The Oswald Group at eXp Realty
Buying a short-term rental is not the same transaction as buying a house. The order is different, the financing is different, and the question that decides everything comes before you look at a single property: can this address be permitted at all?
Get that wrong and nothing else matters. If a property cannot be legally rented short term, the short-term rental case for it does not exist, and it has to be valued on what it can actually do instead. Confirm permit eligibility for the specific parcel before you rely on any revenue estimate, including ours.
Step one, every time
Charleston is not one market. It is a dozen municipalities with their own ordinances, and they disagree sharply on whether an investor can run a short-term rental at all. Two houses a few miles apart can be opposite answers.
| Municipality | Investor permits | The constraint that matters |
|---|---|---|
| Isle of Palms | Available | No cap. A 2023 referendum to cap investor licences was voted down. |
| North Charleston | Limited | Sixty per council district. Districts 5, 8 and 10 are full and others are at the cap. The permit does not survive the sale. |
| Mount Pleasant | Waitlist | Capped at 400 town-wide. The permit does not survive the sale. |
| Charleston County, unincorporated | Available with approval | Extended Home Rental needs a Board of Zoning Appeals exception, renewed yearly, and is capped at 144 rental days. Only five zoning districts qualify. Commercially zoned property has no day limit. |
| City of Charleston | Not for residential | Owner must be resident and 4 percent assessed, on site 183 days a year. The only investor path is commercial zoning inside the Short Term Rental Overlay. |
| Folly Beach | Closed | Moratorium adopted August 2026, running to February 2027. The licence cap was struck down in August and re-enacted in September. Litigation continues. |
| Sullivan's Island | Prohibited for new uses | Only rentals operating before November 2000 are grandfathered. A buyer must re-apply within 30 days of closing to keep one alive. |
Verified against current ordinances on 18 September 2026. These rules change often and Folly Beach is under active litigation. James Island is split across three separate jurisdictions, so the answer there depends on the parcel rather than the island. Confirm permit availability with the municipality for the specific address before you make an offer.
The sequence
A standard purchase runs find, offer, inspect, finance, close. A short-term rental purchase has six stages, and the first three all belong before you make an offer.
Identify the municipality, confirm a permit is available at that address, and find out whether it survives the sale. In North Charleston, Mount Pleasant and Folly Beach it does not, which means a seller running a profitable rental usually cannot hand you the thing that made it profitable. Narrow exceptions exist for inheritance, joint owners and some trust or LLC transfers.
What the house is worth to a family is not what it is worth to you. Project revenue for that bedroom count in that submarket, cross-check it against what comparable properties actually earn, and use the lower of the two.
Furnishing, linens, kitchen, outdoor space, photography, listing setup. It is a second budget on top of any renovation, it is easy to underestimate, and it is spent before a single night is booked.
This is the step that changed this month. Fannie Mae issued new short-term rental income rules in September 2026, so conventional financing is no longer automatically closed to you. A DSCR loan, which qualifies on what the property earns rather than on your tax returns, is still the more common route. Ask a lender which one your file actually fits.
Re-run the whole thing twenty percent below projection, against full operating costs and not just the mortgage: management, cleaning, utilities, insurance, permits, maintenance and a capital reserve. If it still breaks even, the deal has some tolerance for a bad year. If it does not, you are relying on the projection being right.
Budget for the gap between closing and the first booking. A new listing typically takes one to three months to ramp up, and you carry the mortgage, the furnishing spend and the permit costs through all of it on little or no revenue.
Financing
A DSCR loan is the most common instrument for this kind of purchase. The lender underwrites the property's income against its debt service rather than your employment and tax returns, which is what makes it work for an investor buying their second or fifth rental. Credit score, cash reserves and the appraisal still matter.
Roughly high six percent to mid eight percent for a short-term rental as of September 2026. DSCR loans are privately priced with no published index, and short-term rentals price above long-term rentals. Advertised rates assume a best-case borrower.
Twenty-five percent is the realistic planning number. Many lenders cap short-term rental leverage at seventy-five percent loan to value, so the lower down payments advertised for long-term rentals often are not on the table.
Lenders generally want at least 1.0, and some short-term rental programs want 1.15 to 1.25 just to qualify. The best pricing sits above 1.25.
A DSCR loan will not fix a property that does not cash flow. Programs exist that lend below a 1.0 ratio, but you pay for it in rate, in down payment and in reserves. Qualifying on the numbers means weak numbers surface earlier, not later.
Before your next showing
Our full eight-step underwriting checklist on one page, with space to write the numbers in. Print it and fill it in at the showing, while you are standing in the property and the agent is telling you what it could earn.
Download the ChecklistOne page · PDF · No sign-up
Vacation Ventures
Through Vacation Ventures we manage short-term rentals in the same Charleston submarkets our clients buy in. The operating costs used in an analysis come from running properties, not from a calculator.
The full underwriting method, worked end to end on a real set of numbers, is on the Charleston STR property analysis page.
If there is an address you are looking at right now, send it over. You will get the permit position, the revenue projection, the full cost to open, the financing options and the cash flow, whether or not it turns out to be a deal worth doing.
Book a ConsultationThe Oswald Group at eXp Realty. This page is investment insight, not tax, legal or financial advice, and we are not a mortgage broker or lender. Rates, down payments and coverage ratios shown are illustrative ranges as of 18 September 2026, not an offer or commitment to lend, and actual terms are subject to lender underwriting. Short-term rental rules differ by municipality and change often. Revenue projections are estimates, are not guaranteed, and will vary with management, seasonality and local regulation. Verify current permit availability with the municipality and confirm pricing with a licensed lender before you invest. Equal Housing Opportunity.