Myrtle Beach, SC and the surrounding communities along the Grand Strand have garnered a lot of attention among STR investors over the past few years. And rightfully so. We are a perennial vacation destination on the east coast, within comfortable driving distance of several Midwest states and the heavily populated Northeast. STR owners have done quite well, and 2021 was a record-breaking year for many. But I'd like to shine a light for a moment on what I see as a tremendous opportunity for traditional LTR investors. Myrtle Beach is booming. Last year U.S. News & World Report ranked Myrtle Beach as the #1 fastest growing city in the country. And not just Myrtle Beach but all of Horry County is witnessing a massive influx of people. I'm involved with several real estate associations, circles, Facebook groups/forums, etc. One common theme that surfaces every week: Renters are desperate for housing. Our local economy is fueled by tourism, so we've always had a large base of working-class folks who rent. They work in the restaurant industry, hospitality industry, entertainment, etc. Now the mass migration to the beach has brought a new form of renter. The millennial who wants a change of scenery while working from home. The retiree who wants to rent for a year while they get their bearings and decide where to buy. The new construction folks who sold their home up north and need somewhere to stay for 6 months while their house is being built. The current demand for rental housing is through the roof and inventory is Tight! Now, obviously, just because there's a demand doesn't mean that a particular asset class will be profitable as an investment. That's why you run the numbers and let the numbers tell the story. What prompted this post was the notion that LTR's may be getting overlooked or overshadowed by the STR fervor that our market has been experiencing. That, and I also wanted to share a brief excerpt from a Dotloop article I read this morning regarding inflation and how it pertains to rental properties:
Real Estate Rentals Rising With Inflation
As inflation rises, rents will increase to keep pace with the cost of goods and services. In October 2021, CoreLogic reported rental prices increasing 10.9% nationally YoY, the fastest year-over-year growth in more than 16 years.
Many experts forecast a 7% increase or greater in rent prices, this year.
Would-be buyers finding it difficult to secure a loan or who find their salaries and wages failing to keep pace with the aggressive rise in inflation will either need to lower their budget or rent.
More employees working from home could also trigger a spike in rentals as migrating residents “try out” a neighborhood or community before they buy.
And, as mortgage forbearance terms come to a close, even more homeowners are expected to join the leagues of listers/renters.
As a result, 2022 is shaping up as a great year for investment in real estate income properties, including multi-family dwellings as an income source and a hedge against inflation.
