The basic facts about owning & buying a condo in SC. – The SC oceanfront & waterfront condominium market is huge and, if you have never owned a condo much less a beachfront condo there is a lot to know. Myrtle Beach SC and coastal South Carolina are abundant with ocean views and beachfront condominiums & single-family attached real estate properties like villas, townhouses, and duplexes alike dot the Carolina coastline. Many of the vacationers that come to South Carolina are from all over the United States and oftentimes have only lived or owned a single-family detached home which is a totally different thing than owning and financing a condominium or more accurately as “single-family attached dwelling”. Here you can learn what you need to know about buying a condo or townhouse before beginning the process to see if it’s something you’re prepared for.
The Top Things Buyers Should Know When Buying A Condo — (SC Coast)
- Living in an HOA. For those of you who have never lived in a neighborhood with an HOA I highly recommend you learn about them before (condo) hunting. If you have only lived in a detached home without neighbors that are in close proximity to you, you’ve likely never lived in a community with a Home Owners Association. Plus, you’d know because you’d have to pay dues. What’s an HOA? A condo is in what’s called a horizontal property regime (or HPR), which simply means the real property (land) allows for two houses or more to be built on one parcel. Thus, homes are built attached and upward
- Vacation Rentals Management – If you’re thinking about purchasing a condo/villa/townhouse/efficiency unit as an investment rental income property, there are a few things to consider. For an example of investment potential in Litchfield By The Sea of Pawley’s Island, we can see that there are many costs to weigh out. The biggest factor to think about is if you want to do self-management with a company like Booking.com, VRBO or let someone else do it for you and pay a % of your revenue to them. All of that varies depending on the rental company, your unit’s features, location etc.
- What Are The Regime Fees? (oftentimes referred to as HOA fees). If you haven’t read the article written in the links above I suggest you go back and familiarize yourself with what regime fees are and their function. The monthly dues are a collection of monies used to help pay for things necessary for the HOA / Community to function properly. Lastly, the amenities. I think it’s probably obvious the nicer & more amenities your community has the higher the regime fees. Just because your fees are one amount now, does not guarantee they will remain that, in fact I can promise you they will eventually increase. Insurance costs almost never decrease so as you can guess your regime fees are guaranteed to as well.
- Special Assessments – A special assessment is just another term that means “you need/have to help pay for something the community needs”. When the condo building you live in needs a new roof or the pool needs rebuilding etc. Where does that money come from? It comes from the capital budget (the collected regime fees of all the owners), but what happens if there isn’t enough capital in the reserves? You get what’s called a “special assessment”. Whereby, you get a notification that all owners have to pay something __?__ that needs paying for. Your property management company usually will send out a notification of that amount, the project, the reason, a summary as to why & what the money is needed for. For those who have not been attending your HOA meetings. If you don’t pay your portion of the assessment you will usually get a lien placed on your unit/home. If the HOA doesn’t have the funds to pay for said necessity they will also oftentimes get a bank loan in which each owner will be responsible for their portion of that loan, now added to your monthly regime fees. So it is VERY important for you to have an extremely condo experienced agent or real estate broker to navigate the process to protect you. You can’t just hire any agent. I have seen many many buyers get “stuck” because the agent they worked with to buy their condo was not familiar with the intricacies of single-family attached dwelling purchases. Not to get you scared, special assessments are usually not that frequent, and sometimes never, assuming your HOA is well managed and collecting enough dues. The problem arises when the funds are poorly managed or the community has too low fees. Sadly, condominium ownership will likely be more costly going forward, How the condo tragedy in Florida will change the future of condo ownership?
- Insurances – This is important primarily to understand why you will likely think the regime fees are expensive. Most condo developments in Myrtle Beach will have the exterior insurance costs built into your regime (HOA dues) fees. So you won’t have to pay homeowners insurance like you are accustomed to with your standard detached house. However, if you’re moving from one of the hot spots that love Myrtle Beach like Michiganders, New Jersey, New York, Ohio, and the like, you now have to take hurricanes and flooding into consideration. And that insurance isn’t cheap. The HOA will have to have hurricane (also known in SC as wind & hail), traditional hazard (fire usually), and flood insurances. Hopefully, now you understand why your regime fees will easily be $400 to $1500 a month (depending on what condo development) you own. Then there is an HO-6 policy, which is a small interior (walls in) policy you’ll have to get usually only about $400 a year or less.
- Property Management – If you’re like a lot of America you’ve maybe only lived in a house that’s not in an HOA and so you’ve never experienced life with a property manager. There are about 10 large property management real estate companies in the Pee Dee / Myrtle Beach area that service that area including Pawley’s Island, Surfside, North Myrtle, Garden City, Murrells Inlet, and surrounding towns. There are more companies than that, but really only a handful of large and capable firms do it full-time. Is having a property management company absolutely necessary? No, but then someone will have to act as fiduciary, treasury, maintenance crew, and the like. You’ll find that no one wants to manage all that especially when it comes to a few hundred condo units and common areas. So that’s why real estate property management companies are so vital. However, they don’t come free, so also built into your regime fees is the cost for them to manage the community. Usually, at closing, you’ll have to pay a small initial fee to them (called a transfer fee), and the rest will be part of your dues.
- No Efficiency Units Allowed – Why is this important? This matters because traditional lenders and banks will not normally offer mortgages on efficiency units nor even lend if the development community even has them regardless if you’re buying a 1,2, or 3 bedrooms. FHA, Fannie Mae, and the VA all have different rules for this situation.