Myrtle Beach Short Term Rental Income Analysis

Avery Carle [00:00:03]:
Hey guys, it’s your host, Avery Carle. Welcome to the Short Term Show Special Episode series on Myrtle Beach, South Carolina. I’m super excited to do this 10 episode deep dive into this market with you and I wanted to make a few notes for you first. So if you want to set up a search for properties or see current purchase prices or current income numbers in this market, you can do that at our website, the shorttermshop.com. if you just want to connect with us and hang out and talk about short term rentals more, you could do that in our Facebook group. It’s the same title as my book. It’s called Short Term Rental, Long Term Wealth. And you can also find the information on all of our other market short term show special episode series there as well.

Avery Carle [00:00:41]:
So we look really forward to hanging out with you over the next 10 episodes and we’ll catch you guys on the next one. Let’s go.

Erica Muller [00:00:51]:
Foreign.

Avery Carle [00:00:56]:
Hey guys, welcome back to another episode of the Short Term Show Special Episode series on Myrtle Beach. Today we’re going to talk about numbers. We’ve got another separate podcast, the actual or separate episode, sorry, the next episode will be on expenses. So we have kind of a two episode series on numbers and expenses. So today we’re talking only about data and income numbers and we have a very cool guest to help me do that. We have Erica Mueller at Brolio. Erica, you want to introduce yourself really quick. You guys might recognize her from a few of our other podcasts as well.

Erica Muller [00:01:28]:
Hi. Yeah, so I’m Erica Muller. I’ve been a licensed agent for 22 years. Seventeen of those were in short term rentals and before Airbnb. It was a different time, but it’s been exciting watching everything grow. Have a background in commercial real estate investments, Also a real estate investor, and I’m also a data scientist who we built this data technology because we were kind of tired of having a difficult time accessing data in the short term rental industry. So we built a solution that’s for real estate agents and mortgage brokers and we’re going to be using that today to talk about the data. So thank you for having me here, Avery.

Erica Muller [00:02:02]:
I’m also a big fan of Avery, whom I consider a friend in the industry and a big fan of her and all the success she’s had. Very smart and one of the smartest people I know here in the industry.

Avery Carle [00:02:13]:
Well, thank you so much. I don’t know about that, but we have known each other for a while at this point.

Erica Muller [00:02:17]:
Yes, it’s been A while.

Avery Carle [00:02:19]:
Okay, so let’s talk about before we dive into the data. And guys, she is going to share her screen. You’re going to totally be able to understand it if you’re listening in your car. But if you want to go back later and check out the YouTube version, you can, you can see what she’s showing on her screen.

Erica Muller [00:02:34]:
Share.

Avery Carle [00:02:34]:
But Erica, let’s talk for a minute before we go into that, about the metrics that people are using to kind of analyze, oh, is this a good deal or not? So some of the main ones that get used are really the main one, I think for retail investors, like Main street investors, non institutional is going to be cash on cash return. We’re not really going to talk too much about that. I mean, we’ll talk a little bit about it, but. So cash on cash return, guys, is basically just a quick definition, if you’re not familiar, is how much money you put into the property at the beginning. So that’s your down payment, your closing costs, etc. Any furnishing costs if it doesn’t come furnished versus the amount of money that you have in the bank after all your expenses, including your mortgage at the end of the year, expressed as a percentage. The other one that I think Erica looks at a lot because she works with a lot of institutional investors is going to be cap rate. So Erica, do you want to explain what cap rate is to our clients?

Erica Muller [00:03:33]:
Yeah. Cap rate is basically the NOI divided by your purchase price. Your NOI is basically what you have left before after all of your operating expenses, but before your mortgage and taxes. So that would be your net operating income. The reason that we look at cap rate is because cash and cash return is a great metric for each individual investor to determine the return on their own capital invested. But when you’re trying to compare markets against each other and you’re trying to understand agnostic to any type of financing scenario, what’s a better investment, even just in a single market against property types? Cap rate is the most agnostic return rate of return you can use as a metric because it doesn’t take into consideration your financing scenario, any money you invested. It allows you to first determine from a high level how properties are performing against each other. So if you were trying to determine should I invest in the real estate market versus the stock market or some other type of market, the currency market’s hot right now too.

Erica Muller [00:04:31]:
What kind of returns can I get there versus this single family home? Cap rate is your metric. If you were trying to look at should I go into this market and determine between single family, townhouse, condo, which one is performing better. Cap rate is your metric. But if you were like, what is my return going to be on this particular property I’m buying against what I would be getting personally in other investment opportunities with the money I’m investing. Cash on cash is your metric. So I love to say cash on cash is like very intimate to the investor. Cap rate is kind of more of like across the board in terms of investments. Hopefully that makes sense.

Avery Carle [00:05:06]:
Yeah. Yeah. So a good way to compare. I’ve never thought of it like that. You are able to compare cap rate to other types of non real estate investments where cash on cash return, not so much. So you’ll hear both of those terms throughout this call, probably. So I’m really interested, Erica, to hear what you found in your data in terms of how this market performs, what area, what size, what type. Let’s dive into all that.

Avery Carle [00:05:34]:
You can kind of drive and start where you want to start.

