Buy a beach house on a teacher salary? We did it.

Is it possible for a teacher to buy a beach house?  My wife and I are both teacher,s and in May of 2013 we bought a townhouse in Myrtle Beach.  People are often surprised when I talk about our beach house.  It sounds like that would be an unreasonable expense, or require a huge inheritance, but it really was doable.

It all started in 2012, when I was staying in Myrtle and walking through the neighborhoods.  Yaupon Street is a block from the ocean, and much of it appears to be uncared for, and totally run down.  How can there be dilapidated almost ocean front property? I scanned Zillow and saw 40k$ dollar condos.    As a result, the questions quickly scrolled through my brain.  Could I really have an ocean/front condo for 40k?  Could I buy it and rent it to friends and break even, or even possibly turn a profit?

It turns out 40k$ condos are not as affordable as I thought because they all have HOA fees.  Buying the condo is not a huge deal, but paying 300$ to 600$ a month to a Home Owners Association makes them unreasonable.  It becomes a liability instead of an asset.  I kept scanning Zillow watching for a rundown house, and on a random Tuesday a house popped up. 19900$ for a house, half a mile from the beach.  It was a small 900 square foot ranch with 3 beds and 1 bath. It was falling apart and probably had raccoons and/or crack-heads living inside.  I loved it, and could pay cash.  We could put up a tent in the back yard and camp out walking distance from the beach.  Work a couple of summers fixing it up, and then own a beach house, or sell it for a profit.  JumpStart Jr. was getting to the age where he might actually be helpful on a construction project.  It was perfect.

First attempt to buy a beach house.

I found a real estate agent, set up a Saturday appointment and booked a hotel.  The house sold on Thursday. I got there the next night on a Friday.  Like any good real estate agent, she told me I probably did not want that house anyway, but she had some great properties to show me.  I’m surprised she even answered my emails because she stood to earn 3% of 19900$.  She steered me toward some condos and found one we liked at 49900$. It had 2 beds, 2 baths and 110$ HOA dues.  I put in an offer, there was a little back and forth and we had a contract.  I had a credit score above 800 and 15k$ for the down payment.  How hard could it be to borrow 40k?  I am certain I could drive down to the Jeep dealer with no money, and come back tonight with a new shiny Jeep and a 40k$ debt tonight.

I was wrong about the difficulty of borrowing the money.  3 months later Wells Fargo decided not to lend me the money.  Their decision was based on the way the Home Owners Association was run.  There were 8 units in the building, and one man owned 6.  He had 2 of them on the market.  The bank did not like that, and after 3 months of doing nothing thinking, they decided not to loan me the money.  At this point I had filled out applications, paid fees, faxed all kinds of crap, answered the same questions multiple times, and spent hours daydreaming about how great the condo was going to be.  When the banker called me and explained it was not going to happen, I fantasized about _______________.  Well maybe I should not document those dark thoughts, in case something ever mysteriously happens to that guy.

2nd attempt to buy a beach house.

Anyway the real estate agent talks me into a return trip, and assures me she can find us a better place.  We return, and she showed us several places that we did not like.  I had been scanning real estate websites and had found a 3 bed, 2.5 bath townhouse.  My real estate agent probably did not spot it, because it was out of my price range.  The 3rd bedroom and the words “No HOA” attracted my attention.

It was about this time that I learned the difference between townhouses and condos.  I had always thought a townhouse was a certain shape of building, but I was wrong.  With a townhouse you actually own the land the townhouse sits on.  Sometimes there is a HOA and sometimes not.  With a condo, lawyers have set up some kind of fancy contract where you just own rights to the building, or part of the building, but not the land.  There must be an HOA.  So even though the townhouse price was much higher at 75K$, with no HOA dues, it began to sound reasonable.  We put in an offer, signed a contract and 45 days later in May of 2013, we are the owners of a townhouse less than a mile from the ocean in Myrtle Beach.

Obviously for financing, we went with a different mortgage company.  The smaller company was great and got the closing complete quickly.  In a turn of events, the brilliant bankers at Wells Fargo decided to buy the mortgage from the small mortgage company.  So the bastards geniuses who were uncomfortable with loaning me 40k$ in January bought my 60k$ debt in May.

So, we were actually able to buy a beach house!

Financially, our mortgage which includes taxes and hurricane insurance is 560$.  We have an extra set of monthly electrical, water, and internet bills.  There is an extra property to maintain.  We spent about 25k$ from saving on the 20% down payment, furniture, electronics, paint, and cleaning supplies in 2013.

Life style wise, it has been a fantasy come true.  We spend at least 45 days each summer at Myrtle Beach.  Our summers are not like a typical beach vacation.  We can leave any time of day or night and not worry about hotel check-in.  I don’t even pack.  My beach clothes are already there in the dresser, and there will already be cold drinks in the fridge.  We cook for most meals, and hardly ever have sea food.  We have never played miniature golf.  I have never been to the nearby aquarium or many of the other of the typical expensive Myrtle Beach tourist attractions.  We go to the beach and watch Netflix every day.  We surf almost every day.  Most days we work to improve the townhouse in some way.  The time together as a family over the last 4 summers at the beach will be something that I treasure forever.

Part 2: Our first summer at our beach house.

Posted in Beachhouse.

7 Comments

  1. You do have to wonder what goes through the banks minds. With our last refinance we jumped through hoops for almost 3 months to close. It didn’t make any sense why they made it so difficult since the loan was less then my salary and I had more assets in a taxable investment account then that. In the end the concern was my wifes recent change in employment. Never mind that I was still working and the monthly amount was less then my current payment. It cleared eventually but it never seems to make sense.

    • There is no logic behind banks. I could go crazy with a stack of those credit card checks they mail me. Between all of my credit cards, I could easily raise enough cash to buy some real estate. Of course there would be a 3 percent transaction fee and then high interest would begin immediately.

  2. Congrats on the house by the ocean! That is so awesome. Up here in Minnesota, lake houses are popular. I always wanted one, but now that I am on the FI journey, I don’t think two mortgages make sense. Instead, we are looking at houses closer to the cities that are on a lake.

  3. You are certainly living the dream! Thanks for sharing your experience. I understand the banks wanting to protect their own interests, but 3 months of waiting only to say no? You’ve got to be kidding me!

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