So you’re looking for a good return on your investment. Need I say that returns on traditional safe haven investments are hardly attractive? A quick look on-line and you can see the top CD rates around the nation are 1.1%. If you want to tie up your money for 10 years you can turn to the higher yielding Treasury note that’s paying 2.41%.
With the current rate of inflation at 2%, CD’s are pretty much disqualified as a wise investment and Treasury notes aren’t much better. The Dow Jones Industrial Average is up 3.11% year to date, 13.4% since last year and the S&P 500 is even better – up 8.12% this year and 22.2% over the past 12 months.
So stocks look pretty attractive, but if you’re looking for something a little more conservative, have you considered real estate? While we can’t address your local market, there is a honey pot here in the Hilton Head Island/Bluffton area and it is the under $200,000 home and villa.
With the exception of the real estate boom of 2004 through 2007 when virtually anyone with a pulse was eligible for a mortgage, the long term rental market in our area has always been pretty healthy. Ironically, the very dynamics that impacted the long term rental market during that three-year exception is now actually contributing to the high demand of long term rentals.
It’s estimated by RealtTrac.com that nearly 1/10th of the consumer public who might otherwise be eligible to purchase a home is now sitting on the sidelines. Why? According to real estate experts, that 1/10th represents the number of people who lost their homes to short sales and foreclosures. Since qualifying for a mortgage for a seven year period will be daunting (see FNMA and FHLMC underwriting guidelines), these displaced consumers are adding to a rental demand that’s putting considerable pressure on the lower priced segment of our market.
Truth be told, I stumbled into the value of real estate as an investment in 2008 when I decided to take advantage of falling prices and upgrade from my current townhouse to a single family detached home in Hilton Head Plantation. When I pondered selling the townhouse or putting it on the rental market, I found out it was a no-brainer. Even with a mortgage on the townhome, the monthly rent provided me a positive cash flow, so rather than sell the townhouse for 75% of its 2006 value it made complete sense to hang on to it, making money instead.
The decision to keep the home has turned out to be a pretty good one. If you recall, Beaufort County was the fastest growing area of South Carolina during the real estate craze and for good reason. We live in one of the most beautiful places in the whole country, and as the economy cooperates the county has started to regain some of the momentum lost by the recession. The beauty of our area is just another reason for the demand on long term rentals.
A quick call to any local rental management company will elicit the same response. Inventory is under high demand and vacancy rates are extremely low. Vacancies are filled within weeks of availability.
Let’s take a closer look at why the under $200,000 real estate market has been a bright spot in our area over the past two years. Believe it or not, investors are grossing over $1,250 a month for 2-BR, 2-bath townhomes right now. With townhouses still attainable in the $125,000 price range, the numbers can be pretty attractive.
With real estate taxes, insurance, property association fees and repair bills running about $7,000 annually, the net revenues are about $8,000, or 6.5% on the cash invested. If you finance the home, the numbers look even better. A 25% investment on such a property ($31,250) returns a yield of 7.4%.
There are other elements of real estate that make it a very attractive element for anyone’s investment portfolio. In this area we direct you to your tax professional, but potential market appreciation when combined with taxable depreciation along with other tax strategies like Internal Revenue Code 1031 tax deferred exchanges may increase the return on real estate investing.
- Written by Mike Broadhurst
- Category: Agents' Blog
Belfair is booming! The brisk real estate market in Belfair has continued through the summer of 2014. While home sales have increased homesite sales have slowed with the selection of premium lots shrinking, however, new home construction has been steady over the past 24 months with new homes breaking ground every day. Currently, there are thirteen homes under the review process with twenty-four homes in various stages of construction. Belfair now has 485 homes completed which translates to 66% build out for the community.
Social activity in Belfair continues through the summer with the Fourth of July BBQ & golf tournament, Camp Belfair for the children, Margaritaville Party, Lobster Night and so much more. The 2014 Summer Reciprocal Dining and Golf Program is in effect which offers the members the opportunity to enjoy many of the areas private golf courses throughout the summer. If exploring is your choice you will enjoy the old southern charm of historic Old Town Bluffton near the May River with a variety of Bluffton Boutiques, creative art galleries, a large selection of restaurants with outdoor dining and the weekly Farmers Market all just minutes away.
It gives us great pleasure to announce that Belfair has been selected as one of only 75 clubs and residential communities in the country to be awarded The Distinguished Emerald Club of the World Award. This recognition is the result of a rigorous nomination and selection process by BoardRoom Magazine, the voice of the private club industry. After Belfair’s nomination, there was a site visit evaluating many areas of the club’s operations. After numerous visits to the club that included interviews of the staff a proprietary ratings system was used to nominate the clubs that provided exceptional member experience.
This recognition is a tribute to David Porter, Belfair CCM General Manager and his exemplary staff. Other residential country clubs that have received this honor include Boca West Country Club, Bonita Bay Club, Spring Island and the Club at Carlton Woods just to name a few.
In addition to Belfair's selection, the magazine also honored Executive Chef Bruce Christiansen, Food and Beverage Director Millie Grimes, Marketing and Membership Director Nicki Jacoby, Director of Golf Course Maintenance Ken Lee and Director of Golf James Swift. Congratulations and thank you for making Belfair such a special place.
Everyone who owns real estate on Hilton Head Island or Bluffton has now received notice from Beaufort County with their latest real property assessment value. The new property assessments have caused many property owners to evaluate the accuracy of the county's valuation. Since the county's latest assessment is based on a property's value as of December 31, 2012, many property owners have contacted our Realtors for assistance with providing comparable property sales which occurred close to the re-assessment date. Because of the sheer volume of requests we've been receiving for assistance, Carolina Realty Group created a website www.BCTaxAppeal.com as a starting point for anyone considering an appeal.