Erica Muller [00:05:36]:
Cool. Yeah. So I was really excited when you sent me this market, Avery, because it’s not a market I spent a lot of time on in the data. But when I started digging into it, I was actually really impressed. And that’s hard for me. You know, I’ve seen a lot and it’s hard to impress me with numbers and different markets. But what I liked about this market, and I’m going to show this on my screen, is the entry level pricing that you can get into here. And when I say entry level pricing, I mean someone with a 3 to $400,000 budget.

Erica Muller [00:06:03]:
It’s a market where they can get into and still get a really great return compared to other markets across the country that have a higher barrier of entry. So that was the first thing I noticed about this market. And I’m just going to start. I always like to start with the map. So just so you guys know what you’re looking at, the map here shows the quintiles of earning categories. The highest earning to the lowest earning. The red dots are the lowest, the green dots are the highest. I’m going to turn everything off except for high earners.

Erica Muller [00:06:29]:
Because when I’m analyzing a market, I like to see what high earners are doing. Because my strategy, and most investors strategy is not to buy a low earner. Right. It’s to buy a high earner and become a high earner. So that’s the first thing I like to do because it shows me a location map of where these high earners are. So one of the things I noticed that I liked about this market, just based on the high earner locations, was that you don’t have to be right on the water to be a high earner. I thought that was great because not everybody can afford to be on the water. And there are markets that are beach markets where it’s like, yes, you can get a great return if you have a beachfront property or you’re a block from the ocean.

Erica Muller [00:07:06]:
That’s not the case here. So that was the very first thing that I really liked about it. The second thing I liked about it is that you can also be a high earner with a condo or a townhome, not just a single family home here. So if you didn’t want to take on the commitment and the maintenance of a single family home and you’re just getting into the short term rental market for the first time and you want something like a condo or townhouse, there’s a lot of opportunity here for that too in terms of being a top earner. So. So that’s the very first thing I like to look at, is the potential for property types to become a top earner before I even start looking at the income. So as you can see here, and for those of you listening, I’m looking at a map and I’m going to talk about different locations. Right now a lot of your top earners are along this coastal area.

Erica Muller [00:07:51]:
Not necessarily right on the water, but they’re along this coastal area between the road of it looks like there’s North Kings highway, which could also be the 17 and North Ocean Boulevard. So you’re going to see a lot of your activity happening there. But then there’s going to be some more opportunities. Just over it looks like the bridge. Right past it there’s a street called River Oaks Drive and there’s some communities right over there off the bridge.

Avery Carle [00:08:16]:
Looks like those are golf courses, right?

Erica Muller [00:08:18]:
Yeah, it looks like they are golf courses and I think they’re. When I was looking at this, they look like mostly condo opportunities. So this is where kind of your condo opportunities are going to be in this golf course community. Now I know you’re going to have another episode on expenses. I’m sure there’s going to be an HOA fee attached to that which is going to fall within the higher, you know, part of the expense ratio. But if the income’s high enough to support it, it’s still a good opportunity. So that’s my, the first thing I noticed. So go ahead and jump off this map and we can Go deeper into the map based on other things that we find.

Erica Muller [00:08:52]:
I do want to quickly take a look at North Myrtle beach because Myrtle beach and North Myrtle beach are actually clumped into two different cities according to our, our postal information. So over here on North Myrtle beach, there’s still a lot of opportunity to. Not as much over the bridge as you have over kind of in South Myrtle beach, but it looks like most of the opportunities are still along that, that coastal highway area. But you don’t have to be on the water like I see properties going into a little further out inland. But before you get to the bridge, there’s still opportunities here. So we’re going to dig into what those could look like. So, Avery, if you have anything you want to jump in on, feel free because I’m just going to take it away here on the kind of the income. Is that cool?

Avery Carle [00:09:34]:
Yeah, I have a couple things so far. So from what I can see on the map, the highest concentration of high earners is on. Not when I say on the water, I don’t mean like on the sand, but I mean kind of walkable to the beach and the stuff that is a high earner that is not walkable to the beach. Most of it is in the golf course community. So we talked to Bradley, one of our Myrtle beach agents in a previous episode where he mentioned the beach and golf courses are the two main things that people come to visit. And so this data is kind of showing that. And then we have a few like random outlier looking properties that are a little further inland. But there’s only, you know, a few dots here and there, not a high concentration.

Avery Carle [00:10:17]:
So from what I can tell, you still want to be as close to the beach as possible or in one of those golf communities to be a high earner.

Erica Muller [00:10:24]:
Yeah, I agree. And I didn’t even think about the golf. Like Myrtle beach is one of the golf capitals of the US Isn’t it? Myrtle Beach, Augusta. So that makes a lot of sense. All right, great. So let’s go ahead and look at the numbers. So one of the things I like to look at is, is the income continuously going up every year in this market, can it support growth? This last chart is showing only half the year of 2023. But if it was when the year finishes, what we expect is this number to be almost double.

Erica Muller [00:10:53]:
So if this number is what we expect it to be at the end of 2023, we’ll see a clear pattern of growth here in the Myrtle beach market in income every single year. So that means revenue opportunities are continuing to grow every single year. Here we removed 2020. As you can see, 2020 is not a year that anybody should really be paying attention to as far as like, did income grow? Because it didn’t. Everything slowed down. But 2019, 2021, 2022 show a clear pattern of growth. And we expect 2023 to exceed last year’s number is numbers as well. So we do feel confident that this market is still a market that’s growing and has opportunity to continue to grow in terms of revenue every single year.

