Top South Carolina Cities to Own Real Estate
Top South Carolina Cities to Own Real Estate
Welcome to South Carolina, where the charm of southern hospitality meets the allure of coastal living. From sandy beaches to vibrant cities, this state has it all. If you’re looking for a place to invest in real estate that offers both strong potential returns and an unbeatable quality of life, look no further than South Carolina. Let’s explore the top cities in South Carolina for real estate investment and why owning property here is such a smart move.
Top South Carolina Cities by Population
South Carolina is home to bustling cities with diverse populations, each with its own unique charm and appeal. Here are the top four South Carolina cities by population:
Columbia: Known as the “Capital of Southern Hospitality,” Columbia offers a thriving arts scene, historical landmarks, and top-ranked universities. The city’s affordable housing market attracts young professionals looking for an urban lifestyle without breaking the bank.
Greenville: Voted one of America’s Best Downtowns by Forbes Magazine, Greenville features tree-lined streets, award-winning restaurants, and boutique shops. The city’s strong job market and easy access to outdoor recreational activities make it a popular choice among families.
Charleston: Renowned for its rich history and stunning architecture, Charleston is consistently named one of America’s most beautiful cities. Home to world-class restaurants and charming boutiques, this coastal gem is perfect for those seeking a laid-back yet sophisticated lifestyle.
Myrtle Beach: As one of the East Coast’s premier vacation destinations Myrtle Beach offers 60 miles of sandy beaches along with numerous shopping centers and entertainment venues such as theme parks or water parks making it both an attractive location for tourists but also homeowners who want to live in paradise year-round. Homes for sale in Myrtle Beach are very affordable.
Each South Carolina city has something unique to offer potential real estate investors based on their individual preferences!
Benefits of owning in South Carolina
South Carolina is one of the most sought-after states in America, especially when it comes to owning real estate. The state attracts a diverse mix of people and has plenty to offer for everyone. Here are some benefits of owning property in South Carolina:
Firstly, South Carolina real estate offers low property taxes compared to other states which makes it an affordable place to own real estate. This means you can enjoy all the perks that come with homeownership without breaking the bank.
Secondly, there’s no shortage of stunning locations to choose from across the state – whether you’re looking for beachfront properties or rural acreage, there’s something here for every taste and budget.
Thirdly, South Carolina boasts a strong economy with growing job opportunities in sectors like healthcare, technology and manufacturing. This means that investing in real estate now could lead to long-term financial gains down the line.
Fourthly, living in South Carolina also brings access to great schools, top-rated universities and colleges as well as world-class health care facilities.
Lastly but not least important is its weather conditions – mild winters making it perfect for retirees seeking warmer temperatures while still having four seasons and summers ideal for those who love watersports or exploring outdoors!
Why do people love Myrtle Beach?
Myrtle Beach is one of the most popular vacation destinations on the East Coast. But why do people love it so much? For starters, there’s the beach itself – miles and miles of beautiful sand and warm ocean water to enjoy. Whether you’re looking for a relaxing day soaking up the sun or want to hit the waves with your surfboard, Myrtle Beach has something for everyone.
But that’s not all – Myrtle Beach is also home to a wide range of attractions and activities. From amusement parks and water parks to shopping malls and golf courses, there’s always something new to discover in this vibrant coastal city.
For families, Myrtle Beach is an especially popular choice thanks to its many kid-friendly attractions. Take your little ones for a ride on the famous SkyWheel or visit Ripley’s Aquarium for an up-close look at marine life.
And let’s not forget about nightlife – Myrtle Beach has plenty of options when it comes to bars, clubs, and live music venues. Plus, with mild weather year-round, you can enjoy everything this city has to offer no matter what time of year you visit.
Property Taxes In South Carolina
South Carolina is a great state to own real estate in. With its growing economy, beautiful scenery, and friendly communities, it’s no wonder why many people are investing in properties here. Whether you’re looking for a vacation home or a permanent residence, there are plenty of cities in South Carolina that can offer what you need.
However, before making any final decisions on purchasing property in the Palmetto State, it’s important to consider the property taxes involved. Fortunately for homeowners, South Carolina has relatively low property taxes compared to other states around the country.
The power of investing in Real Estate
Associate Broker Century 21 Fairways
Direct: 724-787-1659 Office: 724-864-5916
The power of Real Estate as an investment tool w/ Benefits
First I want to preface that you should never over extend yourself on your home, rental properties or vacation properties.
