Sponsored by: Daniel Ravenel Sotheby's International Realty
By: H. A. Fisher
In a city like Charleston, it can be tempting to invest in real estate. The area has some pretty incredible homes that can be appealing to vacationers as well as college students and young professionals looking to rent.
For the most part, real estate is a solid investment. Homes typically increase in value over time, so it’s quite likely you’ll make a profit should you opt to sell down the road. Other benefits to owning an investment property are:
- A write-off on your income taxes.
- Someone else is paying your mortgage – while you build equity.
- Current interest rates are low, making it a good time to buy.
Charleston has several colleges so purchasing a home in downtown Charleston near the College of Charleston, for example, could be quite lucrative.
Named the top city in the United States for three years running by the readers of Condé Nast Traveler doesn’t hurt the tourism market. Investing in a beach house is smart if you’d like to use it a few weeks out of the year and rent it out to tourists the rest of the time. If you price your rental right, you can end up paying for your own vacation home.
But buying an investment property – like any major purchase – requires some forethought. Make sure you’ve considered the following before you start house hunting.
Can you afford it?
Crunch the numbers and assess your personal finances to ensure it makes sense. Consult with your accountant on the tax benefits and consider what happens if the house sits vacant for a few weeks out the year. Can you cover that extra mortgage payment?
The average sales price for a single-family detached house in Charleston County was $386,452, according to data for March 2015. Beachfront houses may be more pricy as are homes in desirable areas like Mount Pleasant or on the Charleston peninsula.
Have you factored in all the extra expenses?
Just as you have with your primary residence, there are water, trash, utilities and taxes. With a rental property, you’ll also need to account for cleaning and repairs after a tenant moves out. Factor all these into your financial assessment, also accounting for large expenses such as roof repairs or exterior painting.
What are local vacancy rates?
There’s nothing worse than getting your property ready for renters and then finding tons of homes are simply sitting empty. There could be too much inventory and not enough demand. Charleston’s real estate market is pretty strong right now and rental properties seem to be a hot commodity, but make sure you’ve looked at your specific area or neighborhood for comparable properties and pricing. Working with an experienced real estate agent like those at Daniel Ravenel Sotheby's International Realty is beneficial can be very beneficial. Real estate agents can assist you in targeting the most lucrative rental markets and help you get the most out of your investment.
What are your plans for the property?
You need to determine the overall purpose of your property. Will you use it for a portion of the year? Will you rent it for five years and then retire to Charleston? Are you comfortable renting to 20-year-old college students? Give some thought to both the short- and long-term strategies for your investment property.
Will you manage it yourself or hire a property management?
A property manager can cost a percent of the monthly rent so it may be tempting to manage the house yourself. If you have the time and skill set, that’s fine. But if you already have a demanding job and family responsibilities, it may be worth it to outsource that work. Plus, you can seek out a reputable company that will be focused on keeping your property rented at all times. Daniel Ravenel Real Estate offers property management services and boasts more than 250 units in its rental inventory.