BP Oil Catastrophe Update for Myrtle Beach

A professor from Coastal Carolina University talked to a group of us the other day. He stated that even if the oil from the BP catastrophe in the Gulf were to make it into the Gulf Stream, South Carolina beaches should not be affected in a serious way. He stated that because of the way the continental shelf is along our coastline we have some protection from the oil. He does not anticipate any substantial problems along the South Carolina coast.

I spoke with Phil Wehrung yesterday who is the Homeowner Services Representative at Compass Cove in Myrtle Beach. He believes that the concern of oil on the Gulf beaches has driven more people to visit Myrtle Beach. Phil says that rentals at the property he manages have been up and he credits a large part of that to folks who don't want to take a chance that a holiday in the Gulf area would be ruined by the oil on the beaches. Great news for us but I would give that extra rental income back any time if we could reverse this horrible environmental disaster.

Breakers Boutique 3 bedrooms cash flow with 100k down

Here is an estimated cash flow for a Breakers Boutique 3 bedroom. I made some assumptions with the purchase price and of course we would try to get that even lower. One of the reasons that these condos do above average rental income is because the condo is considered a “lock out” which means it can be rented as a 3 bedroom, efficiency or 2 bedroom. That’s good for you too in case part of the condo is rented you could still come down with a smaller party and stay in part of it.
When we EVER get the economy rolling again you can expect this to give you some positive cash flow as in the past these have produced almost 60k in gross rents. You get 59% of the gross rents here.

This property is associated with the Breakers Group. The rental manager, The Brittain Group, has a stellar track record for producing some of the highest rental income on the beach and they also take less for their cut. The split is 60% to you and 40% to them but I use 59% to you as they charge 1% for replacing items like coffee pots, glasses, silverware, TV remotes (they are taken almost half the time!?)

Income/Expense Comparison Breakers Boutique 3 Bedroom oceanfront


Purchase Price $220,000
Percent Down 45%
Term arm
6.25%
Down Payment $99,000
Mortgage Amount $121,000
Monthly Payment $745
Annual Payment $8,944

Est. Total Rents $48,000
Est 59% Rental Mg $28,320 *

Est. HOA Annual $1,318 $15,816
Est. Property Taxes $4,745 **
Est. Bldg. Insurance included
Est. Telephone $25 $300
Est. Content Ins. $0 ***
Annual Mortgage Payment $8,944
Total Expenses $29,805

Est. Pre-Tax Cash Profit/Loss -$1,485

*2009 rental income used from #1750-51-52
** 2009 property taxes used, should be lower in 2010 due to reassessments. Est. $3,300 for 2010
*** HO6 insurance (contents, liability) is included in monthly HOA payment



Here is a link to some properties that have the same floor plan. You will notice that they all seem practically identical as the floor plans are the same and since these came furnished by the developer originally the furniture is almost all the same. It can usually take about 7 years from new to change out all of the furnishings and bedding. It doesn’t happen all at once but when the developer/rental manager notices that the couches are looking worn, they contact you to suggest that you replace it. Even though you could replace it yourself, the rental manager usually gets a much better price since they are ordering multiple couches. Plus, you don’t have to do anything except OK the order.

Click Here to View Listings: http://CCAR.fnismls.com/publink/default.aspx?GUID=499a625e-4b14-45f2-962f-4eb84584ab61&Report=Yes

Once you deduct mortgage interest expense and accumulated depreciation you should find that the condo cash flows. You could expect better numbers when the economy improves. I have been told that we are still seeing lots of people coming to the beach but all of the ocean front condos and hotels had reduced their rates in the last year or so to attract the weary/broke vacationer. I understand that rental rates are starting to creep back up this year.

If the link to properties no longer works, please visit my website or send me an email and I'll send you an updated list. The links to MLS properties only stays live for about 30 days and if you are reading this post any later you will want an update on these condos.

http://myrtlebeachdreaming.com/

Why are rental commission so high on the ocean front?

When most folks hear that the rental split is 59/41 with 59% of gross rental revenue going to the owner and 41% going to the rental manager they think "Holy Cow, that is more that I am used to hearing about for renting property. It turns out that is a better rental split than most ocean front rental managers give. And, the best split comes from one if the best rental managers in Myrtle Beach.

The Brittain Group is the only ON-SITE rental manager on the ocean front in Myrtle Beach that has that low of a rate. Almost all of the other rental managers charge 46% so getting 59% is the best. It has been this way for as long as I have been selling the ocean front which is about 10 years now. In fact, The Brittain Group used to charge the typical 46% fee until last year when the economy took a turn for the worst. They were the only rental group that voluntarily decided to give the owners a better deal. (That could have been because LOTS of people complained that they were making less rent due to the rental manager lowering rates to tempt stressed folks to vacation.) But at least they listened and were reasonable whereas most other rental managers did not budge.

The key is that the on-site rental manager may charge you more, but in 100% of the instances I have researched, they give you a better BOTTOM LINE than an off-site rental manager who only charges 30% to 35%. This is a weekly or nightly rental operation, not a month to month or annual situation. They also bring in approximately 28k of NET rental revenue, better in better economic times. They have the front desk, maid service, linens, towels, etc. They can put golf packages together and run very smoothly a 200+ condo hotel building. Go to TripSmarter.com and research some of the names of the resorts they manager like The Breakers, Breakers Boutique, The Caribbean, The Compass Cove, and Monterray Bay Suites to see comments from guests and go to the websites to see what the resorts offer. In the summer they offer “kid camps” and in the fall they will have cocktails and promos for golfers. They do spend time and money making sure your guests are happy and want to tell their friends and come back next year for a great vacation. Customer service in Brittain Group managed resorts is the best on the beach.

Take a look at my website to search the MLS or to sign up for my newsletter. http://www.myrtlebeachdreaming.com/

Housing Market Insight July 12th Edition

We are all asking the question "Where is the bottom of the real estate market in Myrtle Beach?" Almost every day I seem to get conflicting information. About a year and a half ago the majority of my clients thought we had reached the bottom of the real estate cycle. But of course, we then learned about all of the bad loans made at the height of the ocean front condo market. What started a year and half ago as just a handful of foreclosure's has SKY ROCKETED into 100's of property's being sold at the County Courthouse foreclosure auction, short sales, and REO's. (Real Estate Owned by banks listed on the MLS.)

This latest update shows record low mortgage interest rates but buyers are still not buying. New mortgages fell recently. This could be a sign that investors can take advantage of. Cash is king in the foreclosure market on the ocean front because while not impossible, it can be challenging to find.

While we can't predict the future, I do know that recently a new Judge was added to the County Courthouse to deal exclusively with the backlog of foreclosed properties so I expect to see those numbers rise in the next few months. I also monitor the number of new pre-foreclosure notices (the first notice a foreclosing lender must give that is recorded) and those numbers seem to be falling. If those new notices continue to fall in number, that could be a sign that we are at the bottom or very close to it. Heck, if I knew where the bottom was WE WOULD ALL BE RICH!

To see my opinion of the current best deals in Myrtle Beach, SC, visit my website and send me an email telling me what your interest is.

Susie Axt
Broker
Certified Resort and Second Homes Property Expert in Myrtle Beach, SC
http://www.myrtlebeachdreaming.com

mailto:susie@myrtlebeachdreaming.com







housing Market Insight – July 12th Edition