Erica Muller [00:11:32]:
So that’s one thing I really liked about this in terms of inventory. It’s also growing in inventory as well. Every year since 2019, there’s been a growth in the total active rentals. So that’s also great too, because that means there’s more opportunities coming here. You wouldn’t really see growth if people weren’t demanding it. So that’s a great sign as well. So those two things I like to look at because we want to make sure that it will continue to support tourism going forward. Financial overview here I’m looking at, just so you guys know, we’re only, this is only showing me single family.

Erica Muller [00:12:02]:
We can look at condo and townhomes separately. Avery. But right now we’re looking at single family. And I have all the percentiles blended together. So we’re going to look at what that looks like and then I’m going to isolate the top earners and I want to look at the income data from the top earners. I kind of peeked at it last night and it’s very similar, but because a lot, there’s a lot of top earners in this market, so there’s not a lot of bottom earners pulling these numbers down too much. So it looks like we have a big spike in income in these seven eights. But the income from the smaller properties too is still pretty good considering how small they are compared to other markets.

Erica Muller [00:12:36]:
Like, you don’t see many four bedrooms in other markets, bringing in 144,000 a year in gross income. That’s actually a pretty substantial number for a four bedroom. So that was one of the things I noticed was that a four bedroom can generate a massive amount of income. And it kind of like got me interested because you can purchase a four bedroom for a lot less than you can in some other markets.

Avery Carle [00:12:58]:
And let me stop you really quick and just interject and say that, guys, if you want to see what a four bedroom single family goes for, currently we’re not Going to talk too much about purchase prices on this episode. Episode. Because we want this to be relevant to you whether you listen today or two years from now. But we do have a search function on our website, the shorttermshop.com where you can see what the current prices are for all the properties across the market. But yes, a four bedroom in this market is significantly cheaper than a lot of other markets. Which is what I really like about Myrtle beach is that it’s a really, really great market when it comes to purchase prices. Go ahead.

Erica Muller [00:13:34]:
Yeah, thanks. And I mean, the three bedrooms are honestly doing pretty darn good too. Like, if you look at 90k for a three bedroom, that’s. That’s great. I don’t see that in a lot of markets. So this is for single family. Not even. You know, these condos are probably doing pretty well too, but single family doing 90k.

Erica Muller [00:13:50]:
And this is average. This means what we’re looking at now isn’t just the top earners, this is the whole market. So you also have bottom earners in there. We’re kind of pulling down these high earners. And this is average, so that’s really good. So eight bedrooms, for those of you like that are just wanting to go big or go home. I like to go ahead and show that income too, because I know it’s not for everybody. But there’s a market out there for this.

Erica Muller [00:14:10]:
Seven bedrooms are hitting around 250,000 average in income. That’s really high. And the eight bedrooms are pushing 358. So really impressive numbers overall in this market. And again, it takes a lot to kind of impress me because I’ve seen so many markets where just it doesn’t look like this, but very impressive and super excited about these numbers. Now I’m going to dig into a couple other things before I switch to the high earners. Avery, is there anything else you want to say on those seven or eights?

Avery Carle [00:14:36]:
Not really. I would imagine. And you probably have data on this further down that there’s not a lot of competition when you get to those higher occupancy properties. And I don’t mean higher occupancy rate, guys. I mean higher accommodation occupancy. So, yeah, this is, this is really very fascinating so far. Are we going to do this for condos too?

Erica Muller [00:14:55]:
Yeah, we can do condos. So I’ll go through the rest on single family and then we’ll jump into condos. Just let me know when you’re ready to make the switch because like I said, I could go into the weeds. So I’m gonna. I’m gonna skip over cap rate because we’re really not gonna talk about that much today. But I want to jump down to market saturation. So this is interesting because we noticed, and I just want to jump back to these four bedrooms and why I love them so much is because we noticed that there was a lot of revenue opportunities from the three bedrooms and the four bedrooms. 90K.

Erica Muller [00:15:23]:
I think we had the four bedrooms. I think they were like 120K. Avery, I got to go back and look 144K. And there’s not a lot of competition for the fours or even really well more for the threes, but not a lot of competition for the fours. If we look at the most competitive product in the market and we said which product has the most inventory? Because we tend to want to avoid selling products or buying products that are the most saturated in the market, it doesn’t mean that they’re bad. It just means that there’s already so many of them, we don’t want to continue to add more of it to the market. So those two bedrooms and those three bedrooms combined make up 50% of the inventory right now in Myrtle Beach. So you can get a two, you can get a three.

Erica Muller [00:16:05]:
You could still do well with it, but just know that the twos and the threes are the most saturated product in the market. But when you come down to the fours, you only have 13% of the market. That’s a four bedroom. So getting into a product with really high gross income potential with really low competition to me, sounds like a great strategy. Of course I want to dig deeper and talk to Avery’s team there. But so far, that’s kind of where my eye was going, because I even know the entry level price to getting into a four is pretty doable for most people. And so if you went with a three year or two, nothing wrong with that. There’s still, you know, individually only about 25% of the market, and one bedrooms are actually doing well to only 18% of the market.

