Charleston has become a destination city for all the right reasons, and as such there is a market for leasing various short term rental venues that provide any number of experiences for the traveler – from boutique hotels to sandy beach houses, to in-town villas to entire residential homes.
For those looking to own a property that can be deployed as a short term rental, you must be able to navigate the various ordinances imposed by municipalities and homeowners associations, in addition to the desirability of the property on the rental market.
For this endeavor I provide personal guidance in this process, as it can be a bit convoluted.
This guide provides a high level overview of the landscape.
In previous iterations of this guide I likely delved into too much information that muddied the waters, and also provided a list of active listings that, through automation, produced too many false positives.
Since then I’ve made the guide more concise, and ask that the reader take in the knowledge here and then, when ready to pursue the next steps, to reach out to me directly so we can create a specific plan customized for you.
For eligible listings I will curate them based on your preferences so as to provide the highest accuracy.
Investment Short-Term Rentals
For the real estate investor looking to capitalize on this market, awareness of the municipal laws, homeowners association rules, and political motivation for future ordinances is just as important as estimating a balance sheet.
In this guide I refer to “investment” short term rentals in the context that the owner’s primary motivation for purchasing the property is for rental income, rather than supplemental income from their own residence.
You may have chanced upon this case yourself: sojourning at a beach house, or in a pied-à-terre downtown; perhaps in a golf course patio villa, or a woodsy retreat – all within the Lowcountry of South Carolina.
It’s this diversity of pursuits that makes Charleston such an attractive destination, and the income potential for a savvy investor can be quite lucrative.
The City of Charleston has established zoning overlays to indicate exactly which parcels are eligible to operate a short term rental.
Please understand the spirit of these ordinances that were established in 2018: to limit the residential neighborhoods of Charleston from being overrun with mini-hotel rooms, as prior to this ordinance the livability and character of these neighborhoods were negatively affected by an influx of short term rentals.
Essentially, these are the same overlays which allow the operation of hotels – commercial districts along the main thoroughfares.
These parcels are located along the major commercial thoroughfares of Historic Charleston:
- King Street
- Meeting Street
- Market Street
Most of these buildings are retail/restaurant/office space, and many have residential condominiums above them.
In the more mixed residential-commercial district of Cannonborough, parcels that are zoned commercial may also be considered for investment short term rentals:
- Cannon Street
- Spring Street
- Coming Street (partial)
- Ashley Avenue (partial)
- Rutledge Avenue (partial)
An added layer of restriction comes from the rules and regulations that govern condominium associations. Many have provisions that restrict rental terms to at least 30 or 60 days or more.
We must investigate the condo rules before buying one to use as a short term rental, and also know that condo boards can change the rules during your ownership, so get a feel from the board on how they feel about the subject.
Generally the rules are fairly open to short term rentals – you’ll just need a business license through the municipality:
Each town has a few other ordinances to abide by, but generally short term rentals are a breeze at the beaches, with one exception:
- Sullivan’s Island – The town of Sullivan’s Island openly prohibits short term rentals, and it’s hard to argue with their reasoning for preserving the quiet residential nature of the island.
Any rentals less than 30 days are not legal at all; a scarce few owners do still operate vacation rentals because they are grandfathered in from before the ordinance went into effect in 2002.
Just Outside the City
Outside the City of Charleston but close enough to the urban core, a number of options are available in municipalities that may be less restrictive:
- North Charleston
- James Island (unincorporated)
- Mount Pleasant
These bedroom communities present market opportunities for operating a short term rental – typically an entire home offering plenty of space that is close enough to Historic Downtown while also offering affordability – for both the owner and renter.
Residential Short-Term Rentals
For the homeowner looking to generate rental income from their primary residence, municipal laws and homeowners association rules tend to be more flexible, though an awareness of them remains key.
In this guide I refer to “residential” short term rentals in the context that the owner resides at the property full time, and intends to rent out part of the property for income.
We often see these rentals as accessory structures to the home: an apartment adjacent to the main home, a room above the garage, or a mother-in-law suite.
This is generally allowed in residential zones with a number of caveats:
- the owner must reside at property as a primary residence
- the owner must be physically present on the property during the rental
- there can be only one short term rental unit on any residential property
- the owner must provide one off-street parking space exclusively designated for the rental tenant
- the portion of the property used as a short term rental must be of secondary use, not the main house
There are two zones on the peninsula regarding the historic nature of homes, as they relate to ability to operate a short term rental:
- Category 1 (Historic District):
The rental unit must be listed on the National Register of Historic Places, and there is a one year holding period if it has been occupied by a long term tenant
- Category 2 (Upper Peninsula):
The rental unit must have been constructed at least 50 years ago
Outside of Downtown Charleston
Outside of the peninsula, homeowners can generally operate a short term rental on an accessory structure without too much of a problem.
Within the City of Charleston (West Ashley, much of James Island, and Daniel Island) the five caveats above that apply to Historic Charleston must still be adhered to, however the two historic categories do not apply.
In unincorporated areas of Charleston County – which includes much of James Island and some rural areas – a permit is required along with three zoning categories:
- Limited Home Rental – short term rental of a primary residence – maximum of 72 days in a calendar year
- Extended Home Rental – short term rental of an investment property – maximum of 144 days in a calendar year, with a special exception from County Zoning
- Commercial Guest House – short term rental in commercially zoned districts