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Updated over 1 year ago,

User Stats

51
Posts
25
Votes
Chris Noles
  • Investor
  • Jasper, ga
25
Votes |
51
Posts

Investing in a studio beachfront condo going thru an assessment

Chris Noles
  • Investor
  • Jasper, ga
Posted

Hi,

We currently have a beachfront 1BR/Bath condo in Myrtle Beach that we acquired in 2022, and we are looking at possibly acquiring a second STR in another location.

We understand this is a difficult time to find good cash flowing deals at today's interest rates and listing prices.

We have always preferred to vacation in the Gulf of Mexico, but we couldn't make the numbers work there last year which is how we ended up in Myrtle Beach at a price point we are happy with.

I just stumbled across quite a few beachfront studio condos that are being sold at a great price near the Panama City Beach area. The building was built in 1965, and it is one of the oldest in the area. They are about to go thru a renovation that will be completed by the end of this year, so the HOA issued a mandatory assessment for all of the condo owners. This assessment is about $40,000 per unit. This probably explains why there are quite a few units for sale on the market, but they are selling from $169,000 to $250,000. Some of the sellers have already remodeled the inside, and some sellers are willing to pay the assessment fee.

This looks like a good deal to find a unit right on the water, but the annual rental revenue is just $25k to $30K annually.

Also, these units are about 300+ sq ft. some have partial views of the gulf, but for most of the units you have to go to the community pool deck to get any gulf front view.

Here are some of the pros I see with this investment:

* Low cost of entry for a gulf front rental in a desirable area

* The amenities and building should be more valuable after construction is completed

* There are a lot of couples out there that just need a studio for a few days

* Rents on the gulf of Mexico can be higher than some other beach markets

Here are some of the cons I see:

* May not rent well this year during the construction phase

* Parking is limited, and I am not sure they will expand it

* The building is still very old (1965)

* While this is a good price for a studio, a slightly larger unit somewhere else might generate more revenue

* Some of the google reviews are negative for this building, but that is because it needs to be remodeled

* The HOA is still around $550.00 per month, but that is not unreasonable

I will still run numbers to see how these could cashflow with 10% or 20% down, etc. but I just wanted to get some feedback from experienced investors about buying condos that are under assessment/renovations

It seems like the worst case scenario is that the mortgage gets paid and we bring in an extra $8K to $10K annually if we self manage, and that area is likely to continue to appreciate year over year.

Thanks!

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