Erica Muller [00:16:46]:
So Avery’s point was absolutely correct. When you get to the sevens and eights, for those of you looking at bigger properties, there is less than 1% of the market there. That’s a seven or an eight bedroom, and they’re making an enormous amount of income. And I think that’s why is because there’s really not a lot of them. And there’s a demand for it, obviously, because there’s so much revenue coming into them. So those of you that do have the larger budget and you want to move that somewhere, this could definitely be an option for you. How do you feel about that, Avery?

Avery Carle [00:17:16]:
Yeah, so I have a few points to make. Definitely on the, if you’re looking for. So we see a lot of buyers that are like high income earners, physicians, people like that that are really looking for those. The, the high, their price point doesn’t matter. You know, they can buy what they want. They, they’re looking for a certain high income. But there’s a couple points I want to make on some of the lower stuff too. So you can’t.

Avery Carle [00:17:37]:
What we’re saying here is not don’t buy a two bedroom or a three bedroom, but if you can still absolutely be very successful with that. But if you buy a two bedroom or a three bedroom, you do have to make sure that you’re standing out from the competition better than in. Well, you need to make sure that you’re standing out from the competition at any bedroom count. But you, you really have to kind of be on mind your p’s and Q’s, as my mom would say, on the two and three bedroom. But one thing that I want to point out too is the studios only make up 1% of the market. So if you’re somebody who’s really on a budget, don’t dismiss those studios. So I’ve got a studio in another market that I paid 125,000 for and it makes $65,000 a year. Grosses $65,000 a year.

Avery Carle [00:18:21]:
So if you’re somebody who really wants to get in and you’re. And you maybe don’t want to go with a two or three bed, those studios, there’s not very many of them. And across all markets that I’ve looked at extensively, studios, it’s always like that. There’s not very many studio options, but they stay booked. They have a really high occupancy rate. So if you’re somebody who’s on a studio super budget, this is a great market for you. And that studio option could be a really good option for you because there’s as few studios as there are those eight bedrooms.

Erica Muller [00:18:53]:
Holy cow. So when you were saying that, I just switched the data to the high earners only and then clicked on the studios and they’re at 138,000 a year in gross revenue. You are dead on.

Avery Carle [00:19:05]:
That is, you have to, I will say you have to manage really, really well and have a really badass studio to get to that number. But where we’re looking at higher Earners only. So we’re not saying that you will make that, but there is that potential for the right property and if you manage it well. So I love my studio.

Erica Muller [00:19:21]:
Yeah, that’s definitely on point. Even if you hit this, even if you hit like 60 or 70% of this number. So138,000 is the average across the high earning studios. So you first have to become a high earner like you said. So if you do make it to a high earner and you do become one of the top tier, that’s. That’s a great upside potential. But even if you hit 50% of that, that’s a great opportunity, Avery. So I’m really glad you pointed that out because there’s a lot of potential there.

Avery Carle [00:19:47]:
One more thing that I want to point out about the smaller ones like that a studio or a one bedroom. So beach markets are very seasonal and that’s fine. You want to look at your income number rather than the occupancy rate. I’ve got an example that I give about my four bedroom at the beach versus my four bedroom in the Smokies all the time. My four bedroom in the Smokies has a 85% occupancy rate. My beach property, same size, has a 62% occupancy rate. So if you’re only looking at occupancy rate, you would look at the Smokies all day. But my beach place makes $45,000 more a year than the Smokies place.

Avery Carle [00:20:18]:
And it has an off season, whereas the Smokies doesn’t really. So what I’m getting at here, if you’re somebody that’s like, oh my God, I’m terrified of there being an off season in a beach market. Myrtle beach doesn’t have as many snowbirds as the Florida market does. But if you want to be able to try, at least have a better shot at getting a snowbird into your unit during off season. A. A one bedroom or a studio will be it. Because snowbirds are typically older couples. They don’t want a lot of like, they’re never going to come rent my four bedroom because that’s too much for them to clean and maintain for for the off season.

Avery Carle [00:20:52]:
But they will rent small condos on the beach. So that could be an option for you too. If you’re like, man, I’m really on a budget. This market’s great for my budget. I can totally get a studio, but I’m really scared of seasonality. That would be an option. Potentially. I’m not guaranteeing that you would get a snowbird, but you could.

Erica Muller [00:21:10]:
Yeah, absolutely. That’s, that’s a fair point. So I’m glad you brought that up. So I just switched to the high earning data. So now what we’re looking at is high earning data. So I’m going to go ahead down, skip past the sales price step. I’m going to go to the features. So and then we’ll switch to condos.

Avery Carle [00:21:25]:
That features not necessarily amenities. Right. Features are things like hot tub. Well, hot tub I guess is amenity. But washing machine, dryer.

Erica Muller [00:21:32]:
Yeah. If they allow events, if they are pet friendly, little things like that. We picked the top eight that we felt were most relevant to the actual acquisition because a lot of these things you can determine before you buy if it’s something you’re going to need to add renovation costs to or it’s a strategy like having events, you know, allowing pets, that’s more strategy. So those are why we kind of pick this. But you know, there’s other things that go into this, but these are kind of the most relevant ones up front. So what we notice in the top features is that none of the studios are pet friendly. So clearly not a thing in there. So when it comes to pet friendly strategy, there is markets that support you will generate more income just by simply opening your door to that.

