projected profitability of $22,291.30.

For a buyer using financing, the estimated operating expense of an Efficiency oceanfront unit is $36,184.70, this provides a projected profitability of $8,815.30.

The Average Efficiency Oceanfront Unit provides a depreciation of as much as $6,181.82, and over the past decade appreciated by $75,208, an 74% increase in appreciated value.

1-Bedroom Units

A 1-bedroom Oceanfront unit has a Gross Rental Income in 2022 of $37,813.

For a cash buyer, the estimated operating expense of a 1-bedroom oceanfront unit is $23,899.43, this provides a projected profitability of $13,913.57.

For a buyer using financing, the estimated operating expense of a 1-bedroom oceanfront unit is $40,123.43, this provides a projected loss of $2,310.43.

The Average 1-bedroom Oceanfront Unit provides a depreciation of as much as $7,450.91, and over the past decade appreciated by $98,000, an 80% increase in appreciated value.

Source: Click Here.

Call today to discuss your next Oceanfront Condo purchase in the Myrtle Beach Real Estate Market: 843-360-1737

Disclaimer: All information given is meant to be educational. I am only passing on historical information shared with me by owners, rental companies, and various publications. I am not guaranteeing these numbers, nor can I guarantee future rentals or appreciation. This information is not intended to replace your own research, or to provide legal, investment, or financial advice. Please consult an attorney for legal advice.

Posted in Real Estate News
March 28, 2024

Sandy Beach Oceanfront Resort: Oceanfront Condo Investment Destination | #2 on Expedia.com in 2024

Ranked #2 on Expedia.com for the Top 5 Oceanfront Resorts in Myrtle Beach, SC

Sandy Beach Oceanfront Resort

201 South Ocean Blvd., Myrtle Beach, SC, 29577

Ranked 8.2/10 

1,402 online reviews

Popular amenities

2 indoor pools, 2 outdoor pools, Children's pool, Gym, Lazy river, Barbecue grill, On the beach, Picnic area, Pool loungers

Guest reviews speak well of the family-friendly amenities, beach locale, and pool. One reviewer said, “Very nice view of the ocean, nice pools, house keeping great!” 

Investing at Sandy Beach Oceanfront Resort

For those interested in buying a unit at Sandy Beach Oceanfront Resort, units range from 1-bedroom to 3 bedrooms, having between 450 to 1,500 heated square feet, and come as both oceanview and oceanfront units.  

1-Bedroom Units

The average price of an oceanfront 1-bedroom unit in 2023 was $230,242 while the oceanview 1-bedroom sold at an average price of $215,500.

2-Bedroom Units

The average price of an oceanfront 2-bedroom unit in 2022 was  $375,000 while the oceanview 2-bedroom sold at an average price of  $425,000.

3-Bedroom Units

The average price of an oceanfront 3-bedroom unit in 2023 was   $524,500 while the oceanview 3-bedroom sold at an average price of $532,500.

Gross Rental Income (2023)

1-Bedroom Units

A 1-bedroom Oceanfront unit has a Gross Rental Income in 2023 of $42,345.

For a cash buyer, the estimated operating expense of a 1-bedroom oceanfront unit is $18,353.47, this provides a projected profitability of $23,991.53.

For a buyer using financing, the estimated operating expense of a 1-bedroom oceanfront unit is $37,241.47, this provides a projected profitability of $5,103.53.

The Average 1-bedroom Oceanfront Unit provides a depreciation of as much as $8,676.36, and over the past decade appreciated by $105,326, an 84% increase in appreciated value.

2-Bedroom Units

A 2-bedroom Oceanfront unit has a Gross Rental Income in 2023 of $38,000.00.

For a cash buyer, the estimated operating expense of a 2-bedroom oceanfront unit is $26,465.09, this provides a projected profitability of $11,534.91.

For a buyer using financing, the estimated operating expense of a 2-bedroom oceanfront unit is $60,641.09, this provides a projected loss of $22,641.09.

