Are you eyeing a Folly Beach property and wondering what it takes to secure or keep a short-term rental license? You are not alone. STR rules can directly impact your lifestyle plans and investment returns, especially with license caps and a waitlist in the mix. In this guide, you will learn how owner-occupied and investor licenses differ, how caps and the waitlist function, and what to verify before you write an offer. Let’s dive in.
Folly Beach STR basics
Cities design STR programs to balance neighborhood peace, safety, and housing supply while still allowing homeowners to host. Folly Beach follows this same intent. You will generally see two license types: owner-occupied and non-owner or investor. Each comes with different requirements, renewal steps, and transfer rules that affect both hosts and buyers.
Most programs also include inspections, a local 24-7 contact requirement, rules for posting your license number on listings, and tax collection. Exact numbers, fees, and deadlines change, so plan to verify each detail with the City of Folly Beach before you commit.
Owner-occupied vs investor licenses
What owner-occupied means
Owner-occupied licenses are designed for properties that serve as the owner’s primary residence. Cities typically ask for proof of occupancy such as a driver’s license, voter registration, utility bills, a homestead exemption, or a tax bill. Confirm exactly how Folly Beach defines primary residence and whether partial-year occupancy qualifies.
Operational differences to expect
Policies often treat owner-occupied hosts differently than investor operators. Nights-per-year limits or other operational rules may apply. In some programs, owner-occupied licenses are exempt from citywide caps or prioritized when capacity is limited. Verify Folly Beach’s current rules before you model revenue.
Transfer rules to watch
License transferability is one of the biggest pitfalls for buyers. Many licenses do not automatically transfer on sale, especially when tied to owner occupancy. Even if a city allows licensing, HOA or condo rules can still prohibit STRs, so you must check both. Ask the City of Folly Beach to confirm whether a specific license type can remain valid after conveyance or if you must reapply.
Caps and license limits
Why caps matter
When a city caps the number of investor licenses, the supply of legal STRs becomes limited. Scarcity can increase the value of properties with compliant investor status. It also means new investors may face a waitlist, which can delay income and change the underwriting math.
What to confirm with Folly Beach
- Exact license cap numbers and where they apply, such as citywide or by district.
- Whether owner-occupied licenses are exempt from caps.
- If any properties were grandfathered and how new allocations occur.
- Whether a license can be maintained after sale or if the buyer must reapply.
The waitlist process
How lists usually work
Cities use waitlists when investor licenses hit their cap. Models vary: first-come first-served, periodic lotteries, or priority tiers for certain applicants. Waitlists typically do not permit STR operation until a license is issued.
What to ask the city
- How to apply and whether an application fee is required.
- Whether your place in line is public and if it can be transferred.
- Historical wait times and what triggers a new license offer.
- How you will be notified and the deadline to respond when offered a license.
- Whether a waitlist position survives a property sale or resets for the buyer.
Buyer risks during a wait
If the seller’s STR income depends on an investor license that is not transferable, your revenue may drop to zero until you secure your own license. Make sure your cash-flow model accounts for the time value of waiting, potential changes to caps, and the risk of not receiving a license as quickly as planned.
Renewal and ongoing compliance
Typical renewal timing
Most municipalities require annual renewal with a fee. Expect to update documents such as proof of occupancy, inspection certificates, and tax remittance records. Confirm renewal windows and any grace periods with Folly Beach to avoid lapses.
Inspections and safety
Life safety is a core focus. Be prepared to show compliance with smoke and carbon monoxide detectors, egress standards, and any septic or sewer requirements. You will likely need a designated local contact who is reachable 24-7 to respond to complaints or emergencies.
Penalties to avoid
Unlicensed renting, missed renewals, or safety violations can trigger fines, stop-rental orders, suspension, or revocation. Repeated violations may impact eligibility for future licenses or your position on a waitlist. Build a compliance calendar so you never miss a step.
