Investment Analysis: Cherry Grove Villas (North Myrtle Beach, SC)

Cherry Grove Villas in North Myrtle Beach, SC is a second-row condo community known for its spacious multi-bedroom units and strong appeal as vacation rentals. This analysis uses 2023–2024 performance data to evaluate Cherry Grove Villas from an investor’s perspective. We’ll cover short-term rental viability, rental income figures, cap rates, HOA impacts, guest feedback, seasonal trends, comparisons to nearby properties, and advanced investment strategies (1031 exchanges, self-directed IRAs).

Short-Term Rental Permissibility and Overview

Good news for investors: Cherry Grove Villas does allow short-term rentals. In fact, the community is sought-after specifically for its short-term rental options, giving owners the flexibility to rent to vacationers and generate income. The on-site amenities – including a pool, hot tub, elevators, and covered parking – cater well to weekly renters. HOA rules enforce a family-friendly atmosphere (e.g. minimum check-in age 25, no house parties) similar to other resorts, which helps protect property values and maintain order.

Each condo is large (4 to 6 bedrooms, some sleeping up to 20 guests) and fully equipped for vacation use. With full kitchens (often two refrigerators), in-unit washer/dryers, and spacious balconies, these villas are practically designed for big family gatherings, golf groups, and reunions. Being second-row (one street back from the beach), Cherry Grove Villas still offers ocean views and quick beach access without the oceanfront price tag. Guests simply walk across the street to reach the sand and the famed Cherry Grove Pier nearby.

2023–2024 Rental Performance by Unit Type

How have these condos performed recently? Let’s dive into the numbers from 2023/24. Larger units generally command higher gross rents:

• 4 Bedroom / 3 Bath Units (~2000 sq.ft.): Estimated to gross around $40,000–$50,000 per year in rental income in 2023, assuming active management. (For context, a five-bedroom unit grossed about $34,657 in 2019, and rental rates in Myrtle Beach have risen ~3–9% since then.) Well-marketed 4BR condos likely approached the mid-$40K range in 2023 gross.

• 5 Bedroom / 5 Bath Units (~3000 sq.ft.): Gross income has been reported around $55,000–$60,000 annually. One 5BR unit in Cherry Grove Villas generated $57,594 gross rental income (recent data from 2022/2023). This is significantly above the North Myrtle Beach overall average (~$34.9K annual revenue at ~57% occupancy), highlighting the earning power of these large condos.

• 6 Bedroom / 5 Bath Units (~3100 sq.ft.): These can sleep 16-20 guests and perform similarly to 5BRs or slightly higher during peak season. An investor who sold a 6BR unit noted it was a “proven rental income producer” for large groups. While exact 2023 figures aren’t publicly stated, owners have indicated strong family reunion bookings. It’s reasonable to peg gross revenue in the $60,000+ per year range for a well-run 6BR, especially after 2021’s travel boom.

Price & Cap Rate Context: As of late 2024, 4BR condos are listed around the high-$400s (e.g. a 4-bed, 3-bath penthouse listed at $489,000), while 5–6BR units trade in the $600K range (one furnished 5BR was listed at $624,900, and a 5BR sold for $539K in Dec 2023). Using these prices and the income above:

• Gross Rent Multipliers (GRM): Roughly 10–12 for larger units (e.g. $540K price / ~$57K gross ≈ 9.4) – indicating a healthy income stream relative to price for a vacation rental. Smaller 4BRs might see GRM ~10–11.

• Net Income & Cap Rates: After expenses, net income is lower (details next section). A self-managed 5–6BR might net ~$25K–$30K (assuming no 3rd-party management fee), which is about a 4–5% cap rate on a ~$600K purchase – in line with typical short-term rental ROI ranges. Using full-service management (20–25% of gross for cleaners, booking, etc.) can reduce net to ~$10K–$15K, yielding a modest 2–3% cap rate. In other words, cap rates here tend to range ~3–5%, depending on how actively you manage and cost-control. This is on the lower end of “good” STR returns, due largely to high HOA dues, but many investors accept it for the property’s appreciation and personal use potential.