Erica Muller [00:22:12]:
And we do see in the three bedrooms that a lot more of them, a lot more in the two and three bedrooms do open their doors to pets. That’s a strategy for them that’s allowed them to contributed to them becoming a top earner. And then we see it again in the larger homes, the eight nines. But not a market like we’re in Asheville, for example. We’d see a lot of these as pet friendly. So not as much of a pet friendly market as some of the others. But it could be a strategy that allows you to generate more revenue because some of them aren’t allowing it. So if you were the one that did that could definitely open more opportunities for you.

Erica Muller [00:22:44]:
I like to look at events too when it comes to strategy because I do in some markets see an increase in suitable for events in the top earners that are larger homes. I don’t see it in this market. Well, actually I take it back. I see it in the nine bedrooms. So there’s a about an 9% increase from the eights to the nines on properties that allow events. But I didn’t see an increase in revenue that went along with it. So I’m going to Go here and say that it’s probably not a thing in Myrtle beach that you’re going to go buy like a retreat center or something like that. Yes, you can do it.

Erica Muller [00:23:15]:
And yes, it could work because we have 12% of the nine bedrooms that are high earners doing it. But it’s definitely not going to be a strong strategy if you’re getting into something smaller. Although I do see it in the two bedrooms. So I’m wondering what that’s about. And I don’t know because we do have a 20, 20% of those two bedrooms that say they’re suitable for events. But what kind of events are you really holding in a two bedroom? So that’s interesting. Other things that are going into this is hot tub pool. So we see like 5050 kind of in some of these on the studios.

Erica Muller [00:23:43]:
What I think is going on with that pool is it’s probably a community pool there. And it could be some of those condos that are getting mixed in on MLS with the single family. But what I see here is about 5050 with pool. So about anywhere from like 46 to 56% of them have a pool. On average in those four bedrooms it’s around 47%. Hot tub, not as many, but there are some kind of jumps all around. So depending on bedroom size, I’d really want to dig into bi bedroom size, like if that’s a need or not. So there’s really nothing here that jumps out at me is like if you do this, you’re going to make more money.

Erica Muller [00:24:16]:
I would say pool is definitely an advantage in the single family homes and then having that strategy of maybe allowing pets is an advantage, but nothing that’s just enormous that I need to bring it up because it’s such a huge differentiating factor. One other thing I’ll jump into is kind of an inventory analysis. I like to just look at this because I want to understand the type of property that is going to drive these higher stays. So I think there’s some, I think there’s some data crossed here on these, this studio right here with 16 sleeps. There’s no way we’re sleeping that. So I think there’s something going on there. But when we go up to these two bedrooms, again, this is probably a single family that’s getting listed in the MLS as a studio. But when we go into these average sleeps, that’s actually not where I wanted to go.

Erica Muller [00:24:58]:
I wanted to go here into the year. Built and square footage. So what size of a property am I looking at? What? How old is it? Do I need a renovations budget to bring this up to code? I hate 1990s houses. Honestly, they were the worst gen. It was like the worst generation of homes. And like, if you’re getting into a 90, like, I’m not gonna lie, 90s houses are a nightmare to renovate. I’m doing one myself and most of these are all in the 90s. So I would say you probably, if you’re buying a property here, want to come to the table with some type of a renovation budget, if that wasn’t already done yet.

Erica Muller [00:25:29]:
Avery, how do you feel about the high earning inventory in terms of like, would you agree with that or do you feel differently?

Avery Carle [00:25:36]:
Yeah, yeah. I do think that there was like a big building boom in this market in the 90s. So that’s probably why we’re seeing most properties having been built in the 90s. And especially if you can get one that is not. I don’t want to offend anyone who loves like Tuscan Mediterranean houses, but those are the like, that looks super dated to me now and I think that was more like early 2000s maybe. But it’s much easier, in my opinion, if you’re going to renovate something, to renovate like a wood beach house, than buying something that’s very Tuscan and very 2005 and trying to renovate that to look any sort of updated. It’s just really hard to do. Especially, you know, if the interior has like the columns and the arches and the walls.

Avery Carle [00:26:21]:
Yeah, yeah.

Erica Muller [00:26:22]:
So there’s a lot of that. So keep that in mind when renovating here. 90s homes are not the easiest to renovate, but there is a need for that because you’re going to want to be competitive to today’s product, which is newer construction. But you don’t need to buy new construction to be a top earner. That was my point, is that you can buy something less expensive and renovate, which is a budget friendly market to begin with. So there should be. It should be easier to have a budget for that if you do square footage wise, like it’s not going to be enormous. You don’t have to get into an enormous house to make it work here.

Erica Muller [00:26:51]:
Square footage is kind of like, it’s kind of going up all the way from a thousand square feet in those two bedrooms up to over 4,000 square feet and nine. But your average is around 2,000. So just keep in mind you’re going to be in about 2,000 square feet. Okay. So that’s kind of everything I have to say about the single families, we’ll jump to condo because I know that we wanted to look at those two.

Avery Carle [00:27:10]:
Yeah, definitely. And I think this is a mostly condo market and I think the condos are going to be where the real like really affordable, affordable real estate is. And guys, I don’t want you to be scared of condos because a lot of people hear, oh, condo, I don’t want to do that. They might outlaw short term rental. There’s going to be a couple buildings in Myrtle beach that are more luxury. They’re like these are second home only. But everything else was purpose built to be short term rental accommodations. So it’s not really something you have to worry about here.

