Buying a beach property in South Carolina (whether that is a property you will use as a second home or an investment property) is different than buying a property in the town where you will live. Let me guide you through the process.

Deciding on the Type & Location of Beach Property

Beach properties can be either condos, townhouses or single family homes. They can be used as a second home or an investment property.

How Will You Use the Beach Property?

First, you need to decide how you will use the property.

  • Will the property be used only as a second home for you and/or your family?
  • Will be property be solely an investment property?
  • Would you like a combination of a second home with the ability to rent it when you are not using the property to bring in extra income.

Knowing the answer to this first question will help narrow our search. You will have more flexibility in location if the property is only going to be a second home. You could owe a second home in any neighborhood, the property does not need to be in a short-term rental zone and does not necessarily need to be close to or on the beach.

Investment properties need to be in areas that allow short-term rentals either by zoning or HOA by-laws. Most investment properties are on or near the beach or possibly in a golf course community.

Distance to the Beach

Next, think about how close (or far) you would like to be from the beach. This answer may depend on how you will use the property.

Investment properties need to be as close to the beach as possible for a few reasons. If you are buying an investment property, you will be renting it on a short-term (less than 30 days) basis. Not all areas are zoned for short-term rentals. Also, when people rent a property for their beach vacation, they most likely want to be as close to the beach as possible.

With a second home, you may want to be a golf cart ride or short walk to the beach, right on the beach or a short drive to the beach. Your preference will dictate the distance to the beach.

Condo vs. Single Family Home

Once you have decided how you will use the property and the preferred distance to the beach, you need to decide if you would like to purchase a condo or a single family home. Each option has pros and cons.

Benefits to Purchasing a Condo

  • When buying a condo as a second home, you have access to amenities (like a pool or lazy river) that a single family home would not have.
  • You have someone else handling the exterior maintenance of the property for you. Exterior maintenance is included in the HOA (homeowners’ association) fee.
  • Condos may also be more appealing to vacation renters than a single family home because of the amenities. This reason could make condos a good investment option.

Negatives to Purchasing a Condo

  • The HOA fee is higher with a condo than a single family home. While you are a member of the HOA, you may not have direct control over the expenses an HOA has. Insurance for everyone has been increasing in the last few years and that has been especially hard on condo owners.
  • You also need to consider special assessments. Special assessments usually happen when there is a major project to the building (think painting the exterior of the building or similar projects). If the HOA does not regularly set aside money from the monthly HOA dues for capital projects, each homeowner will be assessed their portion of the projects. Usually, the payment for these projects is broken down over a few months or years.
  • Owners of condos also have to abide by the HOA rules and regulations. While this could be a positive or negative, you need to make sure you read and understand the rules and regulations for the condo you are purchasing.

Benefits to Purchasing a Single Family Home

  • You have more control over the costs of a single family home. If your homeowners’ insurance goes up, you can shop around for a new policy.
  • Some vacation renters may prefer renting a single family home versus a condo. They may like the privacy, extra parking space or just not sharing their vacation area with a lot of other people.
  • You also have a more private space if you use the property as a second home.

Negatives to Purchasing a Single Family Home

  • Any maintenance will need to be handled by you or you will hire someone to do it for you. There is no HOA company handling the exterior maintenance.
  • A single family home will not have the amenities that a large resort may have. If you like waterparks, lazy rivers and pool options, you will not find a single family home with those amenities.

Paying for Your Beach Property

Paying with a Mortgage

Get pre-approved BEFORE you come in town and preferably with a local lender. Condos, especially, have specific financing guidelines and not all banks can finance condos. With condos, you are typically looking at a 5-7 year ARM vs a 30-year conventional loan.

Paying Cash

Should you want to pay cash for your second home or investment property, get a proof of funds letter from your bank or financial institution prior to coming into town to buy a property. The letter does not need to say the amount of funds you have at that institution just that you have cash to purchase a property of $X.

Previewing Vacation Properties

I can only show you beach rental properties when those rental properties are not being rented.

