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Mar 30, 2024

The Lowcountry Primary Owner’s Fairy Tale

Daniel Moskowitz

Photography By

Dunes Real Estate
My best wishes to the many second homeowners who are considering and/or are currently second homeowners. You are vital to our Lowcountry. May you soon be the star of your “Lowcountry Primary Owners Fairy Tale.”  

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How extraordinary is it that so many citizens of Hilton Head Island and the surrounding Lowcountry have lived this fairy tale?  For many more this fairy tale will remain just that until they are able to identify their own comfort in overcoming the unknown and bringing it into balance with their risk tolerance.

11 Armada, a home offered for rent by Palmetto Dunes Oceanfront Resort.

This article will unpack some of the biggest risk-hurdles of second home ownership. However, I wish to lead with the ancillary benefits of this ownership model, including its vitality to our local economy, because it is HUGE!  

Second homeowners and investors in our Lowcountry region currently deliver the best means to facilitate the housing of seasonal visitors as well as our workforce. This is a simple function of our housing buildout being nearly maxed out due to low density and the restrictive covenants that protect and preserve our lands. Today, the viability of our region is dependent upon second homeowners, including investors, being in balance with primary owners.

The balance of workers to provide the essential services and the revenue from visiting patrons is imperative to maintaining our quality of life. It also helps sustain the abundance and variety of year-round options like affordable, quality essential services along with the cultural luxuries of restaurants and entertainment. Yes, we are entirely dependent on the availability of a workforce to facilitate necessary services, from healthcare and education all the way to sanitation and transportation. 

Second homeowners are also critical to our future generations as they literally hold our future in their hands. By “future,” I mean the children of our county and state. More specifically, the real estate property taxes on second homes and businesses are contributing to our school operations fees, but not primary residences. 

Seriously, you will not find school operations fees impacting the bottom line of the real estate tax bill of any primary owner residence, unless that primary homeowner failed to file their South Carolina Legal Residence Exemption Application. Primary owners can thank Act 388, passed by our 2006 state legislature, for this benefit.

Before jumping to judgment about the inequities of Act 388, there are some second homeowner benefits to note. Things like the 15% cap over five years on real market value established at the time of the transaction, or “point of sale,” help reduce some future carrying cost risk, and are especially helpful to any discretionary income, second homeowners. But if you are looking for my opinion, my belief is it was one of those “seemed like a great idea at the time” decisions. 

Fortunately, the best all-time decision so many primary homeowners in our Lowcountry recognize is their version of my opening fairy tale. Yes, they visited, loved it, and knew this is the place they would love to call home. If they were years out from moving here, they could rent long-term to offset some or all carrying costs. For those desiring memories from seasonal use in addition to investment benefits, short-term rentals delivered the answer. In both scenarios, there was the calculated risk/benefit equation, and then there was the emotional leap of faith.

Daniel Moskowitz, Broker-in-Charge at Dunes Real Estate

In my tenure as broker-in-charge of Dunes Real Estate, I’ve come to understand that acquiring a second home often involves navigating the emotional elements as much as, if not more than, the financial ones. The key to overcoming these challenges lies in the expertise of a property manager, who can offer not just oversight but also peace of mind.

To gain deeper insights into this subject, I reached out to two esteemed property management professionals in the Lowcountry. Their experiences and perspectives are invaluable, particularly in debunking common misconceptions and offering guidance to prospective second homeowners.

Brian Tierney, owner of Foreshore LLC, has extensive experience with long-term rentals in Bluffton and on Hilton Head Island. He noted a widespread misconception among homeowners regarding rental rates. 

“Many people have heard from friends, relatives, their Realtor, etc., that rental rates are so high,” he explained, clarifying that while rates remain elevated, they have not maintained the peak seen immediately after COVID. This situation, he suggests, resulted from a temporary shortage of rental inventory, which, although no longer as severe, still influences community perceptions. Tierney highlights the reason it is critical to rely on field experts for accurate rental histories and projections.

Jamie Delsandro, director of property management at Palmetto Dunes Resort, handles short-term rentals and emphasizes the importance of clear communication in addressing misconceptions. “My way of dealing with (these misunderstandings) is the same as it is with any difficult or touchy subject – head on and with full disclosure,” she said. For Delsandro, laying these issues to rest early is essential for forging successful client relationships. 

When it comes to advising prospective second homeowners, Tierney and Delsandro offer tailored advice based on their respective areas of expertise. Tierney advises a strategic approach to long-term rentals, emphasizing the importance of aligning rental periods with market demands.

“People looking for long-term rental or second homes that they can possibly rent at certain times of the year should plan strategically around seasons,” Tierney said, highlighting the significance of understanding market dynamics for less stressful ownership.

On the other hand, Delsandro stresses the importance of financial pragmatism and flexibility, especially for second home rentals. She warns against relying entirely on rental income to afford a property.

“If you are renting your property to pay for the property, don’t buy it,” Delsandro said. This approach, she argues, ensures that owners make decisions based on their goals of enjoyment and financial realities.

Navigating the complexities of owning and managing a second home in the Lowcountry requires a blend of financial understanding and emotional resilience. Insights from experienced professionals like Tierney and Delsandro illuminate the path, offering clarity on rental market dynamics and the importance of strategic planning. We are fortunate to have exceptional property managers in our area like those featured in this CH2 edition. 

If you are in the early stages of acquiring a second home, I highly recommend consulting with your Realtor for property manager recommendations.

My best wishes to the many second homeowners who are considering and/or are currently second homeowners. You are vital to our Lowcountry. May you soon be the star of your “Lowcountry Primary Owners Fairy Tale.”  

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