The Average 2-bedroom Oceanfront Unit provides a depreciation of as much as $15,696.91, and over the past 9 years appreciated by $270,000, an 169% increase in appreciated value.

3-Bedroom Units

A 3-bedroom Oceanfront unit has a Gross Rental Income in 2022 of $49,970.

For a cash buyer, the estimated operating expense of a 3-bedroom oceanfront unit is $31,348.21, this provides a projected profitability of $18,621.79.

For a buyer using financing, the estimated operating expense of a 3-bedroom oceanfront unit is $70,936.21, this provides a projected loss of $20,966.21.

The Average 3-bedroom Oceanfront Unit provides a depreciation of as much as $18,181.82, and over the past 8-years appreciated by $273,500, a 109% increase in appreciated value.

Call today to discuss your next Oceanfront Condo purchase in the Myrtle Beach Real Estate Market: 843-360-1737

Disclaimer: All information given is meant to be educational. I am only passing on historical information shared with me by owners, rental companies, and various publications. I am not guaranteeing these numbers, nor can I guarantee future rentals or appreciation. This information is not intended to replace your own research, or to provide legal, investment, or financial advice. Please consult an attorney for legal advice.

Posted in Real Estate News
March 28, 2024

Holiday Sands South Resort: Oceanfront Condo Investment Destination | #3 on Expedia.com in 2024 (Our Pick)

Ranked #3 on Expedia.com for the Top 5 Oceanfront Resorts in Myrtle Beach, SC

Holiday Sands South Resort (Our Pick)

2411 South Ocean Boulevard, Myrtle Beach, SC, 29577

Ranked 8.6/10

3 online reviews. 

Popular amenities

Indoor Pool, Outdoor Pool, Parking included, Free WiFi, Gym

One reviewer said, “It’s in a perfect location. You could walk to most anything. Staff was friendly. Will definitely come again next summer.”

Investing at Holiday Sands Resort

For those interested in buying a unit at Holiday Sands Resort, units range from 1-bedroom to 2-bedrooms, having between 500 to 1,150 heated square feet, and come as both oceanview and oceanfront units.  

1-Bedroom Units

The average sold price of an oceanfront 1-bedroom unit in 2023 was $223,300 while the oceanview 1-bedroom sold at an average price of $199,000 in 2022 (No Oceanview units sold during 2023).

2-Bedroom Units

The average price of an oceanfront 2-bedroom unit in 2023 was $296,250 while the oceanview 2-bedroom sold at an average price of $309,000.

Gross Rental Income (2023)

1-Bedroom Units

A 1-bedroom Oceanfront unit has a Gross Rental Income in 2023 of $28,600.

For a cash buyer, the estimated operating expense of a 1-bedroom oceanfront unit is  $15,719.89, this provides a projected profitability of $12,880.11.

For a buyer using financing, the estimated operating expense of a 1-bedroom oceanfront unit is $33,635.89, this provides a projected loss of $5,035.89.

The Average 1-bedroom Oceanfront Unit provides a depreciation of as much as $8,228.62, and over the past decade appreciated by $131,647, an 144% increase in appreciated value.

2-Bedroom Units

A 2-bedroom Oceanfront unit has a Gross Rental Income in 2023 of $38,000.

For a cash buyer, the estimated operating expense of a 2-bedroom oceanfront unit is  $21,803.99, this provides a projected profitability of $16,196.01.

For a buyer using financing, the estimated operating expense of a 2-bedroom oceanfront unit is $46,871.99, this provides a projected loss of  $8,871.99.

The Average 2-bedroom Oceanfront Unit provides a depreciation of as much as $11,512.73, and over the past 9 years appreciated by $160,125, an 118% increase in appreciated value.