In the summer, that means between check-out (10:00 am for most rental companies) and check-in (2:00 pm usually) on Saturdays. Take this into consideration when planning your trip. We may have to fit a lot of showings in a short amount of time!

The off-season is often a bit easier to get into preview vacation properties.

Furnishing a Vacation Property

Most properties that are currently being used as an investment property or second home will be sold fully or partially furnished. Not only will the sale include the furnishings, but the sale could also include things like beddings, towels, small kitchen appliances (coffee maker, toaster, etc.), silverware, dishes and glassware, decor, patio furniture, beach equipment, etc.

You may find a property that is just right for you but it is not being used currently as an investment property or second home. In this instance, you will need to consider the costs involved in furnishing and decorating a home or condo. Consider the larger ticket items like furniture and mattresses and smaller items like decor, silverware, small kitchen appliance, glassware, etc. These costs can add up fast!

Dealing with Rentals

Honoring Confirmed Rentals

Any rentals booked and confirmed within 90 days of closing have to be honored. This is a law in South Carolina. If you want to use your property during the summer and you close in April, May or June, 90 days is the summer and you may not be able to use the property.

How Will You Manage the Rentals?

You also need to consider who will manage the rentals for you if you are using your property as an investment.

Single family homes can be rented by a local property management company or you could handle the rental yourself through a company like VRBO or AirBnB. You need to decide how involved in the rentals you would like to be and what you are comfortable doing. Also consider the management split and miscellaneous costs involved in both options.

With a condo, you may have a few options. Condo buildings that are run like a hotel (usually this means they have a front desk where guests check-in) may have an on-site rental company to handle the rentals. Some condo budilidngs with on-site rental management companies allow you to also use a third-party rental company (either a local outside management company or handling the rental yourself through something like VRBO or AirBnB). However, when looking at a third-part management company, you want to ask about the amenities. Some buildings with an on-site management company will allow you to rent with another company but will restrict the amenities you and your guests can use.

Taxes

In South Carolina, second homes and investment properties are taxed at 6% vs. the lower primary residence rate of 4% to determine the assessed value. Then you multiply the assessed value by the area millage rate to determine the total property taxes.

Let’s look at an example. Consider you are purchasing a $400,000 property in the Horry County section of Murrells Inlet. To determine the assessed value, you multiply the purchase price by the tax rate to get $24,000. Multiply the assessed value by the millage rate of 0.214 (this millage rate is as of 2023 and could change) to get the taxes owed of $5,136.00.

Property taxes are paid in arrears. You will receive your tax bill in October for that year and taxes are due by the following January. So for 2024, you receive your tax bill in October 2024 and it is due by January 2025.

Upfront Costs

As with any property purchase, you have closing costs. The bulk of your closing costs will be paid at closing, but you will have some upfront costs.

Within a few days of closing, your earnest money deposit will need to be deposited at your attorney’s office. While the earnest money can be any amount and is a negotiable part of the contract, I recommend the earnest money be at least $1,000 or 1% of the purchase price (whichever is higher).

Should you decide to have a home inspection completed (I always think you should!), you will need to pay your inspector prior to the home inspection. Inspections can range from $250 to $1000+ depending on the size of the property and the services provided, but the average price is around $400.

If you are financing your purchase, you will need to pay for the appraisal prior to your lender ordering it. You can expect to pay around $575 to $675 for an appraisal.

While the due diligence or termination fee is not technically an upfront cost, it could be. You will have a due diligence period that will be negotiated with your offer. During the due diligence period, you can terminate the contract for any reason, but if you terminate, you must pay the seller the due diligence/termination fee.

Do you think buying a beach property in South Carolina is right for you? Let’s schedule a time to talk about your unique situation. You can also start by looking at my Murrells Inlet, Garden City Beach and Surfside Beach pages to learn more about the area. I look forward to helping you realize your dream of owning a second home or goal of building wealth by purchasing an investment property.


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