42 S Forest Beach Dr #3039

Hilton Head Island, SC 29928

$459,900D

2 bd · 2.0 ba · 1,100 sqft · Built 1972 · Condo · Active · 184 DOM

Cashflow @ list (25.0% down · 7.5%)

• Estimated rent: $3,631/mo
• Mortgage (P&I): −$2,412
• Tax + insurance: −$766
• HOA: −$635
• Vac / Maint / Mgmt: −$763
• Net cashflow: $-945/mo
• Annual: $-11,337/yr
• Cap rate: 3.83%
• Cash-on-cash: -8.80%
• DSCR: 0.61
• 1% rule: 0.79%
• Cash to close: $128,772

Investor read

• This is a 2-bed/2.0-bath condo listed at $460k. Condition is rated good.
• At list price, monthly cash flow is $-945 ($-11k/yr) — negative.
• To cash-flow at today's rent, offer at most $323k (29.7% below list).
• To meet the 1% rule (rent ≥ 1% of price), the offer needs to be $363k (21.0% below list).
• It's been on market 184 days — a 12% lower offer ($405k) is reasonable based on typical stale-listing flexibility.
• Recommended offer: $323k (29.7% below list) — sets the bar for cash-flow.
• In year one you build about $18k of equity ($3k loan paydown + $15k appreciation (3.2% local appreciation)).
• Location reads 64/100 on livability (#157 in SC) — a middle-class / working-renter tenant base. Strengths: employment A+, crime A-; Watch: amenities F, commute F, cost of living F.
• Beaufort 01 (town): math 42% / reading 51% proficiency, ranked #17 of 80 in SC (top 21%) — families likely to look elsewhere, expect single-tenant / working-renter base with shorter leases.
• Zoned schools: Hilton Head Island Elementary (math 50% / reading 49%, grade D, #168 of 597 statewide, top 31%, 709 students, 56% FRL); Hilton Head Island Middle (math 33% / reading 42%, grade F, #90 of 229 statewide, top 42%, 856 students, 52% FRL); Hilton Head Island High (math 70% / reading 82%, grade A-, #34 of 196 statewide, top 17%, 1,345 students, 40% FRL) — zoned schools at 49% FRL track the district average.
• Market conditions: Rents rising (+3.2%/yr); 1004 active listings in the ZIP; 6 comparable units currently listed for rent nearby; rentals lingering (median 63d on market — plan ~5-8 weeks vacancy on turnover, expect pricing pressure); 100% of comp listings sitting > 30 days — soft ceiling on asking rent; solid renter incomes; 1,824 units permitted in Beaufort County in 2024 (618 in 5+ unit buildings).
• Beaufort County population projected at +30% by 2050 — long-run rental-demand tailwind backs the buy-and-hold thesis.
• 2 sale attempts since 16y ago with the ask held roughly flat each time — persistent listings suggest the price (not the market) is what's stuck; bring a comps-based counter.
• By year 3, paydown + projected appreciation supports a ~$45k cash-out refi (75% LTV) — recoverable capital for the next deal without selling this one.
• Cap rate 3.8% vs local median 2.3% in Hilton Head Island — top-decile yield for the area; either an underpriced asset or a hidden risk that comps aren't pricing in. Stress-test before assuming the spread holds.
• This rent runs 45% of the median local income ($98k/yr) — at the standard rent-burdened threshold; future hikes will face affordability resistance.

Questions for listing agent

• What do current leases actually rent for vs. the listed asking? Can we see a recent rent roll and the last 12 months of T-12 income?
• It's been on market 184 days. Have you received any prior offers? Is the seller open to a 30% concession, seller financing, or rate buy-down credit?
• Built in 1972 — when were the roof, HVAC, electrical panel, plumbing, and water heater last replaced?
• What does the HOA fee cover, when was the last increase, and are there any pending special assessments or reserve-fund shortfalls?
• Any open or pending special assessments — roof, HVAC, plumbing, elevator, façade? What's the per-unit balance and payoff schedule, and is the seller paying it off at close or rolling it to the buyer?
• Why hasn't it sold? Are there any deal-killer items the seller is aware of (foundation, flood, title, zoning, code violations)?
• Is there a deadline driving the sale (1031 exchange, divorce, estate, relocation)? That informs how much negotiation room exists.
• Schools are B-rated — typically a magnet for longer-tenancy family renters. What's the average tenant stay here, and is there a school-zone premium baked into asking?