All Forum Posts by: James Colgan

Great question @James Colgan It is a true engineering approach needed. Step 1 is collecting elevations of the buildings and comparing them to the Flood Zone. Step 2 is petitioning FEMA for flood designation removal. Once FEMA affirms, then Step 3 is to use the FEMA letter with your lender to request they drop their flood mandate. Step 4 is going back to your insurance broker to discuss the more accurate risk nature of the buildings and get better policy options or decide to cancel flood altogether if you so choose.

My work is to ensure we collect all the data we need for FEMA to avoid time delays, put together engineering exhibits to make FEMAs job easy to affirm the petition, walk our clients through that whole process, use the legal language when needed to convince lenders and insurance carriers, and make sure the process is smooth.

@Ron Williams @Adam Holbrook @James Colgan When it comes to flood insurance requirements, HHI is like most other areas... it just depends on the FEMA Flood Maps. If the building shows to be in a flood zone on the Flood Map, then a lender will require it.

HOWEVER, we have proven the Flood Maps are highly inaccurate.  Especially at the property level.  Many times we find the building was built elevated above the floodplain.  If so, then the flood zone designation can be removed (no matter what the map says). 

The thing is, most owners don't know that is possible. They still think it is a flood zone property, so the property is devalued. You could buy it at a lower price point. Then remove the flood designation. And presto... you have gained NOI + property value.

We are happy to provide complimentary reviews of any flood zone property.  Just add it as a first step in your due diligence.  

@Ron Williams @Adam Holbrook @James Colgan When it comes to flood insurance requirements, HHI is like most other areas... it just depends on the FEMA Flood Maps. If the building shows to be in a flood zone on the Flood Map, then a lender will require it.

HOWEVER, we have proven the Flood Maps are highly inaccurate.  Especially at the property level.  Many times we find the building was built elevated above the floodplain.  If so, then the flood zone designation can be removed (no matter what the map says). 

The thing is, most owners don't know that is possible. They still think it is a flood zone property, so the property is devalued. You could buy it at a lower price point. Then remove the flood designation. And presto... you have gained NOI + property value.

We are happy to provide complimentary reviews of any flood zone property.  Just add it as a first step in your due diligence.  

Now that we are halfway through the year, I thought it would be a good idea to give a market update and see what the indicators are saying.

Year to date sale prices are up 30%. At the same time sale transactions are down 16%. Overall that means our prices are going up at a higher rate than the national average, and we are still having more transactions than the national average. Inventory is up, but that just means we now have a 1 month supply of inventory as opposed to a few weeks of inventory. With the increase in interest rates, we are seeing some of the lower priced properties sit on the market a little longer. An interesting item to watch is AFFORDABILITY. Today's affordability is down 22% from last year and puts us at 46 on the affordability index.

Overall prices are continuing to go up, but not as fast. If you look at comparing June 2021 to June 2022 the price increase comparing the 2 months specifically the increase of price is lower than the year to date increase. This could be an indication that we are getting closer to the peak prices in the market. Demand for properties is still strong and days on market are still very low.

Short term rental rates are up 20% this year from last year. The demand still seems very strong for this. Most investors we are working with are continuing to see high rental rates and low vacancy numbers. Local retailers and restaurants are seeing their numbers to be a little lower than the last 2 years. It is going to be interesting to watch this, and to see what that means long term. A few factors that may be playing into this are as follows:

1. Rising inflation and costs are causing people who come here on vacation to spend less money on food and other items and decide to cook more meals in their unit for the week.

2. Less COVID restrictions worldwide are causing people to travel to other places instead of coming to Hilton Head. 

3. Over the past 2 years more people have purchased homes here as their primary residence and there are not as many STR rentals available. This creates more strain on the STR market, but means less people are coming to spend money on food and gifts.

Long Term Rentals are very strong. Rental rates are hitting $2/sq foot or higher depending on the area. There is a huge shortage of affordable rentals or any rentals at all. We are starting to see some STR's convert to LTR's because the numbers are very good.

All in all the Hilton Head market continues to be solid. All of the fundamentals are still very good. Seeing what the STR numbers are at the end of the season will be interesting compared with what the retailers and food vendors are seeing. Having solid retail and food is very important to the tourist market. These are things that have made Hilton Head a top tourist location in the country. Even though numbers are a little down, their numbers continue to be very good and on par with pre pandemic numbers. This is good news for STR owners.

Thank you for the update. I really enjoy visiting HHI. I’m really interested in owning a rental property in the area. I know there are some areas that prohibit rentals. Is there an easy place to find a list of communities that prohibit either Short or long tern rentals on or around the island and or that answer frequently asked questions like mine and the others below?  

Do property taxes differ much in the area (aside from valuations) for out of state owners or would it be pretty similar for similar priced properties on or around the area?

Lastly what would the insurance considerations be?  Is flood and or other special insurance (hurricane?) be required? I know flood insurance here in Ohio can be very expensive. 

I'll be down in August.  I imagine there are some ongoing labor “shortage” issues and restaurants etc are hurting a bit because of it? 

Thank you! 

Hey Sam, we just closed last week on our first STR cabin in Blue Ridge. It should be up and running by the end of the month. Have you checked out the resources through the Short Term Shop? They posted the 2020 numbers for Blue Ridge and Ellijay recently. If you want to chat more about it let me know and send me a DM!

It is beautiful here, in most areas! It's not my favorite place in the area, but the biggest issue with Crystal River right now is that a 2005 city ordinance was passed banning short term rentals by the nightly rate, and that was a thriving business here in Citrus County (it still is, of course). However, this county is tourist-favorited because it's the only place in the U.S. you can legally swim with the manatees.