Table: Example Financials by Unit Type (Annual)

Condo Size	Gross Income (2023)	HOA Dues	Other Expenses (Tax, Ins., Mgmt)	Net Income (Est.)	Cap Rate (@Price)
4BR/3BA (~2000sf)	~$45,000 (est.)	~$16,644	~$15K–$20K (tax, maint, mgmt)	$10,000 (managed)$20,000 (self)	~2% (managed)~4% (self)
5–6BR (~3000sf)	~$58,000 (actual)	~$24,000	~$18K–$25K (tax, maint, mgmt)	$15,000 (managed)$30,000 (self)	~2.5% (managed)~5% (self)

Note: The above expenses include an allowance for property tax (~1% of price annually for non-homestead SC property) and an assumed 20% of gross for management/cleaning if “managed.” Insurance is covered by HOA (as part of dues), and utilities like water, internet, trash are also HOA-covered, helping reduce owner overhead.

HOA Fees, Policies, and Impact on Returns

Cherry Grove Villas’ Homeowners Association fees are substantial, reflecting the size and amenities of these condos. HOA dues in 2024 are approximately $1,387 per month for a 4BR unit and about $2,002 per month for a 5–6BR unit. These fees are high ( ~$16.6K–$24K per year) and materially affect net income, effectively absorbing a large portion of the rental revenue. What do these fees cover? Quite a lot: building insurance (hazard/flood), water & sewer, trash pickup, cable/Internet, pool and hot tub maintenance, common area upkeep, landscaping, pest control, and property management of the HOA. In essence, many expenses that a single-family beach house investor would pay separately (insurance alone can be hefty for coastal properties) are bundled into the HOA.

Investor take: while the HOA cost is significant, it simplifies operations (fewer separate bills) and reduces risk (major repairs/insurance are shared). It also means amenities are well-kept – a selling point to guests. On the flip side, the HOA’s rules and costs require investors to budget conservatively. As shown above, after HOA dues, the net operating income shrinks, so investors should factor that into their cap rate calculations.

HOA Policies: Cherry Grove Villas’ HOA generally allows short-term rentals, but with rules: often no renter under age 25, no pets for tenants (owners may have pets with restrictions), and no motorcycles or trailers for renters (a common rule in many Myrtle Beach resorts). Golf carts are owner-only as well. These policies may limit a small segment of potential renters (e.g. motorcycle rally participants), but overall they help maintain a family-friendly environment which attracts the core tourist demographic. The HOA is investor-friendly in that it permits rentals of any length (some condos elsewhere have minimum 30-day rules – not the case here). Just be mindful to inform your renters of the HOA rules (parking passes, no smoking in units, etc.) to avoid fines.

Guest Experience and Seasonal Occupancy

What do guests say? The guest experience at Cherry Grove Villas is largely positive, which bodes well for repeat bookings and word-of-mouth. Many renters are extended families who love the spaciousness and convenience. For example, multiple Airbnb listings for Cherry Grove Villas units hold ratings of 4.6–5.0 out of 5 stars. Reviews frequently praise the large, clean units, well-stocked kitchens, proximity to the beach (just across the street), and the bonus features like the game rooms in some units (pool tables or arcade games are popular in the 5+ bedroom condos). One Airbnb guest wrote that the 5-bedroom unit was “exactly as described – plenty of room for our family reunion and an easy walk to the beach.” High guest satisfaction is critical for maintaining strong occupancy in the competitive North Myrtle Beach market, and Cherry Grove Villas delivers on this front with an average Airbnb rating in the high 4’s (out of 5).

