It's not news that Folly Beach SC is a bustling little beach town these days. From countless locals and tourists, surfers and kiteboarders, shops and restaurants, there's always something going on in this eclectic "Edge of America." From Real Estate, to Construction and Vacation Rentals, our diverse teams have all been busy finalizing our newest development project, two modern duplexes to serve as vacation rentals located a block from Center Street, readying it for inaugural vacation rental guests come mid-May. Immediately adjacent to this dual duplex vacation rental property is our latest development project, on E. Cooper Street, designed with innovative new ideas to add additional luxury vacation rental inventory to Folly Beach.
Last year, we purchased a property on E. Erie Street, a single-family home that had seemingly been extended and at some point, converted to a duplex and a 1 bedroom "FROG" (Finished Room Over Garage) over a detached garage. In a poor state of repair, the land was zoned commercial, allowing us the opportunity to further build two homes to the rear of the yard on Hudson Street. Since this lot was connected to City sewer, we could use the rear yard for applications other than a huge drain field for septic which is often a hurdle on Folly Beach.
Our plan was to reduce the size of the overextended main house and reconnect it as a single-family home. Less heated and cooled space would seem madness, but it allowed the two additional dwellings to be slightly larger and in any event, the extension was pretty unsightly. The home itself has a mansard roof design and needed remodeling both inside and out to improve its look and function. BUT it would take a while to proceed with planning and permitting so we made superficial upgrades to the lower of the two duplexes and rented it for the 2017 summer season. It was surprisingly popular, likely due to its inclusion of a basic in-ground pool to the rear and its proximity to Folly's heartbeat, Center Street. The summer rental income paid carrying costs for the full year.
For this project, and the dual duplex across the street, we use Allen Kinter as the architect. As he lives and works on Folly Beach, he's intimately familiar with the local regulations, thus avoiding so many of those common pitfalls and delays. His wife, Julie, is also a talented landscape architect so more "grist to the mill" as they say.
The two new homes to the rear need to be elevated on piles, as do nearly all builds on Folly Beach. We have a very tight budget for this investment so to reduce both holding and build costs we opted for a modular build. Our construction crews have a great relationship with Nationwide Homes out of Virginia and their product will be used here. With careful design and placement of walls, modular homes equal custom "stick-built" in terms of appeal and are in most cases, both stronger and more accurately built. We upgraded their standard offering with composite exterior siding, heart pine floors installed on site, impact windows, metal roof elements - and the price even with installation of in-ground pools and gardens was still less than our historic stick-build costs locally.
A vacation rental really needs a pool for the best positioning among beach rental offerings. Generally, there are four types of pool options to choose from: above ground, swim/lap pools, traditional concrete structures, and containerized pools. Costs span about 1:7 times from the cheapest to most expensive option for the same size pool. We have opted for three, swim/lap style pools and custom decking around them, allowing each home to have its own. These pools come with a swim current machine and are surprisingly priced as well as being very easy to obtain permitting. Each costs less than refurbishing the existing pool, so it will be dismantled and removed. It's our first experience with this type of pool, but if it delivers in form and function for our guests, we will fit all of our properties locally with them.
So what will be the result?
- 10 bedrooms offered across 3 new homes less than 1 block from Center Street, and two blocks from the beach
- 3 private pools and well landscaped grounds
- Total cost "all in" including soft costs and furnishing: $1.79M
- Bank funding from South Atlantic Bank
We think that is a good price for the product and expect it to cash flow profitably. Now here is the ten million dollar question? We began demolition mid-February and will open in mid-summer to available renters for all three houses. Do you think we will make it happen?
Note: Between our Construction and Investment teams, we have plenty of experience by way of building and cash flowing vacation rentals on Folly Beach (and downtown). Have a look at some of our case studies and see the work for yourself...
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