The Villas at Coast Cottages

We are now entering the most active selling season for property on St. Simons Island. All indications are that this will be a very strong year, especially near the beach. High end property is especially hot. The year 2002 saw 22 sales over $1 million near the beach. 2003 had 23 such sales. In less than two months of 2004 there have already been 4 sales near the beach over $1 million, and there are 7 such properties currently under contract (2 of them are right here at The Villas and 1 here at Coast Cottages) . We are expecting a record year for sales in this category. Hal Sigman, a respected local appraiser says, "There's a lot of activity out there right now. We're off to a great start and it looks like it's going to continue. We may be quickly running out of inventory near the beach." Sigman maintains a strong network of real estate, lending and development professionals and is considered St. Simons' most knowledgeable expert for property appraisals near the beach.

In retrospect, 2002 and 2003 were both record setting years for St. Simons real estate. This despite the 9-11 tragedy, a major recession, a war, and a very dismal stock market. Now that all these negative effects are behind us, it's impossible not to be enthusiastic about real estate in 2004 and beyond. More and more "boomers" are entering their peak earning years. They are thinking about retirement, alternative investments, and the relative financial safety of real estate. Second homes have become an important addition to their investment portfolios, and the very best properties (ocean, lake, mountain) are the most in demand. Income producing properties (such as vacation rentals) are even more attractive since they can offset the immediate cost of owning a second home. An often overlooked factor in the real estate market is the amount of inherited money that is finding its way into the second home market. It all points to a very strong future for beach properties where a growing demand is colliding with a very finite supply. These factors are combining to produce appreciation levels in the range of 20% near the beach. They just aren't making any more beachfront!

Finally, it's easy to forget that most people outside the state of Georgia have never heard of St. Simons Island. That will all change when our community hosts the G-8 Summit Conference June 8-10. President George W. Bush and his entourage will be here along with the heads of state of the other 7 most influential nations on earth. We will be ground zero for over 3000 national and international journalists covering the event. There will be no small number of "lifestyle" stories illustrating the beauty and serenity of the Golden Isles. Will all this attention put even more upward pressure on a rising real estate market? It can't hurt!

Red Cedar Villa (25 Sea Oats Lane) and Camellia Villa (27 Sea Oats Lane) are now under contract almost five months before their expected completion date. That leaves only two more Villas available for occupancy in 2004 priced at $1.6 and $1.65 million respectively. If you are considering a Villa, and you would like to move in this year, now is a good time to finalize your decision. Construction will begin in April on at least two more units with prices starting at $1.7 million. There will only be 14 Villas ever built and four of them are already spoken for. If you would like more information on these outstanding properties, contact Patrick Anderson.

The statistics below show the quantity and average intensity (category 1,2,3,4,5) of hurricanes during the past 100 years. Note how St. Simons Island compares with some of the other popular destinations along the U.S. coast. The reason we are so “lucky” is because of our geography. St. Simons is the western most point on the eastern seaboard and many miles from the Gulf Stream. Hurricanes “feed” on the warm waters of the Gulf Stream which flows northward and usually moves them up along the coast. The Gulf Stream washes ashore near Cape Hatteras, NC. Check out the difference between St. Simons Island and Cape Hatteras below!

Number of Hurricanes

Average Intensity (Category)

Amelia Island, FL

2.00

Baldhead Island, NC

2.23

Cape Hatteras, NC

2.00

Charleston, SC

1.75

Galveston Island, TX

2.22

Hilton Head Island, SC

1.75

Miami, FL

2.77

Myrtle Beach, SC

2.83

Seaside, FL

2.11

South Padre Island, TX

2.71

St. Simons Island, GA

1.00

Wilmington, NC

2.23

It's surprising how many investors are not familiar with one of the best and last remaining tax shelters for real estate investment: the Section 1031 Tax Deferred Exchange. This is simply a method by which a property owner trades one investment property for another without having to pay any immediate federal income taxes on the transaction. In an ordinary sale transaction, the property owner is taxed on any gain realized by the sale of the property. But in an exchange, the tax on the realized gain is deferred until some time in the future, usually when the newly acquired investment property is sold. Properties near the beach are excellent candidates for tax deferred exchanges because of their investment potential. If you would like a free booklet entitled "Tax Deferred Exchanges in a Nutshell" contact Patrick Anderson.

VACATION RENTAL PROGRAMS AS AN INVESTMENT STRATEGY

Coast Cottages and Villas are excellent investment properties because of their outstanding income producing potential. About 50% of the Coast Cottages are in vacation rental programs, each producing anywhere from $25,000 to nearly $100,000 in annual gross rentals for their owners. The neighborhood as a whole has become THE place to own a vacation rental property. Rental rates range from $2100 to over $5000 per week in the summer. And since most of our owners don't care to use their homes in the summer (too hot!), the home is usually available for rental during St. Simons' busiest visitor season. Recently we commissioned a local CPA to develop a very detailed cash flow report showing the results of a theoretical rental program. This report is available free to individuals with a serious interest in purchasing a Coast Cottage of Villa property.

PROPERTIES CURRENTLY AVAILABLE

-----$800,000 Ocean View Lot, 21 Coast Cottage Lane
-----$895,000 Landsen Cottage, 35 Coast Cottage Lane, Unfurnished Resale
-----$1,200,000 Cassino Cottage, 18 Coast Cottage Lane, Furnished Resale
-----$1,500,000 Ruby Cottage, 6 Coast Cottage Lane, Furnished Resale
-----$1,500,000 Altamaha Cottage, 19 Coast Cottage Lane, Unfurnished New (ready June 2004)
-----$1,600,000 Hawthorn Villa, 23 Sea Oats Lane, Unfurnished New (ready August 2004)
-----$1,650,000 Sea Myrtle Villa, 21 Sea Oats Lane, Unfurnished New (ready August 2004)
-----$2,595,000 Beach Lawn Cottage, 3 Coast Cottage Lane, Unfurnished Resale.

For more information about these properties, contact Patrick Anderson.

Thanks in part to over 12,000 visitors who toured our Coastal Living Idea House, the Historic U.S. Coast Guard Station adjacent to Coast Cottages will get a much needed restoration. Ticket sales exceeded $100,000 during the 4-1/2 month open house period which ended January 4, 2004. The Idea House was featured on the front cover of the November/December issue of Coastal Living magazine along with a 30-page feature article. We'd like to thank Coastal Living Magazine, the Coastal Georgia Historical Society, the Brunswick-Golden Isles Visitors Bureau, and everyone else who helped make it such a great experience. St. Simons Island, and particularly The Villas at Coast Cottages received unprecedented national exposure as a result of the effort. Thanks to everyone involved!

AVERAGE TEMPERATURE ON ST. SIMONS ISLAND

We don’t complain too much about the whether around here. If you study the table below, you begin to realize that most of the time it’s just about perfect! Particularly in the Spring and Fall.