With that being said real estate is one of the safest long term investments one can make once you are educated on it.
Owning real estate as a primary residence may not always be the highest yielding investment, especially in the Pittsburgh metro, but it can provide long term security that renting cannot. Appreciation locally tends to vary between 1-3% year over year with a spike of nearly 24% combined during 2020 and 2021.
An example by the numbers – investing vs pay down
Let’s look at the following example. Homeowner A has been in his house for nearly 14 years. He purchased his house for $225,000 and put 20% down when doing so. Due to appreciation the current value of his home is $345,000. His original principal would have been $180,000 and with 168 payments his current balance would be around $119,000. This means his current home now has $226,000 in equity. Homeowner A could simply continue paying off his mortgage and be debt free in 16 years or could refinance to pull $157,000 from his equity while maintaining 80% equity in his house and invest in a cash producing property.
Using a real-life example from NHT he could buy a 5 unit, with rents totaling $4,800/mo. Using his $157,000 as a down payment he would have roughly a $252,000 mortgage and monthly payment of $1,862.87 /mo. Assuming a 10% vacancy and 8% repair rate, his net would be roughly $2,073.00. Over the course of a year that is roughly $24,000 of profit.
Now the real story gets even better… His change in the mortgage of his original property likely increased around $720/mo, so even after figuring that he is up $1,300 mo. However, it gets better. His net worth owning the 2 properties will increase roughly $18,000 the first year due to a 2.5% appreciation in the value of real estate. At the end of 10 years his assets will be worth roughly $965,000 assuming a 2.5% increase per year. He will have netted $156,000 in rent after considering for vacancy, maintenance, and the 720 increase his first mortgage. Then to make things even better, he is able to depreciate the property during this time helping him save on taxes…
Now lets assume homeowner A decided to instead just continue paying his mortgage. In 10 years or 24 years from initial purchase his balance would be roughly $82,000 and the value of his single home would be $441,630. Creating a net worth of assets of $359,630… Lets see how that compares to the investment choice. His two properties while having a $965,000 worth would have $442,812.00 in debt. Plus the $156,000 in rent gives a net of assets of $678,188…or $318,558 more. And that is assuming none of the $156,000 was invested in the stock market during that time.
Homeowner A is now in the market for a vacation property and uses the $156,000 as a down payment towards his new property. He purchases a condo on the beach in Indian shores Fl for $650,000. With his down payment his mortgage comes out to $495,000 or roughly $5,000/mo including taxes and condo HOA fees. Homeowner A though is ok with having a property management company rent his condo out at a weekly rate of $2,500 for 3 out of 4 weeks each month. And still manages to net around $750/mo after all expenses.
Ten years down the road here is his standing while getting to enjoy a vacation property. The value of his properties totals $2,067,337. He has collected another $246,000 in rent during that time period including subtracting the $720/mo he is paying more because of the original refinance. Against all three properties he will owe a total of $702,006… Making him positive $1,365,331, plus of course the $246,000 in rent which could be applied to the principal or invested in other avenues. How does this stack up to if he had decided to just finish paying off his mortgage and bank his monthly payment for the last 6 years? His house value of $565,323 is free and clear along with an additional $97,000 in cash… seems good until you really consider buying the 5 plex plus the beach rental not only afforded him a vacation property for 12 weeks of the year, but also grew his net assets by an additional $949,000 over the straight pay down.
How do you get started?
So where to begin? The first step is homeownership. If you aren’t currently a homeowner your goal should be to become one as soon as possible. Regardless if you decide to purchase additional properties a CNBC study in 2019 found that the average net worth of a homeowner was $255,000 vs $6,300 of a renter suggesting that owning a home is a smarter long term financial move.
Once you’re committed to buying, finding a great lender is the first place to start. They will be able to guide you through the costs of the down payment and the monthly expense associated with the cost of buying. Principal & interest, property taxes, and Home owners insurance. In the circumstance that your credit or savings are not where they need to be, a good lender can help with suggestions to put you on the fastest possible path to home ownership.
The other individual you will want to find is a good real estate agent who is familiar with the area you are looking to buy in. Someone who understands the current trends in the market along with nuisances such as list to sale percentages and average days on market.