Call today to discuss your next Oceanfront Condo purchase in the Myrtle Beach Real Estate Market: 843-360-1737

Disclaimer: All information given is meant to be educational. I am only passing on historical information shared with me by owners, rental companies, and various publications. I am not guaranteeing these numbers, nor can I guarantee future rentals or appreciation. This information is not intended to replace your own research, or to provide legal, investment, or financial advice. Please consult an attorney for legal advice.

Posted in Real Estate News
March 28, 2024

Ocean One Resort: Oceanfront Condo Investment Destination | #4 on Expedia.com in 2024

Ranked #4 on Expedia.com for the Top 5 Oceanfront Resorts in Myrtle Beach, SC

Oceans One Resort

102 South Ocean Boulevard, Myrtle Beach, SC, 29577

Ranked 7.8/10

1001 online reviews

Popular amenities

2 spa tubs, Children's pool, Gym, Indoor pool, Lazy river, Outdoor pool, TV in common areas, On the beach, On the water, Terrace

One Reviewer said, “Really nice and spacious rooms. Loved the 2 separate balconies. Rooms are up to date.”

Investing at Oceans One Resort

For those interested in buying a unit at Oceans One Resort, units range from 1-bedroom to 3-bedrooms, having between 550 to 1,350 heated square feet, and come as both oceanview and oceanfront units.  

1-Bedroom Units

The average sold price of an oceanfront 1-bedroom unit in 2023 was $267,966 while the oceanview 1-bedroom sold at an average price of $274,900.  

2-Bedroom Units

The average price of an oceanfront 2-bedroom unit in 2022 was $420,069 while the oceanview 2-bedroom sold at an average price of $426,225 in 2023.

3-Bedroom Units

The average price of an oceanfront 3-bedroom unit in 2023 was $510,000.

Gross Rental Income (2023)

1-Bedroom Units

A 1-bedroom Oceanfront unit has a Gross Rental Income in 2023 of $34,740.79.

For a cash buyer, the estimated operating expense of a 1-bedroom oceanfront unit is $19,953.80, this provides a projected profitability of $14,786.99.

For a buyer using financing, the estimated operating expense of a 1-bedroom oceanfront unit is $44,709.80, this provides a projected loss of $9,969.01.

The Average 1-bedroom Oceanfront Unit provides a depreciation of as much as $11,024.22, and over the past decade appreciated by $105,386, an 65% increase in appreciated value.

2-Bedroom Units

A 2-bedroom Oceanfront unit has a Gross Rental Income in 2023 of $69,432.

For a cash buyer, the estimated operating expense of a 2-bedroom oceanfront unit is $32,856.18, this provides a projected profitability of $36,575.82.

For a buyer using financing, the estimated operating expense of a 2-bedroom oceanfront unit is $69,672.18, this provides a projected loss of $240.18.

The Average 2-bedroom Oceanfront Unit provides a depreciation of as much as $16,908.18, and over the past 9 years appreciated by $132,569, an 46% increase in appreciated value.

3-Bedroom Units

A 3-bedroom Oceanfront unit has a Gross Rental Income in 2023 of $59,953.42.

For a cash buyer, the estimated operating expense of a 3-bedroom oceanfront unit is $43,057.24, this provides a projected profitability of $16,896.18.

For a buyer using financing, the estimated operating expense of a 3-bedroom oceanfront unit is $84,937.24, this provides a projected loss of $24,983.82.

The Average 3-bedroom Oceanfront Unit provides a depreciation of as much as $19,236.36, and over the past 8-years appreciated by $255,634, a 100% increase in appreciated value.

Call today to discuss your next Oceanfront Condo purchase in the Myrtle Beach Real Estate Market: 843-360-1737

Disclaimer: All information given is meant to be educational. I am only passing on historical information shared with me by owners, rental companies, and various publications. I am not guaranteeing these numbers, nor can I guarantee future rentals or appreciation. This information is not intended to replace your own research, or to provide legal, investment, or financial advice. Please consult an attorney for legal advice.

Posted in Real Estate News