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 in Charleston:
First think about the experience you wish to provide.
- An authentic historic experience?
- A sandy beach getaway?
- A rustic woody excursion?
Regardless, one 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.
The primary question for you:
What makes this city extraordinary is that, despite its popularity, Charleston has not devolved into a Disney-like caricature of itself.
This is a vibrant, living city – when you come here, you experience an authenticity that we locals enjoy every day. To preserve that enduring character requires considerable effort from the City and its citizens.
To that end, the City of Charleston in 2018 was moved to respond to the exploding popularity of homesharing platforms such as Airbnb and VRBO.
In establishing the short term rental permitting that dominates most of this guide, the city sought to strike a balance: enabling homeowners to benefit from additional income from their property, while also preventing residential neighborhoods from becoming overcommercialized.
So income from short term rentals can assist homeowners with keeping their homes in good repair, which can be expensive with historic homes.
But also, neighborhoods that are very attractive for visitors can maintain the nature of what makes them attractive to begin with: residential.
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 before committing to a purchase.
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 generate income through short term rentals on all or part of the property.
Looking for an investment property?
Skip to here: Investment Short Term Rentals
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.
In many areas outside of downtown, it is permitted to short term rent the entire home.
Let’s begin here:
To obtain a short term rental permit for a residential property on the Charleston peninsula, the owner must first pass the following criteria:
- there may be only one short term rental unit on any residential property
- the short term rental must be an accessory unit – the main house cannot be rented short term
- the owner must declare the property as their primary residence
- the owner must be physically present near the property when tenants are present
- there must be at least one off-street parking space exclusively designated for the rental tenant
Next, there are three zones on the peninsula to consider when selecting the property:
- Category 1
This is the core Historic District of Charleston – the most lucrative and attractive area to operate a rental for that genuine Charleston experience.
As such, the restrictions here are highest.
The accessory unit intended for short term rentals must be existing, and also be individually listed on the National Register of Historic Places.
Furthermore, to discourage renter displacement, there is a one year holding period for any unit that has been occupied by a long term tenant.
- Category 2
This is the rest of the peninsula including much of Midtown and the Upper Peninsula, whose historic heritage ranges from late 1800s to midcentury neighborhoods.
The accessory unit intended for short term rentals must be existing, and also have been constructed at least 50 years ago.
- STR Overlay
One downtown neighborhood was ahead of the curve on the short term rental business: Cannonborough & Elliotborough succeeded in 2012 to establish a sort of enhanced bed & breakfast ordinance for themselves.
It remains as a modification of Category 2 for the residential zoned (most of) Cannonborough/Elliotborough, but:
The owner is not limited to one accessory unit – it can have up to four.
The property owner need not be a primary resident, BUT must reside at the property at least 183 days/year.
The main building on the property must be at least 50 years old, but the accessory units may be newer.
- How long does a permit remain valid?
One year. The owner must reapply each year.
- Does an existing short term rental permit convey to a new owner?
No. The new owner must reapply for a permit.
- Can an owner short term rent their property without a permit, as long as they don’t advertise it?
No. This is illegal.
- May an owner advertise the property for short term rentals?
Yes, if there is a valid permit. Online advertising is allowed, but physical signage is not (exception: STR Overlay).
- Are there insurance requirements?
Yes, for city permitting there must be a policy in place for personal injury and property damage, with limits of at least $1,000,000 per occurrence.
Homeowners associations may have additional requirements.
- Does an owner require a business license?
Yes, and comply with all revenue collection laws.
- If the existing building requires alterations to deploy as a short term rental, would this be allowed?
Yes, but only interior alterations. The exterior may not be modified in order to comply with permitting.
- Can the off-street parking for the STR be shared with the owner’s parking?
Tandem parking is allowed, only if there is always a space for one vehicle to park exclusively for the tenant.
- Can an LLC own a commercial short term rental?
Yes, if one of the managing members resides at the property.
- Is there a fine for operating a short term rental without a permit?
Oh yes. And possible jail time for repeat offenses.
Outside of Downtown Charleston
- City of Charleston (off the peninsula) Homeowners can generally operate a short term rental with an accessory structure without too much of a problem – in the ordinance this is described as Category 3. Within the City of Charleston (parts of West Ashley and James Island, and Daniel Island) the five general caveats above still apply, however the historic requirements do not apply. A homeowner can build a brand new accessory structure for short term renting and still obtain a permit.
- Charleston County
In unincorporated areas of Charleston County – which includes some of West Ashley and James Island and most of Johns Island and other 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 This requires a special exception from County Zoning
- Commercial Guest House – short term rental in commercially zoned districts
- North Charleston At the moment, there appear to be no restrictions, though the town retains the right to deny business permits. Update 9/18/2021: City Council is deliberating the issue, stay tuned.
- Mount Pleasant A different direction was taken here: The number of permits granted are capped at 1% of the dwelling units in the city. They are not allowed in multifamily dwellings, or anywhere in the Old Village. There is a waiting list.
- Hanahan At the moment, there appear to be no restrictions, though the town retains the right to deny business permits.
- Summerville At the moment, there appear to be no restrictions, though the town retains the right to deny business permits.
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.
My (clearly biased) sentiment of Historic Charleston as one of the finest places in the South is shared by many.
As such there is a huge hospitality presence on the peninsula – lots of hotels, complemented by a number of historic homes that can be rented short term.
Properties that are eligible for short rentals in Charleston are focused along the major commercial thoroughfares:
- 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 & Eliotborough, 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.
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
- North Charleston
- West Ashley (unincorporated)
- 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.
Along with parcel restrictions, a number of additional requirements were developed to ensure the preservation of historic character and livability.
In short: it’s complicated, restrictive, and the market for these homes is very, very tight.
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.