My quick suggestion on loan type would be a conventional 3-5% down or VA – 0%… This would mean you’ll need roughly 6-12% including closing costs. Why not wait until you have more to put down? Opportunity cost. Consider this… the median home price in North Huntingdon is up 4% ytd (March 2023 vs March 2022). That means that even a $200,000 home would be roughly $8,000 more next year if we appreciate at the same rate from 2023 till 2024. So in a sense you have to save $8,000 just to break even and buy the same house. With that you need to be certain you are not overextending yourself on the purchase as homes do occasionally have issues and require repairs. Additionally, if you know you want to get into investing quickly, you could purchase a 2-4 unit dwelling, live in one unit and rent the others out.
I own a home what do I do next?
Once purchased I would recommend paying aggressively until you are at least 90% LTV. This way should you ever need to move you are in a position that it should be feasible without taking cash out of your pocket.
If you are a homeowner, then assessing your current situation can help determine what the best next step is for you. If you owe more than 90% of the current value, bring down your balance to below a 90% LTV ratio. From there the number of directions that could make sense are nearly limitless. Sometimes additional real estate holdings is something people are not comfortable with and in this case have a more limited portfolio is a way to go,.. stocks, bonds, mutual funds, ect… If you are open to real estate as part of your investment portfolio..
- First determine your long term goals
- Determine your tolerance for risk…being highly leveraged vs cash only
- Determine how much cash you have to invest whether that is actual cash in hand or equity in a primary residence
The safest plan of investing
The safest plan of attack is paying off your primary residence and then purchase existing properties cash. The downside is with a limited budget this route tends to be more long term, however the upside is there is virtually no risk.
On the other end there are extreme options such as hard money, owner financing, or even on a very advanced extreme end creating a REIT.
The Reality of what most people want
The reality is most people simply want the real estate to help with monthly cash flow and create long term asset accumulation/ wealth. Real estate can also be useful for deferment of taxes…For example rental properties that are going up in value accompanied by rising rental returns could be used to pull cash from by a line of credit or refinancing. That “income” would not be taxable because it’s a loan and you don’t pay taxes on a loan like you would ordinary income. Then in turn the higher rent rates would pay off the additional loan.
Lets say you just bought your first home and now you’re looking to begin investing. First you want to ensure that you have at least 10% equity in your own home and that you can more than comfortably afford the payment. At this point I recommend saving approximately 3-6 months of expenses to further your security. After that point its time to begin aggressively saving for that first rental property. Most banks are going to require 20-30% down and with closing costs generally that means 25-35% of the purchase price.
When buying your first rental property, unless you are a contractor, builder, or are well versed on construction you will want to get a home inspection to ensure that there are no big repairs right around the corner. Even prior you will want to ensure the property has adequate cash flow. While there is no hard fast rule, some people use the 1% rule meaning that the property should generate 1% of the purchase price in rent monthly. This may not be feasible in certain areas, so understanding local capitalization rates (with the help of an expert) can help determine whether a home is a good buy or not. In general rougher areas will have a higher rate of return, whereas more desirable areas will have a lower rate of return. This can be offset in some circumstances by the difference in property appreciation between the two areas.
Either way it is important to figure in some tolerances such as a 10% vacancy rate, 8% on-going repair cost (based on condition & desirability). Then on top of that you want to ensure that you can cash flow month over month. If you’d like the property to be more hands off figure in another 8% in on-going fees for property management. At the end of the day you should aim to be cash positive even after making those allowances.
Also when purchasing an existing property you will want copies of the existing leases with tenants and the current rent roll so you know who is paying in a timely fashion. Also this ensures that any claimed rents are really being collected. Finally you will want to take to your attorney as to whether using an LLC, trust, or simply putting the property in your name mokes the most sense for current and future planning.
While real estate again is one of the safest investments one can make it still pays to have a professional in your corner. As you gain experience you can make decisions and see other innovative ways to earn profits, such as whole selling, flipping, or adding multiple properties to a rental portfolio.
Leveraging your primary home beyond 80-90% in my opinion is never a safe or logical decision as it makes exiting the home difficult should the need arise. With that in mind, the power of using your home’s equity to create other avenues of income or purchasing even just a vacation property is a very real possibility.
A few good books..
The Millionaire Real Estate Investor by Gary Keller
ABCs of Buying rental property by Ken McElroy
ABCs of Real Estate Investing by Ken McElroy
Tax-Free Wealth by Tom Wheelwright, CPA