Avery Carle [00:27:40]:
So what I don’t want you to do is say, oh, they’re on condos. Let me turn off the podcast now. This is where probably one of the best options for you is going to be. So I just wanted to preface what you’re about to say with that.

Erica Muller [00:27:51]:
Yeah, I, I totally agree with you. It’s similar to Orlando where everything was purpose built for short term rental and for years there’s never been an issue of that being converted over to non short term rental. So like you said, it might be an anomaly, but most of these have been around for a while, since the 90s. All right, so we’re going to jump into it. So let’s see here. Income from an income perspective, condos are following a clear trend of around 90,000. Well that’s pretty high actually. They’re starting at around 90000 a year.

Avery Carle [00:28:19]:
And you’re looking at only again guys, she’s looking at only the high earner data.

Erica Muller [00:28:24]:
Yeah, let me go to the averages for the market because I don’t want to just jump to the highest. There we go. Okay, so if I average the market together, right, the studio condos are starting at around 21,0001Bedrooms are at 43,000. Two bedrooms are at 60,000. Three bedrooms are at 88, 000. Four bedroom condos are at 143. And then the rest of these going forward are most likely single family that got listed in MLS’s condos. So we’re going to disregard those.

Erica Muller [00:28:50]:
We’re going to stop at the, we’re going to stop at the threes because most condos are not bigger than threes. So what I’m seeing here is average gross income of around 88, 000 and for the three bedroom condos. So this is pretty good for condos because the condo purchase prices are Already so low that the, the purchase prices will support the, the income will support these purchase prices.

Avery Carle [00:29:10]:
So drop out just the lowest percentile and see what happens. Because you know there’s always going to be some like grandma condos with things with it.

Erica Muller [00:29:18]:
Yeah, I have to isolate by quintile. So I could go to middle. Yeah, yeah, let’s just go to the middle of the market because that will drop out the bottom and the top and that’ll kind of take us to the middle of the market. So if we jump to the middle of the market, I think this is a good baseline. Around 50,000 in a studio, 49,061K and 55K. So going up to a three bedroom. So it’s very similar but like we are dropping off those studios some of the older things, which is, which makes sense. So I mean you’re right about the studios.

Erica Muller [00:29:48]:
There’s a really good amount of income coming in from them. $50,000, I mean for what you can buy them for. That’s great. So the two bedrooms have a bump in revenue. So I’m seeing that immediately. That there’s about $11,000. No, there’s almost a 20,000. Trying to see here.

Erica Muller [00:30:04]:
We’ve got. Okay, yeah, so we’ve got a twelve thousand dollar bump in revenue from the ones to the two bedrooms. So there is that twelve thousand dollar bump. What I would want to know is what is the bump in purchase price going from a one bedroom condo to a two bedroom condo and is it worth that extra 12,000? I’d also want to know how to increase that revenue and become a top earner. Of course that’s always the question is how do we get that revenue up? And that’s where you, you’re the expert, Avery. So I’m sure you can show that. Okay, looking at the middle earners, we’re going to go down to market saturation and most of these condos are two bedrooms. 10% of the middle earners are going to be your two bedroom condos.

Erica Muller [00:30:40]:
So we can already see here that that’s going to be most of the market. So going into a one one bedroom condo studio like Avery said, or even a three bedroom condo if you can find it, is probably a smart strategy. But don’t disregard the twos because there’s clearly a bump in income on those. So they might be more saturated. It’s probably just two because there’s more inventory for those and that could also be contributing to why there’s more of them. All right, we’re going to jump down here to the community features, because all these features, pool, hot tub, that’s going to be community features. So when you’re looking at a condo, it’s important that it’s amenitized the community itself. We’re seeing that most of these communities have a pool and a hot tub.

Erica Muller [00:31:18]:
In almost all of these condos, not all the time. About 60 to 70% of the time they have a pool and about 50% of the time on average they have a hot tub. So check the amenities as well. That was a big thing. I know, Avery, you’ve probably run into this, but here, where I was selling short term rentals, a big thing was amenities. And also how close are the amenities to the condo? Like how long does it take you to walk from your condo to the amenities? Because most of the time there’s a parking issue at these places, especially when they’re in season. You’re not going to be able to park, go to the clubhouse because there’s already a parking issue. So one of the things I would encourage you to pay attention to on the condos is that if the community is amenitized the location of your condo within the community and how easy it would be for somebody that’s staying there to be able to walk to the clubhouse.

Erica Muller [00:32:05]:
I don’t know if you’ve ever run into that. That issue, Avery, but we used to see it a lot here, especially in the, the condos where parking can become an issue at places like that.

Avery Carle [00:32:14]:
Yeah. So I think condos in this market, since it’s all technically usually in one building and not like a spread out that a lot of times if there are more, if there, if it’s like a big complex and it has more than one building, a lot of times they’ll have their own pool. So you’re not having to walk or drive over there. You just go downstairs, which is nice.

Erica Muller [00:32:31]:
That’s great. Perfect. Okay. As far as pets allowed, I’m not surprised to not really see that here most condo communities have rules against pets or it’s really difficult because you’re in a condo. So that’s not going to be a strategy here and events aren’t going to be a strategy here. So those are the main things I wanted to touch on. I don’t see anything else. They’re really affecting the revenue.

