The skyline of Charleston as the sun sets over the Ravenel bridge is only the tip of the iceberg of why people fall in love with the Holy City. The saltwater, friendly atmosphere, and incredible food leave visitors wanting more. Many of these folks often find themselves uttering the phrase “I could see myself living here someday” – and they are not alone!
Tips When Considering to Buy an Investment Property or Vacation Home in Charleston
While extremely lucrative and convenient, there are obstacles to navigate when choosing a vacation home or investment property based on your needs. The world of Air BnB has made managing a rental or investment property streamlined, but in an effort to preserve the charm of the city, Charleston officials have eliminated the vast majority of zones where they are allowed. We often pose the option of renting exclusively to short term tenants such as traveling nurses or executives, which comes with a more high-end price tag and less risk than a longer term tenant. It also allows the flexibility of using the property for your own enjoyment throughout the year, bookended by a steady stream of revenue between visits.
Below are a few of the unforeseen things that may come into play during your search.
Possible City Ordinances or HOA Restrictions
Navigating the city ordinances and codes in the various pockets of Charleston can make your head spin! Between the legal jargon and arbitrary maps where certain things are
permitted in one section, but not permitted one block over, it's easy to get confused. An additional hurdle can include an HOA (home owners association) and their CCRs (covenants, conditions and restrictions – much less fun than the John Fogarty led band of the 60’s). Having an agent who can read through the legal documents of what is allowed or restricted in a particular neighborhood can save a lot of headaches and preemptively rule out a neighborhood or area that doesn't fit your needs. Here are a few examples of what restrictions could affect you:
- Ability to rent a separate unit, like a pool house or garage with a finished living area above it. Some neighborhoods will only allow rentals if you live on the property as well.
- Rental time frames- some HOAs set a minimum amount of time rentals must be leased for. If you are looking to do short term rentals only, then neighborhoods with 6 month lease minimums need to be ruled out.
Property Management for Investment Properties
If you are managing a property from afar, having someone you trust to check in on the house and manage all of the facets your investment is a huge relationship to foster. Decide whether you want to manage the property yourself or hire a property management company. Drawing up lease terms, dropping off keys, collecting rent, finding an emergency plumber at midnight.... If this is the obstacle that is keeping you from investing, consider a property management company who will juggle all of this for you, letting you sit back and enjoy your investment. Property management fees can run anywhere from 6%-20%, depending on what services they provide. That is the percentage of each rental payment made by a tenant that a property management company would keep.
Follow the money!
Ahh yes, how much is this going to cost me? Set yourself the expectation up front for at least a 20% down payment on an investment property or secondary home. You also need to consider the cost of furnishing the home and making any repairs or renovations needed to rent it out. Look into what the tax liabilities will be. Luckily there are numerous tax havens for investment properties that your accountant can explain to you in thorough detail. You also need to keep in mind that there will be regular maintenance and upkeep. As any Realtor® will tell you, always have a good handyman, plumber, electrician, exterminator, and accountant on speed dial to make life easier. Or call us at the Andy Bovender Team at Compass and we can recommend any local tradesman you may need!
Let us help you!
Our job is to set the expectations of what acquiring a secondary home, vacation home, or investment property may look like. No two situations are the same! For any questions you have regarding the investment climate here in the Lowcountry, the Andy Bovender Team can help guide you through the entire process!