The feel of white sandy beaches, the sound of ocean waves, the sight of mesmerizing sunsets – these only represent a sample of the seductive experience of owning Hilton Head Island real estate.
While it ideally represents a smooth, carefree lifestyle that affords you fun, sun, and coastal dreams fulfilled, there is much more involved in owning this kind of property, especially when it concerns your bank statements.
It’s important not to let yourself get swept away by your dreams without being prepared. After all, it’s no walk in the sand. Some folks will grab this kind of property to make it their permanent residence, perhaps even in retirement. Others, as an investment opportunity or a vacation home – spend a month or two in the summer, then rent out to tenants when they’re not using it. Nevertheless, there are some important details to know first before buying.
If it’s manageable, it’s rarely a bad investment. Owning beachfront property can deliver excellent ROI, especially if you use it as a rental property to generate a reliable income stream. Many beach home investors make use of tourist seasons for this very purpose, especially to snowbirds from the north or Midwest need a change of scenery and atmosphere. But there’s much more to it than that.
Owning a second home can prove to be a financial nightmare if you can’t afford it. This should come as no real surprise. Even if you aim to use it as an investment opportunity, you need the funds to invest in it. Beware of overextending your line of credit. When it comes down to it, there’s more than just the mortgage to think about. You’ll have to pay close attention to these key factors:
Financing – Some mortgage companies may charge higher interest rates and down payments. It may be possible to leverage the equity of your first home or divert pretax funds from an IRA. Think about seeking assistance from an experienced mortgage broker to find out more.
Insurance – Many desirable seaside communities pose natural risks and hazards like floods, hurricanes, extreme winds, storms, and even the sea salt air can cause damage to your home’s structure and cosmetic aesthetic. Get a few insurance quotes before going to escrow so you’re aware of the potential ruin to your budget this kind of property can sometimes cause.
Maintenance – Routine upkeep will easily include electricity, heating, repairs, renovations, and potential management fees. You’ll also need to think about the cosmetic and structural preservation of your home. From roof jobs to exterior paint to ensuring the strength of balconies, decks, and even your boat slip, if the property comes with one.
There has been an upward trend in second-home purchases used for the purpose of renting the property out when it’s not in use. Even with fluctuation in property values, buying a vacation home has statistically been a good investment. If this is what your intended use is for it, strongly consider the location.
The right property can easily generate an income all year round. There are the aforementioned expenses to consider, but you should still be able to turn a decent profit. Oftentimes buyers tend to expect to turn a rather high profit from rentals when this is not always the case.
Before mortgaging off your first home to buy this one, consider the possibility that you may only break even at best, or dig yourself a hole in the sand at worst. To play it safe, expect to cover all the costs yourself, and think of any profit you make as icing on the cake.
Owning any kind of home will affect your taxes, and picking up a second home will only add to it. Before buying, consider the tax liabilities in owning a beach home. Take the time to learn before diving headfirst. Mortgage interest rates and property taxes can be claimed as special deductions, but buyers still ought to beware of the differences between a primary and secondary residence.
Homes rented out fewer than 15 days a year are considered “personal-use properties” by the IRS. Homeowners aren’t required to report the rental fees as income and no other deductions are allowed. Renting out for more than 15 days a year? While deductions are made available for certain things, all rental receipts must be reported to the IRS. That’s going to be a lot of paperwork.
While there are beaches to be found all over the world, it’s important to know as much as you can about the area you’re buying the home in. Typically, most second-home buyers acquire property in considerable proximity to their primary residence. But it all depends on where you live, what you can afford, and how you intend to use it. Also, consider homeowner regulations in those areas and whether it may even suit your lifestyle.
Another key ingredient to location, especially in a high-risk area of natural disasters, is to know which way the wind blows. A home facing west and a home facing east could make all the difference in how much damage it is susceptible to during a storm.
You may know that you love beaches, but a coastal home inspector can provide you with some vital information about what to fully expect. If it’s not your real estate agent, they should be able to point you in the right direction. Make sure they are coastal experts and do your homework. You may jump into what you think is a great deal, but that may only be because it’s a property nobody wants due to it being a potential money pit. An expert will tell you all you need to know.
Sometimes a good idea is just best left as a good idea – something to ruminate over from your front porch in the suburb during the summer. If you decide to buy because it’s been your dream, then your dream doesn’t deserve hasty decisions and improper preparations.
If you’re buying because it’s inexpensive and you think you can make money off of it, reconsider. Have realistic expectations about how you’ll use the home and about your means to afford it.