Erica Muller [00:32:49]:
I want to go down to the, the inventory analysis real quick and I want to jump in and just see if this follows the same pattern as single family. Yeah. So it looks like the bigger condos, like those three bedrooms Might be a bit newer. So there could be some newer condo communities. Like if you want a bigger condo they’re on average built in around 2011 where everything else is built in the 90s. So that’s telling me there’s probably opportunities in newer communities to get a bigger condo, which might be an interesting strategy because they’re actually pretty good size. 1700 square feet on average and these are the middle earners. But your, your one and your studios are going to be around 500 square feet.

Erica Muller [00:33:26]:
So that’s kind of small but you can make that work. Your twos are going to jump up to about a thousand square feet. So that’s the one thing I would say on condos is expectation is again they’re probably going to be, the community is probably going to be built in the 90s. It would be nice to know if the HOA has updated any of the amenities since the 90s. We did see that a lot happening here where communities built in the 90s had to start investing money to update their amenities to compete with the newer product on the market. So that would be one thing I’d like to know is like how committed are these HOAs in these purpose built communities to really keeping them current to today’s tourist demands, Tourism demands, you know what, what they’re expecting from a five star hotel or four star hotel. So that would be really what I’d have to say here. I don’t know.

Erica Muller [00:34:11]:
Avery, do you have anything you want to touch on?

Avery Carle [00:34:13]:
I don’t think so. I guess my only thing that I want to add is all this data is really great guys but you do have to use the enemy method to see what people are doing in terms of optimizing their management. I mean, so are you. The easiest way I think to tell if people are optimizing their are truly like managing the way they should be is by looking at their calendars and looking. I like to get, you know, a week weekdays and a weekend in the next three months. And if those are all the same prices, you know they’re not using any kind of dynamic pricing tool. And if they’re not using a dynamic pricing tool, you can pretty much bet, not always, but you can pretty much bet that they’re not optimizing in other ways. So you want to be looking, using this data but also looking at each of these buildings because you can, there can be a building or there can be a size that looks great, but then when you look at the building it looks like a dump when people pull up and you know that’s going to affect what you’re able to do with it.

Avery Carle [00:35:08]:
So same thing with the interior of units. You want to enemy method and make sure that especially in condos, that your unit, your decor, your photos, everything looks better than the rest of the units or at least is on par with the top performers in that condo building. So you can’t just buy any old two bedroom and say, oh, I’m going to be a top performer. Unless you are optimizing the appearance and the decor and the experience and the management of your property as well.

Erica Muller [00:35:37]:
I don’t know if you could see my screen, but I’m clicking through at some of the top earning condos. This one’s on a lake. It’s on a golf course in a golf course community. I do feel that, you know, the interior, it’s nice, but it definitely could use a facelift. It’s still a top earner and I would have to say it’s probably because of the location within the community. So there’s definitely things to pay attention to there as well. I’m just looking at another one. This one’s much nicer.

Erica Muller [00:36:00]:
It looks like it’s also on a lake or river. So these condo communities are probably on the river. Avery. Or I don’t know if there’s an interview.

Avery Carle [00:36:07]:
So those look like golf courses. So I don’t know if there’s a river, if it’s a lake. Okay, yeah, those are the golf course ones. Let’s look at a beach one.

Erica Muller [00:36:14]:
Yeah, let’s do that. Okay. So going to the beach and how. What are your feelings on HOA fees a lot or condo fees along beachfront condos? Because I know that right now insurance is kind of high, which has driven things up. What are your thoughts around that?

Avery Carle [00:36:28]:
Yeah, so South Carolina is not having the insurance problem that we’re having here in Florida, which is only temporary, guys. And we go into that in some of our Florida episodes, but not worth talking about here. Okay, so condo fees. Here’s, here’s how I feel about condo fees. I’m actually in a one of our condo units. So I’ve got a mixed use building. That’s my office on the bottom and we’ve got a three bedroom condo upstairs that we obviously is a short term rental. And it’s a $500 a month condo fee.

Avery Carle [00:36:56]:
And a lot of people will go, oh my God, that throws my numbers off. That’s going to kill my numbers. But you have to look at what the condo fees cover. So mine covers everything. Exc electricity. So it covers water, it covers cable and Internet and it covers every everything except electricity. It covers exterior insurance, which is the more expensive part of insurance. I only have to ensure what’s inside the unit covers exterior maintenance.

Avery Carle [00:37:22]:
We have three pools that I don’t have to maintain myself. I have other properties that, where I have a private pool and I know how much it costs and what a pain in the asset is to maintain a pool. So when you look at the things that you would be doing anyway, like if I add up what my maintenance costs are on my single families monthly and then look at my condo fees, it really evens out. So it’s not like, oh my God, you’re going to have to pay all of these expenses and then a $500 condo fee. It’s usually. You have to check and make sure it’s usually not an additional cost if you look at what all it covers. So it makes sense in the unit that I’m in. So a lot of times it covers a lot of expenses that you’d be having to pay anyway.

Avery Carle [00:38:03]:
And you just need to kind of look at that. And I think a lot of people get scared of condo assessments too. But again, so condo assessment happens when something needs to be fixed, like, or some kind of capex, like, oh, we got to do a new roof or we got to repaint the building. You would be having to do that small expenses over time. On a single family with condos, you’re not doing any of that over time. It’s just all happening at one time. So instead of a bunch of small payments, maintenance payments and capex payments over time to fix things, you’re not doing that. You’re just doing it all at once, like once every five years.

