Let’s look at the top 10 reasons for buying investment real estate in the Charleston market.
1. Charleston Has a Massive Military Market
Any military base provides a large, mobile population that overwhelmingly rents. Joint Base Charleston combined the Air Force and Naval bases located in Charleston. The joint base is home to a number of military training programs like the nuclear power school and Coast Guard maritime law enforcement academy, as well. There are more than twenty thousand personnel in all, and nearly all of them rent.
2. The Tourist Market Is Big in Charleston
Charleston, once best known for it’s rich history dating back to the mid-seventeenth century, is quickly gaining recognition as a destination resort that caters to discerning travelers. The city sits on the Atlantic coast, the ocean breezes mediating the warm summer climate and keeping winter’s chill at bay. The mild weather and surf helps to explain why around eight million visitors a year pass through the city. If you have a condo or beach house, you can rent it out to tourists at a decent rate. Note that Charleston County’s rules on short term rentals through sites like AirBnB are more relaxed than that of Charleston proper.
3. The Proportionally Large Student Market
Charleston, South Carolina was founded around 1670. The College of Charleston serves around 11,000 students. Charleston Southern University is a private university located in the city. The Medical University of South Carolina is the only medical school in the area, attracting students from across the region. Trident Technical College is the local community college. On top of that are the military educational programs. This creates a disproportionately large student market for a city this size. Yet the Charleston housing market is better than that of the average college town, since the value of rental real estate here isn’t dependent on the appeal of a particular college.
4. The Booming Job Market in Charleston, SC
The Charleston SC real estate market is experiencing a boom because the job market is likewise booming. Bosch and Boeing are hiring in the area. Mercedes Benz and Volvo both opened car manufacturing plants in the area, and that’s aside from the military contractors in the area. This helps explain why the unemployment rate in Charleston is less than 3%, a half point below the state average and nearly a full point below the national average. The availability of jobs brings many here from across the state. Industry growth shows no signs of slowing down, and property values are expected to continue to rise for the foreseeable future. As workers move into the area, following the jobs or looking for career advancement opportunities, local inventory will most likely continue to shrink.
5. This Is a Low Tax State
South Carolina’s tax burden is one of the lowest in the country. Income taxes are tenth lowest out of the 42 states with an income tax. This is partially due to the 7% tax rate being offset by generous deductions and exemptions, resulting in a roughly 3% real tax rate.
6. South Carolina is Landlord Friendly
South Carolina like many Southern states is very landlord friendly. There are no limits on late fees, and there are no state laws on payment grace periods. The state doesn’t require a license to be a landlord, though a license is required to rent a property out short-term via AirBnB. South Carolina makes it rather easy to evict someone for non-payment of rent, committing violent acts and engaging in illegal activities in the unit.
7. Low Average Wages Result in a Large Rental Population
About 40% of the Charleston population rents, somewhat higher than the third of Americans who rent. There is a shortage of affordable housing in the Charleston SC real estate market, since half of the population spends more than half their income on rent. Average income in the area is around 33,000 a year, while the average apartment rents for a thousand a month. While there are a number of multifamily units coming onto the market, many of these are luxury units, not the cheap housing many residents need. This opens the door to decent returns if you turn a single family home into several rentable units.
8. Home Appreciation Is Strong
When demand is strong but supply is limited, home values go up. Homes in the Charleston SC real estate market have gone up nearly 10% year over year. Appreciation over the past 10 years – including the Great Recession that only really ended in 2016 – is 31%. Expect appreciation to continue, since the population here is growing three times the national average.
9. Rental Rates Are Rising
In 2015, the Charleston housing market hit a top ten list of cities with the fastest growing rental rates. Rent increases hit 16.5% in 2015 as people moved to the area to work for Boeing and Mercedes Benz. While new units are coming onto the market, strong demand is keeping rental rates going up faster than the rate of inflation.
10. Home Values Are Reasonable Compared to Hot Markets
The median price of homes in the Charleston SC housing market is $310,000. However, prices vary widely across the Charleston SC housing market. In the Midlands, you can find homes with price tags averaging $160,000. In desirable parts of Charleston, expect to pay over $300,000. In downtown Charleston, valuations of $500 per square foot are not uncommon, especially where there is a view of the water. Move inland from Charleston, and you’ll find suburbs with more expensive luxury homes and cheaper detached single family homes. If you want to buy new homes, Summerville and Goose Creek are expected to see 50% to 60% growth over the next ten years.
Charleston SC Real Estate Investment: Summary
If you are a beginner in the business of cash flow real estate investing, it very important to read good books on real estate. You must also learn from successful real estate investors who have retired early on in their lives by investing in some of the best real estate markets like Charleston, SC. The strong US real estate market shows no signs of slowing, and is slated to remain among the world’s top performers in 2019. The Charleston housing market is certainly benefiting from a local economy that has gained worldwide attention.
The Charleston real estate market contains multiple, sizable renting populations aside from a growing workforce that cannot afford to buy local single family homes. The strong job market and relatively limited space is driving up rents and home values. According to report published on Charlestonrealestate.com, the feeling is that the Charleston real estate market will have an adequate demand for housing in 2019. However, increased inventory and lower buying power will result in lower sale prices and signify a buyer’s market. A buyer’s market indicates that buyers have greater control over the price point.