Taxes and fees to plan for
Accommodations tax obligations
Hosts must register and remit lodging or accommodations tax to the appropriate agencies, which typically include the city or county and the South Carolina Department of Revenue for state portions. Confirm current tax rates and filing schedules. If you purchase, you will need to set up your own tax accounts and keep filings current.
Application, renewal, and business licensing
Expect separate application and renewal fees, which may differ by license type. Some municipalities also require a business license or a hospitality fee. Verify each item with Folly Beach so you can budget accurately.
Insurance and liability
Standard homeowner policies often exclude STR use without an endorsement. Confirm the city’s minimum insurance requirements and request a policy that covers short-term rental operations. Budget for higher premiums and any property upgrades needed to meet code.
Underwriting for buyers
Build conservative assumptions
- Use verified historical booking data when available, and reconcile it with tax filings.
- Stress test for lower shoulder-season occupancy, periods of closure for inspections, and potential waitlist delays.
- Model scenarios for losing a non-transferable license at sale and operating as a long-term rental instead.
Expense categories to include
- Management and platform fees, cleaning, utilities, routine maintenance.
- Capital improvements to meet safety and parking requirements.
- Insurance premiums and all lodging tax remittance.
Regulatory risk premium
If investor licenses are capped and nontransferable, price in the risk that you may not receive a license promptly after closing. Properties with lawful investor status often command a premium, while units without a clear path to licensing should be valued more cautiously.
Offer-ready compliance checklist
Use this quick checklist before you write an offer:
- Request and review the current Folly Beach STR license and its expiration date.
- Confirm license type, owner-occupied or investor, and whether it is transferable on sale.
- Check the city’s STR registry or portal for license status and expiration.
- If owner-occupied, verify the seller’s occupancy proof submitted to the city.
- Ask for the last 12 months of lodging tax filings and receipts.
- Obtain inspection certificates and any list of outstanding code violations.
- Review HOA or condo rules for any STR prohibitions or restrictions.
- Confirm insurance coverage for STR operations or budget for an endorsement.
- If no license exists, request written city documentation on the waitlist rules and the seller’s position, if claimed.
- Add a contract contingency that addresses license transferability or receipt of an operational license by closing.
- Model conservative STR revenue using verified bookings and a regulatory risk adjustment.
- Identify your local 24-7 contact or management plan and confirm it meets city requirements.
- Verify parking and trash plans along with any neighborhood permit needs.
- Confirm renewal deadlines and create a calendar for post-closing compliance.
Smart next steps
- Call the City of Folly Beach to confirm today’s cap numbers, license types, renewal window, waitlist rules, and fees. Policies evolve, so get the latest in writing.
- Ask the seller for full documentation: license, inspections, booking history, tax filings, insurance declarations, and any city correspondence about violations.
- Align your purchase plan with what the rules actually permit. If the investor license will not transfer, decide whether a waitlist timeline still supports your goals.
If you want a clear, concierge plan for Folly Beach STR licensing, underwriting, and HOA logistics tailored to your goals, let’s talk. Schedule a lifestyle consultation with Unknown Company.
FAQs
Can a Folly Beach STR license transfer to a buyer at closing?
- Often not automatically. Ask the City of Folly Beach for written confirmation of transfer rules for the specific license type tied to the property.
Does being on the Folly Beach waitlist allow me to rent now?
- No. A waitlist position typically does not authorize operation. You must wait until a license is issued and all conditions are met.
How long does the Folly Beach STR waitlist take?
- It varies by demand and policy. Request historical timelines or any published statistics directly from the city to set realistic expectations.
Are owner-occupied STR licenses treated differently in Folly Beach?
- Many programs treat them differently, such as exemptions from caps or unique documentation. Confirm Folly Beach’s current definitions and rules.
Will HOA rules override a Folly Beach STR license?
- Yes. HOA and condominium documents can prohibit STRs even if the city issues a license. Always review governing documents before you offer.
What happens if the seller has STR violations on record?
- Violations can lead to fines or license suspension and should be disclosed. Require remediation and clean documentation prior to closing.
