Holly Place Townhomes (North Myrtle Beach) – Investment Case Study

Holly Place Townhomes is a boutique, 2-story townhome community (built ~2007–08) in the Crescent Beach area of North Myrtle Beach. Each unit is ~1,920 ft² (4 BR/3 BA) with two master suites (one on each floor) and ocean views from the balconies. The complex sits about 2 blocks (≈100 yards) from the sand, offers a private pool, and explicitly allows both short-term and long-term rentals. HOA dues are extremely low (just $375/year) and cover common-area insurance, landscaping, pool maintenance and trash service. (Golf carts and motorcycles are permitted, and the HOA even includes cable TV.)

• Location: North Myrtle Beach (Crescent Beach section), ~100 yd to ocean.

• Structure: 2 levels, vinyl siding townhome (1920 ft²), built 2008.

• Beds/Baths: 4 bed / 3 bath. Two master suites (one up, one down).

• HOA: $375/year (~$31/mo) covering insurance, pool, grounds, trash. Short‑term rentals explicitly allowed (with rules against parties).

Rental Income Estimates

These estimates use 2023–24 market data. For example, Airbtics shows the typical North Myrtle Beach rental is booked ~212 nights/year (≈58% occupancy) at ~$190–$200 ADR, yielding about $39K/yr revenue. The average month’s revenue in Feb ’24–Jan ’25 was ~$3,134. Holly Place’s 4 BR units likely command higher ADR (due to size and ocean views), so gross short-term income could reach $35–45K/yr. Even after ~30% of gross goes to management, turnover, utilities, and taxes, net cash flow is on the order of $25–30K/yr. By contrast, long-term leasing (12‑month rental) at Zillow’s estimate ($2,905/mo) yields about $34.8K/yr gross and ~$24–26K NOI after expenses. In other words, the turnkey STR potential is comparable or higher than a lease, with the advantage of flexibility.

HOA Fees and Policies

• Fees: Only $375/year (≈$31/mo). Extremely low for an ocean-adjacent complex.

• Included in HOA: Insurance, cable TV, common-area maintenance, pool upkeep, trash removal. (Note: cable and trash are covered; utilities for individual units are separate.)

• Rentals Allowed: Both short-term and long-term rentals are explicitly permitted. There are no on-site managers or additional resort fees. Owners can bring golf carts/motorcycles (within HOA limits).

This structure keeps operating costs low and grants flexibility for owners to rent on Airbnb/VRBO or traditional leases. (By comparison, many beachfront resorts have HOA >$300/mo and stricter rental caps.)

Cap Rate and ROI (Examples)

Using the above income estimates and recent sale price (~$645K in 2023), we can illustrate returns:

• Cap rate: All-cash cap rate ≈ NOI / price. E.g. NOI ≈$26K on $640K purchase ⇒ ~4.0% cap rate. Including a modest mortgage (e.g. 20–25% down) would reduce cash flow significantly at today’s rates, but leveraged equity growth can boost overall ROI.

• Cash-on-Cash (CoC): With 25% down ($161K equity), and loan interest ~6–7%, annual cash flow might be small or slightly negative, but equity would grow via amortization. A buyer could also exploit depreciation and 1031 benefits (below) to improve after-tax returns.

• Long-Term vs Short-Term: If one instead rents long-term, NOI is ~$24K/yr (on the same price), giving a cap ~3.7%. Short-term income can double typical rent cash-flow in this area, but also comes with seasonal variability and slightly higher operating effort.

Example ROI: Assume $650K all-cash purchase, $37K gross STR income and 30% expenses (NOI ~$26K). Cap rate ≈4.0%. If 25% financed at 6%, yearly mortgage interest ~$10–12K (interest-only) – the net would be ~$14K cash flow on $162K investment (≈8.6% CoC, excluding amortization and taxes). (These are illustrative; buyers should run exact amortization and tax scenarios.)

Renovation & Upgrade Strategies

Investors can boost income and occupancy through targeted upgrades. Key strategies include:

• Add sleeping capacity: Installing a bunk bed or extra full bed in a bedroom increases maximum occupancy and allows higher per-night rates. (Beach families often need flexible bedding, and more guests ⇒ more revenue.)

• High-quality amenities: Furnish premium items guests notice – e.g. top-tier mattresses, luxurious linens/robes, premium soaps, and a good coffee maker or even a Nespresso machine. These small touches justify higher rates and better reviews.

• Kitchen/Galley: Update kitchen appliances (full-size fridge, stainless appliances), add cookware and wine cooler, and supply beach equipment (chairs, umbrella). A well-equipped kitchen and rental gear can significantly improve guest satisfaction.

• Modern decor and finishes: Fresh paint, new flooring or luxury vinyl planks, and contemporary decor “refreshes” give a modern look without a full remodel. Even modest renovations (paint, lighting, new cabinet fronts or hardware) make a big impact on guest impressions.