Avery Carle [00:38:38]:
So when you look at it like that, condo assessments aren’t really that scary either.

Erica Muller [00:38:41]:
Right. Yeah, I agree. So I was pulling up some of these oceanfront condos while you were talking and you know, they’re. They’re all right on. Right on the ocean. I mean, this is so nice. But there’s some interior units too. This one I think is an interior.

Erica Muller [00:38:54]:
And I don’t believe. Oh, does it have an ocean view? Let me see. Because I like to look for the pattern. Is. Is it only the ocean views? It doesn’t really have that great of an ocean view. So it looks like if. As long as the building is close or within walking distance to the water for the condo. Oh, it does.

Erica Muller [00:39:09]:
Okay. This one too. So of the ones I pulled up, a lot of them have great ocean Ocean views. So I’d want to kind of work with you and your team, Avery, to find out, like, what is the cost of getting into one of these that has a view and what’s the cost of not. Either way, you can still become a top earner because there’s plenty of them here that don’t have ocean views. They’re further inland. So that was an interesting thing that I just noticed. This is a 2 one and this one is a top earner.

Erica Muller [00:39:34]:
And it’s not. I don’t want to put anyone’s house down, so I’m not trying to do that. It’s very dark inside and it definitely needs a facelift and it definitely needs to be updated. So I’m kind of wondering.

Avery Carle [00:39:42]:
The pictures are terrible. That’s not.

Erica Muller [00:39:44]:
The pictures are also horrific in general. But I, I wonder, you know, what it is about this one that’s allowing it to become a top earner without being on the water. That would be a great conversation start to have with your agent here, because those of you that don’t have the budget to be on the water, you could do something that’s an interior unit or, you know, a little further inland. Okay, so that was everything on condo. Avery, did you want to go into townhouse or do you think that that’s pretty good?

Avery Carle [00:40:10]:
I think we’re good on. On single families and condos. Is there anything else on in terms of the market as a whole that you feel like is worth mentioning data wise?

Erica Muller [00:40:21]:
So what my whole thing was is that the price points. That’s as a whole in terms of. Compared to. And all I do is underwrite markets every day, all day. In terms of what I’ve seen across all markets. This is a really great beach market in terms of entry level price. So a lot of people right now don’t want to spend more because interest rates are higher and they want to keep that payment at a certain place. So their budget is what it is.

Erica Muller [00:40:48]:
There’s not a lot of beach markets you can get into at this price point. And I’m in. I live in Florida. I understand beach markets and I know how. How costly they can be. This is a really great entry level beach market and that. That’s kind of what kept coming to mind for me when I was looking at it. The airport’s also right there.

Erica Muller [00:41:05]:
Super easy to get in and out of. Not going to be difficult for your guests to get to their properties once they get there. Like, there’s some markets where they’re beach markets and they’re Beautiful. But you have to fly into an airport that’s an hour away and then you have to get there. You have to think about that too. This is a drive to market for a lot of people on the Northeast. I know that for a while Myrtle beach was being marketed to Northeasterners like New York, New Jersey, up that way as the halfway point for like, for those of you that can’t get to Florida, go to Myrtle beach. Right.

Erica Muller [00:41:36]:
And now there was a big heavy push in marketing for that for years back in the 2000s. So there’s still a lot of people in the Northeast with that mindset that they go to Myrtle beach for their family vacation. This is what they do. And a lot of times they drive. Right. So it’s important to think about access to the market, the price to get into the market, the returns you’re going to get on that price. Everything is a win, win, win when I look at it like that. So it’s easy to get to.

Erica Muller [00:42:02]:
It’s a great entry level market. You’re going to get an awesome property for the price that has really high upside potential if you manage it right. And if you, if you execute the right strategy. Of course I don’t want to say just because you buy here you’re going to make a bunch of money because other people are, those people are doing something right and you have to do, you know what they’re doing or do it better. But that being said, it’s not an overly saturated market either. So that’s my, that’s my, my big take on this market from what I understand and what I know about it. And I think you really, you really should consider this. If you’re at that price point of under 500,000, even if you’re above that price point, but especially if you’re under that price point and you need to get into the market, this is, this is where you should be looking.

Avery Carle [00:42:44]:
I totally agree with that. And on that note guys, if you think you’re ready to buy with us in this market, you can email us at agents the shorttermshop.com or you can just join our Facebook group and hang out with us for a little while longer before you decide to buy. It’s called Short Term Rental, Long Term Wealth. Same title as my book. We also have a live Q and A every Thursday that you can join and ask us us all your burning questions about short term rentals. You can join that@strquestions.com Erica if they want to follow you and learn more about you and or Rolio. Where can they do that?

Erica Muller [00:43:17]:
Yeah, so I’m not really as out there as you guys are, which working on that. But if you go to Rolio on Instagram, V R O L I O, you can get follow us there. Also, if you go to our website, rolio.com, there’s a lot of ways to get in touch with us. We, we work more with agents, training on things like this and, and working with data. But, but we also love to help investors as well. But if you’re on Avery’s podcast, make sure you just connect with her to get to us because that’ll be the easiest way because we’d like to know that you came from Avery and, and Avery’s going to have everything you need to get access to this anyway.

Avery Carle [00:43:49]:
Totally. All right, thanks, guys. We’ll catch you on the next episode.

Erica Muller [00:44:01]:
Sat.