Looking into Myrtle Beach Condos for STR—High HOA Worth It?

Question

Hi All,

I’ve been exploring condos in Myrtle Beach as a potential short-term rental investment. Some of the purchase prices seem pretty reasonable, but I’m noticing that the monthly HOA fees are often higher than what the mortgage would be.

Aside from utilities or trash service, I’m trying to understand how these high HOA costs are justified. Do they typically cover a lot more (like insurance, amenities, etc.)? And even if they do, would a condo with a high HOA still make sense as an investment?

Would love to hear from anyone with experience in the area—thanks!

Myrtle Mike Thompson · Answer

@Jacqueline Ward I can help you make sense of this.  I know of exactly 1 oceanfront condo building in the greater Myrtle Beach area that does not have an HOA... and because there's no HOA and no master insurance policy, you can't get traditional financing there, lol.  HOAs are simply the way of the world for oceanfront buildings, and that's not necessarily a bad thing.  There are obvious pros and cons.  Your question is financial in nature, so let me give you a numbers example.  Several of my clients have been buying units in Grande Cayman Resort.  It's a nice property in an upscale part of town.  The current HOA fee for a 1-bed oceanfront unit is $748/month.  That covers all utilities and insurance (both coverage for the building AND for the interior of the unit).  Let's look at what you would pay separately for some of those services if you were responsible for paying them on your own:

Electricity - $110/month

Internet - $85/month

Water - $70/month

Trash - $40/month

Pest Control - $30/month

HO6 Insurance - $80/month

We're already up to $415/month.  Then you add in the fact that your HOA fee covers insurance for the building itself (and Flood), maintenance of the elevators, pools, and all the common areas, 24/7 onsite security, electricity for the building, and access to top notch amenities including indoor and outdoor pools and splash areas, water slide, lazy river, tiki bar, attached parking garage, and a couple onsite restaurants.  You're getting quite a bit of value for $748/month!

Now this is just an example.  Some buildings like this one have a pretty economical HOA fee and some are really not a good value at all.  It usually comes down to how well the HOA is managed.  I've done the legwork to know which properties along the Grand Strand are "investment worthy" and which ones to avoid.  Feel free to shoot me a DM if I could be of assistance.

Myrtle Mike Thompson · Answer

@Jeff Costa I don't know of any buildings in Myrtle Beach that REQUIRE you to use the onsite management company, but several make it a little bit tricky to self-manage or use a third-party property manager by restricting access to amenities.  For example, I have clients who self-manage at Compass Cove.  Their guests are not permitted to use some of the commercial facilities on the property, such as the onsite restaurant and tiki bar, fitness room, and gift shop.  However, that hasn't been an issue for them because there are so many other amenities at that property that are open to everyone, whether the guest books directly through the resort or through a platform like AirBNB... indoor and outdoor pools, lazy river, etc.  I just encourage my clients to be clear with their guests upfront (on their booking page) and set the proper expectation so that folks aren't unexpectedly turned away from something, which may compel them to leave a negative review.

Bobby Paquette · Answer

Get in contact with@Myrtle Mike Thompson

Jeff Costa · Answer

@Myrtle Mike Thompson Do you (or others) maintain a list of MB oceanfront condos where use of the onsite program is required? Ex: Compass Cove requires use of the onsite manager.

Patrick Roberts · Answer

The high HOAs are partially due to high insurance premiums because of the hurricane risk on the coast. The high humidity and heat increases repair/maintenance expenditures as well.

Also, make sure youre aware of SC property taxes. Horry County is more reasonable than some other parts of the state, but expect to pay 1.5%+ of the property FMV in annual property taxes in Horry.

I would dig into when the last special assessments and regime fee increases occurred. A lot of these buildings are older, have significant deferred maintenance, and are getting told by insurance companies that they have to address disrepair and deferred maintenance issues or risk losing insurance. Some of the owners know this is happening and that it will likely result in major hoa/regime fee increases in the near future, so they are selling before this hits.

Jules Aton · Answer

Condos have some significant negatives most notably the condo fees but also the large number of identical units that can be vying for rent or sale at the same time you are trying to peddle your wares. That doesn't mean they can't be a decent STR especially at the beach but I'd be very particular about the specific condo neighborhood and their bylaws which probably also means the units won't be inexpensive.

Caleb Brown · Answer

I'd be leery of HOAs. They do cover pretty much everything and offer amenities but they control what you can/can't do. If they already gauge people what's stopping them increasing more? If the numbers work then you can try but you have minimal control over the HOA costs and any assessments.

Looking into Myrtle Beach Condos for STR—High HOA Worth It?

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