Charleston SC STR Real Estate

[Greg Irwin]

Hello Everybody,

I'm wondering if anyone has good knowledge of the STR market in Charleston SC? I love the area and visit there often. I'm just getting into real estate investing in my hometown, but like the idea of STRs and think Charleston could be a good place for them as well. I know there are fairly strict laws regarding where an STR can set up shop and have researched that some. But I am wondering if anyone has first hand knowledge of this and if you have any suggestions of good areas to buy for such an endeavor? Also, is the Charleston market viable for STRs?

Thanks in advance!

-Greg

[David Bergmann]

Charleston is a great market from a vacation demand perspective, but the vast majority of operators are running STRs illegally.  Charleston is actually such a popular tourist destination that the revenue from operating illegally more than offsets the risks and fines, which is creating a huge black market in the city for Airbnbs.  

There are only about 300-400 legal permits for STRS, yet 2300+ rentals according to Airdna.  Charleston is trying to hire a third party consultant that can identify the address of the units so they can serve up fines on a mass scale and serve up notices/fines.  Until then, they can only enforce through complaints, and for every unit taken down due to complaint, there are two more operators that have popped up.  So its essentially Airbnb whack-a-mole.

A market like this will definitely have a risk premium and I can tell you that many of those illegal operators are probably making a ton of cash as long as their units don't generate complaints.  But its only a matter of time before the city increases fines and finds a way to effectively locate and fine illegal operators.