So, you’ve decided to finally buy a beach house, just like you’ve always dreamed. You’ve debated back and forth about whether or not it’s cost-effective. You’ve begun to imagine yourself with a year-round flip-flop tan.
You’ve researched beach communities and coastal towns. You’ve picked Hilton Head Island as your ideal getaway or your new permanent home. But before you start scheduling house showings, there are a few things you should know about Hilton Head real estate.
Before you move to any new place, you should know a bit about the area’s history and geography. This can help you feel less like a tourist and more like an incoming member of a community. Knowing the history of a place can help you identify with the area and with the permanent residents. It can also help you determine which specific area or neighborhood would be ideal for you.
Hilton Head Island is in the Lowcountry of South Carolina, off the coast but accessible by a bridge. Broad Creek cuts the island nearly in half. Broad Creek is surrounded by marshland, and the island also contains a significant wooded area. The island is about 12 miles long and five miles wide.
Hilton Head real estate is known for its gated communities and tourist feel. The island boasts a large number of spas and golf courses, in addition to its beaches. Tourists and residents can also bicycle, kayak, and sail on Hilton Head. There are so many things to do in this area!
Although the island has fewer than 40,000 residents, more than 2.5 million tourists pass through each year. For many, Hilton Head Island is the perfect tropical escape.
The Real Estate Market
Before you jump into looking for homes, you should familiarize yourself with the current state of the Hilton Head real estate market. A few quick facts to orient you in the market:
The average value of a home on Hilton Head is approximately $380,000. This includes all homes on the island, both oceanfront, and inland. In comparison, the average value of a home in the entire United States is just under $200,000. From 2016 to 2017, homes have increased in value by over 2 percent, which should help put your mind at ease about buying property on the island.
The market is on the rise. After the most recent recession, a lot of people are wary of investing in real estate. Hilton Head real estate, however, is currently increasing in value.
Oceanfront property is much more expensive than inland property. But, as with any coastal town, if you want to be right on the water, you’re going to have to pay for it.
Large, waterfront homes on Hilton Head can easily be valued at millions of dollars. That being said, there are still waterfront homes on the island that are affordable but you may need to compromise on size or location.
If being right on the water is crucial for you, then consider downsizing from your current home. Or, if you’d rather have a spacious living area, think about looking a little farther from the water. Either way, keep in mind that some beaches on Hilton Head are public while others are private.
Much of Hilton Head real estate is located behind locked doors in gated communities. In fact, it’s estimated that 70 percent of Hilton Head is in gated communities. If you’re looking to buy property on Hilton Head Island, then, you’ll need to decide whether or not to buy in a gated community. The benefits of a gated community are plentiful, but there are drawbacks as well.
Gated communities are typically safer than open neighborhoods. Often, only residents and residents’ visitors are allowed through the gates, which means you can rest easy if you’re concerned about crime.
This is especially beneficial if you aren’t going to be living at your Hilton Head home year round. With a gated community, you have much less to worry about while you’re away. In addition, gated communities are typically quieter than open neighborhoods. If you have pets or small children, you can feel comfortable knowing that there won’t be much traffic or road danger.
Many people also appreciate the exclusive feel of a gated community. Gated communities give residents a feeling of wealth and security. Others, however, may find that the feel of a gated community is too uptight for their style. Most people know intuitively whether or not a gated community fits with their vision of themselves.
Besides the feel of a gated community, the main drawback of such a neighborhood is its cost. These communities are typically more expensive to live in. In addition to increased property cost, you may also be required to pay monthly dues. These dues could cover everything from landscaping to the salary of the guards working at the gate.
Gated communities, like Sea Pines Plantation, can provide a next-level sense of luxury for some homeowners. If you’re willing to foot the extra cost of a gated neighborhood, then it’s a good idea to look into some specific communities. Remember to check about each community’s monthly dues and visitor policies.
Of course, there’s only so much you can learn about a place online. Once you’ve armed yourself with the basics about Hilton Head real estate, it’s time to tour the island in person. Familiarize yourself with the different neighborhoods on the island, and start to get a feel for where you’d like to live. Talking to locals can help tremendously with this. Then, get looking at some homes.
Remember that finding the perfect home can take a while. You may need to make multiple visits to the island, or tour a large number of homes. But, if you’re determined and patient, you’re sure to find an ideal home on Hilton Head Island!
If you need assistance in finding the perfect home, contact Ocean Front HHI today. We can help you find beach and beach-oriented properties that you are your family will enjoy. Let us know what type of property you are looking for when you call us today!
Tucked just inside the Sea Pines Ocean Gate are Night Heron Villas Hilton Head For Sale and they are the first complex on the right-hand side just across N Sea Pines Drive from the beach walkway.