Charleston is one of the most visited cities in the South, but most of the city's residential neighborhoods are not open to investor-owned short-term rentals. The opportunities are real, they are just mostly on the barrier islands and in a few specific districts.
In short: LendingStreet finances short-term rentals in the Charleston area with DSCR loans that qualify on the property's income, and on some programs on projected nightly revenue. Be clear on the rules first: the City of Charleston generally requires short-term rentals in residential zones to be the owner's primary residence, which rules out investor STRs in most city neighborhoods. Investors usually look to beach towns such as Folly Beach, Isle of Palms and Edisto Beach, resort communities and the commercial districts where the city allows them. Loans start at $150,000, the minimum credit score is 620 and LLC borrowers are standard.
In 2018 the City of Charleston adopted a short-term rental ordinance that ties most residential STRs to owner occupancy: the operator must live on the property as a primary residence, with permits, limits on the number of guests and stricter rules in the historic districts. Whole-house rentals by non-resident investors are generally not allowed in residential zoning. Some commercial and mixed-use districts allow commercial short-term rentals under separate standards.
Because our investor loans are business-purpose loans on non-owner-occupied property, a home that would only qualify as an owner-occupied STR under the city's rules does not fit our STR program. Check zoning and permit eligibility with the city's Zoning Division before you make an offer.
The beach towns have operated as vacation rental markets for decades, each with its own business licensing, accommodations tax and occupancy rules. Folly Beach, Isle of Palms and Edisto Beach have large stocks of rental homes, and towns have adjusted their rules over time, so confirm current limits for the specific street. Kiawah Island and Seabrook Island are private resort communities with their own rental programs and association rules.
Mount Pleasant restricts short-term rentals in most residential areas, and North Charleston and Summerville have their own ordinances. Treat every jurisdiction separately and get the rule in writing.
This example is illustrative and not a quote. An investor buys a three-bedroom raised home on Folly Beach for $975,000, putting 25% down for a $731,250 loan on a 30-year term. A third-party projection estimates $96,000 a year, about $8,000 a month.
Estimated principal and interest is about $5,239. Property taxes, at the 6% assessment ratio for non-owner-occupied property, run about $1,120 a month, and wind, flood and liability insurance about $650. The total is about $7,009, and the DSCR on projected revenue is about 1.14x.
| Line | Monthly |
|---|---|
| Projected nightly revenue | $8,000 |
| Estimated principal and interest | $5,239 |
| Property taxes (6% assessment ratio) | $1,120 |
| Wind, flood and liability insurance | $650 |
| Total payment | $7,009 |
| DSCR | About 1.14x |
South Carolina taxes a legal residence at a 4% assessment ratio but other residential property, including rentals and second homes, at a 6% assessment ratio. Owner-occupants also get relief from school operating millage that investors do not. The result is that an investor's tax bill on the same house can be well over twice what an owner-occupant pays.
When you buy from someone who lived in the home, the tax bill on the listing reflects the 4% ratio. Recalculate taxes at 6% using the Charleston County millage for that tax district, or ask the county auditor's office for an estimate, before you rely on any projection.
Wind and flood insurance often cost more than taxes on a Charleston-area beach rental. Most barrier island homes sit in FEMA flood zones, and many policies carry a separate named-storm deductible. Elevation, construction age and roof type all move the premium. Ask for an elevation certificate and quotes for wind, flood and liability before you write an offer, and include all three in the ratio.
Charleston-area beach rentals earn most of their revenue from late spring through early fall, with spring break and holiday weeks filling in. Winters are quieter, though the city's food, wedding and festival calendar keeps some demand. Revenue projections should reflect that curve rather than peak-week rates.
Guest stays are subject to South Carolina sales tax, the state accommodations tax and local accommodations and hospitality taxes. Beach towns require business licenses, and platforms collect some taxes but not always all of them.
If you already own a licensed beach rental with a track record, an STR DSCR refinance can use actual booking history. Rate-and-term refinances go up to 80% LTV on some programs and cash-out up to 75% LTV. Keep 12 to 24 months of platform statements and your town business license handy.
If your history shows strong summers but thin winters, the annual total is what matters for the ratio. Seasonal swings are expected on the coast, and a full year of statements tells the story better than a single peak month.
Send the address, price, town, permit or license status, revenue projection or booking history, and insurance quotes. We will confirm the property type fits, run the ratio on projected and long-term rent figures and come back with options. Call (877) 298-1001 or use the form below. The South Carolina STR page covers other coastal and mountain markets in the state.
Generally not in residential neighborhoods. The city requires most residential STRs to be the operator's primary residence. Some commercial and mixed-use districts allow commercial STRs.
Beach towns such as Folly Beach, Isle of Palms and Edisto Beach and resort communities like Kiawah and Seabrook have long-standing rental markets, each with its own licensing rules.
South Carolina assesses rentals and second homes at a 6% assessment ratio, compared with 4% for a legal residence, and investors do not get school operating millage relief.
On some programs, yes. A third-party projection can stand in for a lease, and the property should cover its full payment at about 1.0x.
A lot. Wind and flood coverage can exceed the tax bill. Get quotes with the named-storm deductible before you make an offer.
Mount Pleasant restricts STRs in most residential areas. Confirm current rules with the town before buying.
Yes. An STR DSCR refinance can use your booking history. Cash-out goes up to 75% LTV.
Yes. LLC borrowers are standard, and the members sign for the loan personally.
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