• Technology: Smart locks (for easy check-in), high-speed Wi-Fi, and updated TVs/sound systems are expected by guests. A modern thermostat and USB outlets can improve comfort.

• Professional Photos & Marketing: After upgrades, hire a photographer for bright, polished listing photos. High-quality images are proven to increase bookings (showing off new furnishings/amenities).

Each of these improvements tends to raise guest ratings and demand: as one blog notes, refreshed decor and luxe touches let owners “justify charging higher rates” and drive repeat bookings. (For example, adding a bunk bed can directly increase your ADR by enabling higher occupancy.) Over time, even cosmetic updates (new paint, linens, appliances) can yield double-digit ROI by boosting occupancy and revPAR.

Guest Review Highlights

Holly Place’s short-term units are highly rated by guests. Review excerpts (from VRBO/Airbnb listings and local agencies) frequently praise:

• Location & Beach Access: “Short walk or golf cart to the beach,” “2 blocks from beach” (guests love how close it is).

• Spacious, Well-Equipped Interior: “Plenty of room for the whole family… well-stocked kitchen… linen package was well worth it”. (Guests note two master suites and 5 TVs.)

• Family-Friendly Amenities: “Kids loved the shuffleboard and arcade games”. A shuffleboard table in the garage/game room is repeatedly mentioned as a fun bonus.

• Quality & Condition: “Pristine shape… comfortable home away from home”, “Everything was appointed & maintained… A++”. Owners are noted for attention to detail (cleanliness, extras).

• Overall Sentiment: Guests frequently say they would “definitely be coming back” or “highly recommend” the unit.

In short, reviews emphasize comfort, cleanliness, and convenience. No major complaints appear; the unit’s condition, décor and amenities receive very positive feedback, which supports strong repeat bookings and word-of-mouth referrals.

Nearby Comparables

Other Crescent Beach-area properties help benchmark value and returns:

• Paradise Pointe (Oceanfront Condo): A 3 BR/3 BA oceanfront condo (10th floor) at 5310 N Ocean Blvd sold/listed for $584,900. It is larger (2,512 ft²) and on the beach, but Holly Place 103 (4 BR/3 BA, 1,920 ft², 3rd row) recently traded in the mid-$600Ks, reflecting its updated condition and beachfront proximity.

• Windemere (Oceanfront High-Rise): A 3 BR/2 BA oceanfront unit at 523 S Ocean Blvd Unit 705 sold for $479,900. This is a smaller or older unit, yet underscores that a well-furnished 4 BR like Holly Place commands a premium.

• Crescent Shores (Condo Hotel): One-bedroom oceanfront units in the area commonly list ~$250–$300K, but a 3 BR there goes higher. Holly Place’s all-private structure and no resort fees justify its premium price.

These comps (all in North Myrtle Beach) show that Holly Place’s pricing is competitive: it sells in the same range as renovated 3–4 BR properties with ocean views. Its combination of updated build (2008) and strong rental track record pushes its cap rate into the upper 3–5% range (at prevailing prices).

Investment Strategies

• 1031 Exchange: Investors can leverage Section 1031 to defer capital gains when selling another investment and buying into Holly Place. A 1031 swap treats the sale proceeds as “rolled over” into the new rental property, deferring taxes. This is a common strategy for vacation home investors upgrading or changing markets. (All properties must be “like-kind” and owned for investment, but Short‐Term Rental use qualifies.)

• Self-Directed IRA/401(k): One can purchase vacation rentals through a self-directed IRA or Solo 401(k). With a self-directed account, retirement funds can buy real estate (though the property must remain investment-only, with no personal use). This allows tax-advantaged acquisition, but requires cash funding and strict adherence to IRS rules (custodian must handle the transaction).

• Leveraging Depreciation: As an investment property, owners can deduct depreciation (on the building) against rental income, further improving after-tax cash flow. At current values, annual straight-line depreciation on a ~$650K purchase (with ~70% building basis) could be ~$15K/yr. Combined with maintenance write-offs and interest expense, this tax shelter can notably boost net return.

• Condo vs. Single-Family: Some investors also consider converting IRA/1031 into a few single-family rentals. Holly Place’s IRA-friendly condo structure (condo corporation) simplifies management of shared expenses. It’s crucial, however, to maintain arms-length rentals and avoid “disqualified person” use when using retirement accounts.

Summary

Holly Place Townhomes offers a low-cost, flexible beach investment: very low HOA, strong STR demand (≈$35–40K gross annually), and positive guest feedback. The long-term outlook is supported by comparables and resort-area tourism. While cap rates are modest (≈4–5%), strategies like leverage, tax deferral (1031) and retirement-account purchasing can significantly enhance effective ROI. With prudent upgrades (amenities, décor) and professional management, Holly Place’s condos can produce stable cash flow and appreciation as part of a diversified coastal portfolio.

Sources: STR market data, Airbnb trends, Zillow/Redfin property data, MLS/Compass records, vacation rental guides.

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.