Earlier this year we bought two blocks of land running parallel and adjacent to Center Street in Folly Beach. It's a prime site, very close to the main attractions and the beach with easy parking and private yards. We rightly saw this as an opportunity to bring out of the dirt, newly-built vacation rental homes in the form of luxury duplexes. The first house is now framed and due for cladding, second duplex framing is at the second floor level and we will start the rear yards and pools in a week or so. Hopefully painting externally once the dust has settled in about three weeks.
Commercial zoning allows for a total of 7 dwellings on the properties and the intended end use is vacation rental with a fall back of long-term rental or sale as residential. This is an investment play in a rapidly developing beach location. Our initial underwriting estimates the return at around 8-9% which is at the top end of what is achievable in downtown Charleston under the present market conditions. We have teamed up with two New York friends and South Atlantic Bank to make this happen in real time. Working with local Folly architect Allen Kinter we developed plans for two new duplexes, to remodel one existing duplex into a single residence and build two additional three-bed homes each with their own pool and yard. The parking lot was vacant whilst all this was going on, so we donated the parking proceeds from the lot to Follypalooza, the local cancer charity. What goes around comes around in this life and maybe the next.
So what's special about building at the beach? Zoning for a start. All building work is considered to be in a "V Zone" for the purpose of planning, only retreating to the Federal Emergency Management Agency (FEMA) designation once the Certificate of Occupation is granted. So you will be high in the air on piles of one design or another. That can tend to "divorce" the yard from the house, and to limit this effect we raised the rear yards by seven feet taking them near to the first-floor elevation.
Piling comes with its own issues, so make sure that you include foundation monitoring so as not to disturb the set of neighboring houses. You will also need to undertake a geotechnical evaluation to establish ground conditions prior to piling which is an extra expense to consider.
Building anytime along the southern US coast from June 1 - November 30th has the additional caveat of potentially being on "hurricane watch." Hurricane Irma played merrily with our scheduling as we started construction three weeks before she came ashore near Folly as a Tropical Storm. That stopped work and scattered our materials and framing crews only returning after the storm and in one case after repairing their own homes which understandably took priority. We are now playing catch-up so as not to complete the project in next summers peak vacation season.
It's going to be a tight schedule but I think we'll make it this time, weather permitting. We will start on the rear house remodel in December and the final two houses on Erie Street in January, all projected to complete at about the same time next year. Its going to be a busy winter for sure. You can view a short video of our progress HERE.
NOTE: Whether you are interested in learning of the commercial investment opportunities or pursuing a vacation rental property of your own, expertly managed by our Luxury Simplified Retreats management team, we are well versed in the opportunities that exist on Folly Beach.
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