Investing in Myrtle Beach: Short-Term Rentals

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If the property serves as a primary residence, any building could suffice, though many prefer quieter options away from downtown Myrtle Beach. For those seeking a second home, the options are vast. To narrow down choices, consider factors like the desired number of bedrooms, approximate square footage, and budget constraints.

Along the oceanfront, smaller wood-frame buildings from the late 1970s and early 1980s predominate. Most of these buildings, typically three stories or fewer, lack elevators, requiring consideration for stairs. Even first-floor condos in such structures may entail a few steps. Amenities are often limited to outdoor pools and possibly hot tubs. Washers/dryers might not be inside the condos but may be available in a common laundry room on the premises.

Mid-rise buildings, spanning 4-6 stories, are common in Surfside/Garden City areas. These buildings typically feature elevators and offer amenities such as pools and hot tubs.

The concrete/steel high-rises, seven stories or taller, resemble resort-style properties found in North Myrtle Beach and Myrtle Beach, and occasionally in Surfside/Garden City like Water's Edge and Royal Garden. These buildings boast elevators, onsite check-in desks, and a plethora of water amenities including indoor and outdoor pools, hot tubs, and perhaps lazy rivers. Operated akin to hotels, they are often referred to as "condo-tels," indicating a blend of condominium and hotel services.

The designation of "condo-tel" typically applies to properties available for daily or weekly rentals, regardless of onsite front desk services. Even non-oceanfront condos may fall under this classification if rental activities are evident through platforms like AirBnB or VRBO. 

If you're planning for just a few weeks per year, it suggests that maximizing rental income is your priority, correct? If you agree, then we're looking for rental machines. However, if rental income isn't your primary concern, and you simply want to offset taxes and HOA dues, then perhaps more "home-style" buildings would be suitable. In that case, we'll consider factors like the number of bedrooms, size, price, style, and age of the building.

Not all buyers may want to manage rentals themselves, but for those who can, it often yields the highest Return on Investment (ROI). The next best option for ROI is utilizing the onsite front desk. Most oceanfront condo buildings charge rental management fees ranging from 35-45%. Additional miscellaneous charges, like travel agent commissions, annual maintenance agreements, business license fees, replacement fees (typically 1% of monthly gross rental income), repairs, and carpet cleanings, typically add another 5-8%.

However, the NET income received by an owner from onsite management is generally higher than that from off-site rental agencies. Off-site agencies typically charge around 15-20%, but there are additional fees, like cleaning costs after each renter, which are passed on to the homeowner, not the renter. When factoring in these "extra" fees, total expenses from off-site rental agencies can amount to 30-40% of gross income.

Using onsite management offers added conveniences like easy access to towels and assistance with lockouts. In contrast, with off-site companies, tenants may need to call an emergency number and wait for assistance, potentially causing inconvenience.

As more buyers opt to rent their condos independently through platforms like Airbnb, VRBO, or direct websites, many "rental machine" buildings have begun restricting access to commercially-controlled amenities onsite at resorts. These amenities typically require card key access or payment, such as tiki bars, bar/lounges, onsite restaurants, and some recreational facilities like laundry rooms or fitness centers. This limitation aims to discourage buyers from removing their condos from the onsite rental program.

While all water amenities are generally accessible to owners and their renters, as they are covered by monthly HOA dues, certain resorts may restrict access to specific water amenities for owners and their guests who rent independently. These limitations stem from agreements where certain amenities were funded by the owner of the front desk to incentivize participation in the rental program.

Due to the nature of oceanfront buildings being predominantly "condo-tels," conventional 30-year fixed-rate loans are generally unavailable for buyers. Additionally, local lenders outside the coastal area, are often unfamiliar with "condo-tel" loans, further limiting financing options. Fannie Mae's reluctance to purchase condo-tel loans, coupled with most lenders' reliance on selling loans to Fannie Mae, contributes to the challenge of obtaining financing. While the buyer may qualify, the property itself may not meet lending criteria. Lenders willing to offer condo-tel loans typically retain them on their books or sell them to private investors, bypassing the traditional secondary market. Local lenders in the Myrtle Beach area, familiar with condo-tel loans, are recommended to facilitate the financing process effectively.

HOA dues are typically charged monthly. However, it's essential to check with the specific condo association as some may have different payment schedules, such as quarterly payments. The exact amount of the monthly dues and what they include can vary depending on the specific condominium complex and its amenities, services, and financial requirements. It's advisable to review the HOA documents and discuss with the HOA management or real estate agent to get precise information about the monthly dues and what they cover.

Associations usually impose special assessments only when necessary, such as for building maintenance, hurricane repairs, or if there's a shortfall in the building's insurance coverage. These assessments are usually spread out over time through installment payments to ease the financial burden on each condo owner.

Unfortunately, there isn't a universal list of buildings that permit pets. If they permit pets, you'll need to ask about any breed or weight restrictions. Some buildings may allow pets under 40 pounds or prohibit certain breeds like pit bulls, rottweilers, or Dobermans. Additionally, some HOAs may require the Board of Director's approval for pets, which can complicate matters. While some OF buildings, including rental units, may allow owners to have pets, most do not permit renters to have pets. 

Many owners desire the ability to bring or ride their motorcycles to their oceanfront resort in Myrtle Beach. However, whether this is allowed varies from one building to another. 

This indicates that the new buyer must respect any existing rentals in place for up to 90 days after the closing date. Owners who independently rent out their properties (through direct rentals, websites like AirBnb, VRBO, etc.) are indeed subject to the Vacation Rental Act (VRA).