The website offers property owners everything they need to file a property tax appeal with Beaufort County - including a tool to request the comparable property sales information from our experienced Hilton Head and Bluffton real estate specialists. We encourage all of our friends, clients, and neighbors to take advantage of this free service.
Thank you to Jeff Halseth for this update. Jeff's contact information is available at the end of the article.
- New Rates for Pre-FIRM Single Family Homes -
In response to the Flood Insurance Update I provided recently, announcing that FEMA had issued new Rate Tables for newly purchased Pre-FIRM properties, I received many questions.
Most people wanted to know what the new rates are for "A" Zones, whether the rates are the same for both Primary & Secondary homes, whether they are the same regardless of the elevation, and whether the rates are the same whether built on Slab or Elevated on a Crawlspace.
Below I have listed the new Pre-FIRM rates effective June 1, 2014 for single family Primary and Secondary homes located in A Zones. The rates are based on a $2,000/$2000 Deductible, which is now the lowest Deductible option for Pre-FIRM homes. Increasing the Deductible to $5,000/$5,000 reduces the rates approximately 19%.
The new rate for a Pre-FIRM Primary residence in an A Zone is: $2,711.
The new rate for a Pre-FIRM Secondary residence in an A Zone is: $3,437.
The rates are the same regardless of a home's elevation, so no Elevation Certificate is needed. The rates are the same whether it is built on slab or elevated on a crawlspace. The rates for Second homes are approximately 26% higher than for Primary homes.
Note - For a Pre-FIRM home that is elevated on a crawlspace with an attached garage that does not have flood vents/openings, the cost is higher.
Pre-FIRM properties may use elevation rating based on an elevation certificate, if it happens to be more favorable to the insured. Also, a new buyer can assume the seller's existing flood policy at the same rate. If the rate the seller is paying is less than the cost of a new policy, assuming the sellers policy is a viable alternative.
If you have any questions, feel free to contact me.
Coastal Plains Insurance
15 Bow Circle
Hilton Head Island, SC 29928
Colleton River Plantation Club's Jack Nicklaus course has received many accolades, including being named a "Top 100" course by Golf Magazine. Most recently, the course was featured in South Carolina Commerce Magazine, and George Peper of LINKS Magazine named the Nicklaus Course the best in our area.
- Written by Dick Datz
- Category: Agents' Blog
Thank you to Jeff Halseth with Coastal Plains Insurance for the update. You can reach Jeff at 843-368-9798
FLOOD INSURANCE UPDATE
- New policies for newly purchased Pre-FIRM homes no longer rated at Full Risk -
Since October 1, 2013, new flood insurance policies for newly purchased Pre-FIRM properties have been rated at full risk as set forth under the Biggert-Waters Act. The Homeowners Flood Insurance Affordability Act (HFIAA) passed on March 21, 2014 rolled-back full risk rating for newly purchased Pre-FIRM properties. However, full risk rating remained in effect until FEMA issued the new rate tables.
FEMA has now issued the "new" rate tables for Pre-FIRM properties. As a point of fact, they re-implemented the Pre-FIRM rate tables from October 1, 2013. All new policies for newly purchased Pre-FIRM properties are now rated based on the newly issued rate tables, regardless of the elevation. Thus, no Elevation Certificate is required. However, Pre-FIRM properties may use elevation rating based on an elevation certificate, if it happens to be more favorable to the insured.
- Written by Gerry Prud'homme
- Category: Agents' Blog
Congratulations to Matt Lucchesi, Director of Golf at the Colleton River Plantation Club for his first win in the Professional's Championship and Assistant's Championship which was held at the newly renovated Moss Creek Golf Club South Course. Matt recorded the low round of the tournament on day one with a 71 followed by a 76 in round two to claim his victory by one shot. Read more about Matt Lucchesi and the Pros at this exceptional golf community in the following link.
I'll be monitoring this legislation closely. This could be really good news for Hilton Head Island home owners who rent their homes for the summer months.
Credit to The Charleston Post and Courier for the article
The 2013 Players Amateur will be held at Berkeley Hall Golf Club in Bluffton, SC from July 8-14, 2013. The field will be comprised of approximately 80 amateur golfers from all over the world who will compete in a four day tournament for a chance to be named the 2013 Players Amateur Champion and earn an exemption into the 2014 RBC Heritage presented by Boeing to be held at the Harbour Town Golf Links in April 2014. Please enjoy this special video produced by Berkeley Hall Club. You will be amazed to see just how many PGA TOUR pros got their start at this top ranked amateur event that began in 2000.
- Written by Dick Datz
- Category: Agents' Blog
The best priced 4th row ocean lot on Hilton Head Island, just got better! 15 Ensis had a price reduction today to $289,000!!! This is an amazing value for a 4th row beachwalk homesite in the private community of Port Royal Plantation. This one won't last long! Click hear to view 15 Ensis Road
Please Contact Gerry or Dan Prud'homme for more information on this property.
Belfair’s own Jennifer Adams was victorious on Wednesday, May 15, 2013 winning the 31st WSCGA Senior Ladies Championship. This year’s Championship was hosted at Belfair with 90 of South Carolina’s best senior players competing in 36 holes of stroke play for this coveted title. Jennifer shot an impressive score of three over par 147 (71-76) to win by five shots over the nearest competitor, carding the only under-par score of the entire field.
Congratulations again to Mrs. Adams on a fantastic performance!