Anybody own a beachfront condo rental unit ?

Discussion in 'After Hours Lounge (Off Topic)' started by Kirk Gunn, Mar 10, 2004.

  1. Kirk Gunn

    Kirk Gunn Screenwriter

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    We are contemplating one as an investment/vacation get-away. Guess it varies by location, but we're hoping the rental income pays for all daily expenses, then we can use it during the off-season when it's not occupied.

    Considering Myrtle Beach since their prices are still relatively low and I enjoy golfing. (Ok - I try to golf, don't really enjoy it yet...)

    So, anyone in this situation have any comments ?

    Thanks
     
  2. Scott Merryfield

    Scott Merryfield Executive Producer

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    Kirk,

    We've owned a rental condo in Myrtle Beach for about eight years now. The complex is on the ocean (our unit is a few minutes walk on the grounds to get to the beach).

    As a pure investment, there are better ways to invest your money. However, if you enjoy the area there are tax benefits that will reduce what would otherwise be vacation costs. Property values in the area have not increased much in the area during our ownership, since there has been a huge building boom that has saturated the market there. We come close to breaking even between rental income, expenses and tax deductions.

    We usually make 2-3 trips per year to the area. My wife loves the beach, and I love to golf. We confine our trips to winter, spring and fall, so we avoid the very busy summer season. Also, we have friends/relatives living in several nearby areas -- Raleigh, Murrell's Inlet and Beaufort -- so we have an opportunity to visit them.
     
  3. Matt Stryker

    Matt Stryker Screenwriter

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    Being somewhat from that area, I would also expand my search up to North Myrtle and maybe up into the southern NC beaches; Sunset (very unspoiled), Ocean Isle, Wrightsville, maybe even Bald Head. I know that Ocean Isle has spaces for anchorage/docking, which might be a concern if you still have your sailboat. Some of the larger communities in Myrtle probably would have this as well. Golf is all over the place, you should have no problem playing a good and different course every day, and having a world class course (Pinehurst) not too far if you have some high-class golf entertaining to do.

    The Northern SC/southern NC beaches are very accessible, with I-40 running down to the coast from the Raleigh airport.
     
  4. Scott Merryfield

    Scott Merryfield Executive Producer

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    Our complex is right on the border of North Myrtle Beach. We prefer the northern part of the Grand Strand area, too.

    One thing to keep in mind if you consider the MB area -- do not get too far away from the main area if you want to keep the place rented most of the time (and beachfront property will rent better in the summer, too). However, if your main concern is a less congested area, then Matt's suggestion of looking just across the North Carolina border is an excellent one. If we were going to live permanently in the area, we would probably end up in NC instead of the Myrtle Beach area proper.
     
  5. Kirk Gunn

    Kirk Gunn Screenwriter

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    Thanks guys -

    We are thinking of just a rental place now, with possible retirement further down the road in NC. Some friends are getting a fairly inexpensive condo on the Strand, where the management company rents it out, but keeps 45% of the income. Is that about industry average ?

    The income includes all cleaning and furniture (condo comes furnished). Unit would be oceanfront, even a corner unit for hopefully decent rentals off-season. What are the typical expenses you can right-off on taxes ? If we drive down to paint the place, can we right off the mileage ? Stuff like that....

    Thanks again !
     
  6. Scott Merryfield

    Scott Merryfield Executive Producer

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    If the rental agency is completely handling the property, then that fee is pretty standard. Our agency has different rates depending on the type of booking -- standard guest, golf package, or conference attendee (the complex has an onsite conference center and restaurant).

    As for tax deductions, they include travel expenses (mileage, air fare, rental car), some meals, and anything that actually goes into maintaining the property -- mortgage interest, association dues, insurance, upkeep, new furnishings, utilities, taxes, rental agency commission, etc. Also, since this is a business, you should be able to deduct other expenses such as office supplies, computer expenses (if you maintain records and pay bills electronically), Internet and phone expenses, tax preparation, etc.

    With all the deductions, you should be able to show a loss on the business. I would highly advise hiring a professional tax person to help if you do this.
     
  7. Kirk Gunn

    Kirk Gunn Screenwriter

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    Thanks Scott - those are some whopping deductions ! HOA fees are 350.00/month, but it includes cleaning after the renters. The agency seems to take care of just about everything. Only thing I see missing from the furnishings are the TV's. An HT in rental condo.. I don't think so ! [​IMG]
     
  8. Scott Merryfield

    Scott Merryfield Executive Producer

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    Depending on the arrangement, you may be responsible for replacement of the furnishings as they wear out. The condo we purchased was furnished, but we've replaced the sofa bed, bedroom furniture, stove and air conditioner during our 8 year ownership. The complex is about 20 years old.

    Our plan was to budget a certain amount each year for remodeling costs (the above furnishings, along with painting, wall paper, floor covering, etc.). Depending on the age of the units and the number of bedrooms, plan on an average of $1,000 per year for this. Some years are above this (the a/c unit), while others are less. FYI, our place is a one bedroom, 1.5 bath unit with full kitchen and separate living room (with sofa bed).

    Also, expect to replace little things like dishes and silverware quite often. These things will disappear -- renters treat the place like a hotel and steal stuff. My wife shops at the dollar store for most of these things to keep costs down.
     
  9. Kirk Gunn

    Kirk Gunn Screenwriter

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    Scott - seeing that your home is Michigan, how frequently do you get to the condo to make repairs, restock missing items, etc ? Sounds like maintaining inventory needs to be performed frequently.

    Thanks again for the info.
     
  10. Scott Merryfield

    Scott Merryfield Executive Producer

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    We usually make 2-3 trips per year. Spirit Airlines has inexpensive, direct (mostly) flights from Detroit to Myrtle Beach. The management company will let us know if anything major needs to be taken care of in our absence.
     

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