Critiques: Some minor issues noted in reviews include the parking garage’s tight spaces (common in beach condos) and occasional amenity downtime. In 2024, the HOA temporarily closed the pool and hot tub for repairs, which a few guests mentioned. However, the management was proactive in communicating this and the amenities were expected to reopen promptly. A couple of older TripAdvisor reviews (circa 2016–2018) gave mixed feedback, citing that certain units needed updating. Notably, many condos have since been renovated with new flooring, paint, and furniture (as highlighted in listing descriptions). These upgrades have improved guest satisfaction. Investors should plan for periodic updates to keep the condo “fresh” – the ROI on renovations is apparent in both higher nightly rates and better reviews. Even simple upgrades like new mattresses or smart TVs can pay off by boosting your ratings and justification for rate increases.

Seasonal Occupancy Trends

North Myrtle Beach is a highly seasonal market, and Cherry Grove Villas is no exception. Summer is king: June, July, and August typically account for over half of the annual rental income for vacation rentals on the Grand Strand. During these peak months, occupancy often runs 80–90%+. Many owners rent weekly Saturday-to-Saturday in summer to maximize occupancy (some listings note summer stays must be weekly blocks) – back-to-back bookings are common in peak season. With 6-bedroom units, you might cater to family reunions, which often book the same week year after year. Average daily rates (ADR) in summer 2023 were around $420+ for the Myrtle Beach area (and even higher for large ocean-view properties), so a single prime week in July for a 6BR can gross $4,000-$5,000.

The shoulder seasons (spring and fall) see moderate occupancy. April, May, September, and October bring golfers, festival-goers, and retirees. Expect maybe ~40–60% occupancy in these months at slightly lower nightly rates. Some savvy owners run promotions (e.g., 3-night spring weekends for golf groups, or fall discounts) to capture this market.

Winter (Off-Season): December through February are the slowest. Many owners opt for monthly “snowbird” rentals in winter – e.g. renting to a retired couple for $1,800/month all-inclusive – rather than leaving the unit empty. Cherry Grove Villas does accommodate monthly off-season rentals (property managers like Elliott Realty list winter rates). This can bring in ~$4–5K total for Dec–Feb, helping cover carrying costs. Occupancy during winter is otherwise very low (often <20% if renting short stays) given the beach weather is cool. However, holiday weeks (Thanksgiving, Christmas/New Year’s) sometimes get one-off family bookings for reunions. Overall, expect annual occupancy in the ~50–60% range (which aligns with N. Myrtle Beach’s 57% average), heavily weighted to the summer. Seasonal fluctuation is high, so cash flow planning is crucial – your summer profits must carry the property through the winter.

HOA vs. Nearby Properties: How Cherry Grove Villas Stacks Up

In evaluating Cherry Grove Villas, it’s helpful to compare it to other North Myrtle Beach investment options:

• Versus Oceanfront Condos: Oceanfront high-rises (e.g. Paradise Pointe in Cherry Grove or Mar Vista Grande in Ocean Drive) command higher prices per unit (often $700K+ for 4BR) but not necessarily proportionally higher rents. For example, a 4BR oceanfront at Paradise Pointe might sleep 8–10 and gross perhaps $50K, similar to a second-row 6BR that costs less. Cherry Grove Villas offers more bedrooms for the dollar. You sacrifice direct oceanfront views, but many guests are happy with ocean peek views and a short walk in exchange for 6 bedrooms under one roof – something few oceanfront condos offer. Also, Cherry Grove Villas’ HOA fees, while high in absolute terms, may actually be lower per square foot than some luxury oceanfront resorts that have extensive amenities (lazy rivers, gyms, etc.). Here you’re not paying for 24/7 front desks or restaurants in the building, for example.

