Is Buying a Condo in Myrtle Beach a Good Investment?

Myrtle Beach as a Condo Investment Destination

Myrtle Beach, often referred to as the “Grand Strand,” has firmly established itself as a leading tourist destination, attracting millions of visitors each year. This consistent influx of tourism forms the foundation of its appeal as a condo investment location. The area boasts approximately 60 miles of sandy beaches, which serve as a primary draw for vacationers seeking coastal relaxation and recreation.

Beyond its natural beauty, Myrtle Beach offers a wide array of attractions that cater to diverse interests and age groups, contributing to its sustained popularity. The region features over 80 championship golf courses, making it a significant hub for golf enthusiasts. Visitors also enjoy the iconic Myrtle Beach Boardwalk, Broadway at the Beach, various amusement parks, aquariums, and live entertainment venues. This rich tapestry of activities ensures a continuous flow of tourists throughout the year, extending beyond peak summer months.

The robust tourism industry directly fuels the demand for short-term rental properties, making condo ownership an attractive proposition for investors. Millions of people visit the area annually, with some reports indicating over 18 million visitors in 2024 alone, generating substantial visitor spending. This high volume of tourist traffic creates a consistent need for accommodation, including condos that often provide more space and amenities than traditional hotel rooms.

The area’s reputation for Southern hospitality and a family-friendly environment further enhances its allure, drawing repeat visitors and a broad demographic. Myrtle Beach has consistently ranked among the top U.S. beach destinations, reinforcing its position as a desirable place for leisure and, consequently, for real estate investment. The economic stability of the region is significantly bolstered by its thriving tourism sector, creating a favorable environment for property appreciation and rental income generation.

Understanding the Financial Landscape of Condo Ownership

The initial outlay for a condo can vary significantly, with median listing prices around $211,000, while average sale prices for homes in the area hover near $403,000. Condos themselves range broadly from approximately $39,900 to $1,775,000, influenced by factors like location, size, and amenities.

Beyond the purchase price, buyers typically encounter closing costs ranging from 2% to 5% of the property’s value. These expenses encompass various fees, including lender charges, appraisal costs, title search and insurance, attorney fees, and recording fees. Additionally, buyers often need to prepay a portion of property taxes and homeowners insurance at closing, adding to the upfront financial commitment.

Ongoing ownership costs include property taxes, which in Horry County (where Myrtle Beach is located) can have an effective rate ranging from approximately 0.54% to 1.03% of the assessed value. For investment properties or secondary residences, the assessment ratio is typically 6% of the market value, compared to 4% for primary residences, leading to a higher tax burden.

Homeowners Association (HOA) fees constitute a significant recurring expense for condo owners, covering the maintenance and upkeep of common areas and shared amenities. These fees in Myrtle Beach can range from as low as $50 to over $600 per month, with oceanfront properties sometimes incurring fees exceeding $700 monthly. These fees commonly include exterior maintenance, landscaping, common area utilities, amenities like pools and fitness centers, and contributions to reserve funds.

Insurance premiums are another substantial cost, particularly for coastal properties. Average homeowners insurance in South Carolina is around $2,350 annually, but in Myrtle Beach, this can be higher, averaging approximately $5,315 per year. Flood insurance is typically a separate requirement for properties in designated flood zones, with average annual costs ranging from $740 to $798, though policies can exceed $3,000 depending on the specific flood risk and coverage levels. Hurricane coverage is integrated into homeowners insurance, often featuring specific deductibles (1% to 5% of insured value) for hurricane-related damage.

Maintenance and repair costs for coastal properties tend to be higher than for inland homes, estimated at 1.5 to 3 times more, due to the corrosive effects of salt air and high humidity on materials. More frequent exterior painting, metal component upkeep, and HVAC system maintenance are needed. Utilities can also be elevated in coastal climates due to increased air conditioning usage.

On the income side, the primary revenue source for an investment condo is rental income. Short-term rentals in Myrtle Beach have shown an average annual revenue of approximately $29,000, with occupancy rates around 61%. North Myrtle Beach properties can see higher revenues, averaging $45,000 annually. Daily rental rates typically range from $138 to $280 or more, with significant seasonal variations impacting overall earnings.

For those employing property management services, fees typically range from 10% to 15% of the rental revenue, though some companies offer flat monthly rates. Beyond rental income, investors may also benefit from property value appreciation over time, as the real estate market in Myrtle Beach has seen steady increases.

Essential Due Diligence for Potential Investors

A critical first step involves understanding the specific zoning laws that govern the property you are considering. In Myrtle Beach, short-term rentals, generally defined as stays less than 90 days, are typically not permitted in most traditional residential zones. However, exceptions exist in specific districts, such as the Residential Multifamily Visitor (RMV) zone, where such rentals are allowed.

Verifying the zoning of a potential property is essential, as operating a short-term rental in an unapproved zone can lead to penalties, including fines. If the property is intended for rental, it will necessitate obtaining a business license from the city. This process involves submitting documentation and adhering to local codes, including fire safety. Additionally, investors must be prepared to collect and remit applicable state sales tax and local accommodations taxes on rental income.

A comprehensive review of the Homeowners Association (HOA) documents is another vital aspect of due diligence. This includes examining the Declaration of Covenants, Conditions, and Restrictions (CC&Rs), bylaws, rules and regulations, and past meeting minutes. These documents will outline any rental restrictions, such as minimum lease periods or caps on the number of units that can be rented at one time, which could impact your investment strategy.

Beyond operational rules, assessing the HOA’s financial health is imperative. Prospective buyers should scrutinize the association’s financial statements, including income statements, balance sheets, and reserve studies, to ensure fiscal stability. Adequate reserve funds are significant for coastal properties, indicating the HOA’s preparedness for major repairs like roof replacements or structural maintenance. Verifying the adequacy of the HOA’s insurance coverage for the building and common areas is also important to mitigate unforeseen risks.

A detailed property inspection by a qualified professional is indispensable. For coastal condos, this inspection should focus not only on the individual unit but also on the structural integrity of the building and common areas, considering the impact of salt air, humidity, and potential hurricane exposure. An inspector can identify existing issues and potential future concerns. Consulting with local real estate agents and property managers who possess intimate knowledge of the Myrtle Beach market and its specific sub-markets can provide invaluable insights into rental demand, occupancy rates, and property values for comparable units.