Master bedroom in Folly Beach SC Towards the end of 2014, we bought a high-end vacation property in a great, oceanfront location on Folly Beach, SC.  A sizable investment of around $1M as an alternative to our usual strategy of longer term rentals in downtown Charleston.  I was a little nervous of this one but my wife, Sebrina, was her persuasive self, making an additional case for family holidays at the beach.  So now, some 6 months have passed and it’s time to review just how is it all going?

What we did:

First of all, our initial predictions surrounding investing in a vacation rental property can be found in an earlier blog.  We spent around $5K updating the fixtures which is pretty minimal.  Our designer also spent time staging the property and removing all the unnecessary items, mismatched crockery, Readers Digests from 2005 etc. Visitors want to believe the home is theirs for the week and not to be constantly reminded of someone else’s life. 

Tripp Smith, our real estate photographer, took new in-house shots and produced a great flyover video to show the property at it’s best.  After a review of the competition among Folly Beach rentals, a new rental rate was set raising it from $3600 to $5500/weekly in peak season.  VRBO, HomeAway, Air B&B, Trip Advisor, Booking.com and our own web site, Luxury Simplified Retreats, were used to promote and secure bookings.

Does the market like it?

We are now 3 months into the 2015 season.  It started slowly but we expected that, being new on the market. 

  • $75K in receipts paid and accrued representing 19 weeks booked or used so far in 2015
  • 6 further weeks blocked out awaiting initial deposit.
  • Run rate so far this year is averaging $4K per week.
  • Estimation for the year at 70% capacity is $120-130K.  With discounting and special offers we hope to run at 85% capacity using some of the remainder for family fun at the beach!

The performance is good and we are on target for our initial $120K prediction.  Once at that figure we will begin to discount those harder-to-rent mid week and winter opportunities to maximize our income.

 

UPDATE: May 2015

As a result of its strong performance in Q1 2015, we made a substantial investment in updating the interiors to keep it fresh and fully inline with our luxury vacation portfolio.  Even a luxury beachfront property starts to show the wear and tear of weekly rental visitors, especially during the height of the summer beach tourist season.

Take a peek at some of our updated paint and furnishings … then view the entire album here and then book your next Folly Beach vacation!

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Note: In a recession, people will stop going on vacation and booking a luxury vacation rental, but they are unlikely to take their children out of college. That is precisely why our real estate investment portfolio includes downtown rental properties nearby the College of Charleston.  Student rental rates have a greater protection from changes in the economy.  Here is the proof from Stanford.  It is important to develop a balanced portfolio and not to rely on a single strategy. Is it time to build your own investment portfolio? Start your search with available downtown properties … 

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