• Versus Beach Houses: A single-family beach house in Cherry Grove with 6+ bedrooms could easily cost $1M+ (especially if oceanfront or second-row with private pool). Those can gross six figures in rent, but the cap rate might be similar or worse once you factor in maintaining a pool, yard, individual insurance, etc. Cherry Grove Villas gives you a condo-style investment: more turnkey, with maintenance handled by HOA. Also, multi-story beach houses can have higher vacancy in off-season unless they’re oceanfront. The condos benefit from resort-like features that draw snowbirds (elevators, on-site hot tub, etc.). That said, a beach house has no HOA fee – so it’s a trade-off between autonomy vs. convenience. Investors aiming for higher appreciation might lean toward scarce land (house), whereas those prioritizing ease of management and lower entry price gravitate to Cherry Grove Villas.

• Versus Other North Myrtle Beach Condos: In the Cherry Grove section, most condos are smaller (1-3 BR) or older low-rise buildings. Cherry Grove Villas is relatively unique in offering 4-6 BR in a condo format. The closest comps might be Ocean Breeze Luxury Villas in Windy Hill or Myrtle Beach Villas down in Myrtle proper – both also large-unit, second-row condos. Those have similar rental concepts. Cherry Grove Villas holds its own with competitive rental yields. Its building age (built ~2006–2007) means interiors are modern (or recently updated), whereas some older condos in NMB might need more rehab. Also, Cherry Grove’s family-friendly reputation (quiet, north end of town) can be a selling point versus busier central areas. This can translate into slightly longer average stays (families booking a full week rather than a few nights) – beneficial for reducing turnover costs.

In summary, Cherry Grove Villas fills a profitable niche: large-group vacation condos at a mid-range price point. They compare favorably to costlier oceanfront alternatives, though investors must be comfortable with the HOA structure. Nearby rental properties may have higher glamour (oceanfront views or lavish waterparks), but Cherry Grove Villas delivers the core rental revenue drivers – beds and location – very efficiently.

Investment Strategies and Considerations

Investing in Cherry Grove Villas can be approached with some sophisticated strategies:

• 1031 Exchange: Many buyers use a Section 1031 exchange to roll profits from another property into a Cherry Grove Villas condo tax-deferred. This IRS rule allows you to swap one investment property for another “like-kind” property and defer capital gains taxes. For example, if you’re selling a rental cabin in the mountains, you could 1031 into a beach condo. Cherry Grove Villas qualify since they’re income-producing real estate. Just be mindful of the strict timelines (identify replacement within 45 days, close in 180 days) and hold the condo as an investment (rent it out) to satisfy IRS requirements (you can’t immediately move in as a primary home). A 1031 is a great way to upgrade into this market without an immediate tax hit.

• Self-Directed IRA/401(k): Some investors even purchase rental condos through a self-directed IRA or Solo 401(k). This allows using retirement funds to invest in real estate. It’s possible to buy a Cherry Grove Villas unit under an IRA LLC, for instance. The advantage is tax-deferred (or tax-free, if Roth) rental income building your retirement. However, note the strict rules: no personal use of the condo is allowed (you can’t vacation in it yourself if owned by your IRA), and all income/expenses must flow through the IRA custodian. Also, financing is tricky (must be non-recourse loan if any). But for a cash purchase, this can be a powerful long-term hold strategy – essentially an income-generating asset in your retirement portfolio. Given the relatively moderate price point (~$500K), it can fit some self-directed retirement accounts’ capabilities. Always consult a financial advisor on this, as improper use can disqualify the IRA’s tax benefits.

• Leverage and Financing: Traditional financing (a second-home mortgage or investment loan) is commonly used. In 2024, interest rates are higher than a few years ago, so factor ~7%+ interest if taking a loan. High HOA dues also count against your debt-to-income when qualifying. Some investors choose to put 25-30% down to qualify for better loan terms on condotels. Cash flow can be tight with a big mortgage, but if you put 40-50% down, you can likely cover expenses with rental income and have some positive cash flow. Another approach is partnerships – e.g. a few family members go in on a 6BR condo, splitting use and income.

