Investing in Folly Beach Real Estate: How to Cover Costs by Renting Out

Because Folly is the most popular beach in Charleston for vacationers, many home buyers choose this area for buying real estate as an investment.  Especially if you’re looking at buying a second home in Charleston, beach real estate in general may be a good option to consider.  If you know that you’ll only be staying in the home a portion of the year, why not place the home on a rental program to offset some of the costs of upkeep, insurance, and taxes?  There are several good vacation rental agencies in the Charleston area that can handle the headache of finding renters and collecting the money.  Out of Charleston’s six beaches, Folly is the surest bet for good rental income, as it has more vacation rentals on average each year.

Pros

1)  Potential income:  Typically a property used for vacation rentals will bring in around 70% to 80% of the overall cost of the property given that you put 20% down on the property.  If the property that you are purchasing doesn’t already have a good rental history, we can usually find similar properties to get some idea of what you can expect to earn in rental income. 

2)  Tax write offs:  You can write off the expenses on a second home/rental investment up to the amount that you make in income from its rentals.  This means that you can make the income virtually tax free, or another way to look at it is that the property will practically pay for itself. 

3)  Getting to spend time at the beach:  What other investment option allows you to lay out in the sun, swim in the ocean, or watch a beach sunset on your own porch?  You certainly won’t get as much enjoyment directly from stocks or CDs!  You can set aside as much time as you want for you and your family.  Whether you want to be in the beach house for just a few weeks every summer or half the year, you can tell your rental agency exactly what dates you want the house reserved for your own enjoyment.  You can even just rent the home out in the off season (and stay there yourself for the whole summer).  However, renting just in the off season won’t bring in the kind of income that you can get from the months of May to August, as these are the peak tourist months.

Cons

1)  Having to deal with renters:  A good agency will take care of headache, so be sure to talk with property management companies about what services they offer.  There will still be some extra work on your side compared to not renting, but most people think that it’s worth the time it takes to have the additional income.  If you can afford to buy a beach vacation home and also keep it up on your own, that’s wonderful!  However, if you could use the extra income that renting out provides, this is certainly a good option for you to consider.

2)  More wear and tear:  You’ll have to replace furniture, etc. more often because the house gets used more throughout the year.  But even with replacements every so many years, renting the home should more than cover the replacement costs you’ll pay.  And, as an investment property, remember that you can write off furniture and other house needs on your taxes.

If you’re looking for a full time residence (instead of a second home/investment property), Folly Beach is still an excellent choice for buying a home.  Even if you never rent out your beach home, you’ll still be indirectly benefiting from renters and investors who put such a large demand in the real estate market for Folly Beach homes.

Regardless of how you plan to use your Folly Beach home, be sure to talk with your Realtor to get statistics and estimates that pertain to the type of home you plan to buy!