• Property Management Strategy: Deciding between self-management (via Airbnb/VRBO) or hiring a local property manager is key. Self-managing can save 20-25% commission, but you must handle marketing, guest communication, cleaners, and emergencies. Many out-of-state owners successfully self-manage Cherry Grove Villas by using dynamic pricing tools and local cleaning services – the reviews show it’s doable (some listings are explicitly “owner operated” with 4.8+ star ratings). Others prefer to contract with local rental agencies (e.g. Elliott Realty or Vacasa) for a more hands-off approach, at the cost of that commission. There’s also a hybrid: you manage bookings on Airbnb and have a local co-host or handyman on call. Regardless, budget for cleaning fees (usually passed to guests) and occasional maintenance. Given the size of these units, cleanings take longer and things like two HVAC systems or multiple appliances mean higher odds of repairs. A good strategy is to set aside ~5% of gross revenue for maintenance reserves.

• Renovation and Value-Add: If you acquire an older or under-furnished unit, strategic renovations can sharply increase revenue. Think coastal chic decor, durable LVP flooring (easy to clean sand), updated appliances, and adding fun amenities like a foosball or arcade machine. The renovation ROI can be compelling – for example, simply updating an outdated living room and bedding could justify a $20-$50/night higher rate and attract more bookings. Many 2007-era units in the complex have already been remodeled in the last few years, yielding modern looks that garner premium rents. Run the numbers: a $30K renovation might increase annual revenue by $5-10K and improve resale value, paying for itself within a few years while also boosting your guest ratings.

Conclusion

Cherry Grove Villas offers a compelling investment opportunity for those looking at North Myrtle Beach. It permits lucrative short-term rentals and has a proven track record of high occupancy in peak seasons and solid rental income (with one 5BR condo grossing about $57K in a recent year). Investors should go in with eyes open to the hefty HOA fees and seasonal nature of the business – this is not a low-expense, year-round rental, but rather a vacation rental machine that churns out income in the summer and covers costs in the winter.

On the plus side, the HOA takes care of most maintenance and insurance, and the large-unit format means economies of scale (renting one 6BR unit to a big group is often easier than renting two 3BR units to the same group). Guest demand remains strong for well-managed units, as evidenced by stellar online reviews and repeat family gatherings. The location in Cherry Grove is ideal for families and groups seeking a quieter beach atmosphere with easy access to attractions (golf, restaurants, the Intracoastal Waterway, etc.). Seasoned investors can further optimize returns through tax strategies like 1031 exchanges to defer gains, or even holding the asset in a retirement account for long-term wealth building.

In summary, short-term rentals at Cherry Grove Villas can be a profitable addition to an investor’s portfolio when approached with a realistic budget and active management. The combination of large floor plans, strong rental potential, and a prime beach location make it unique in the North Myrtle Beach market. By understanding the financials – from gross rents to net ROI after HOA fees – and employing smart strategies, investors can turn these condos into high-yield coastal investments. With 2023-2024 data showing robust performance and sustained tourism demand, Cherry Grove Villas stands out as a viable investment for those looking to capitalize on the Grand Strand’s vacation rental sector.

Sources:

• Community & rental policy information

• Current listings and pricing (4BR @ $489K; 5BR @ $624K)

• HOA fees and inclusions (4BR: $1,387/mo; 5BR: $2,002/mo, incl. insurance, utilities, etc.)

• Rental performance data (NMB average occupancy 57%, ADR ~$341) and specific Cherry Grove Villas unit income

• Seasonal revenue distribution (55% of annual revenue in summer months)

• Guest review snapshots (Airbnb ratings 4.6–5.0/5 for CGV condos)

• 1031 Exchange definition (tax-deferred swap of investment properties)

Disclaimer: All information given is meant to be educational. I am only passing on historical information shared with me by owners, rental companies, and various publications. I am not guaranteeing these numbers, nor can I guarantee future rentals or appreciation. This information is not intended to replace your own research, or to provide legal, investment, or financial advice. Please consult an attorney for legal advice.