Vacation Rental Investment on Folly Beach: Start With the 800-License Cap

The Cap: 800 Licenses, Set by Referendum, Tested in Court

In February 2023, Folly Beach residents voted 655 to 577 in a referendum to cap short-term rental licenses citywide at 800 -- a genuinely close vote, with more than 1,200 residents turning out. The stated goal, per Post and Courier and ABC News 4 coverage of the debate, was maintaining a balance between tourism-driven short-term rental turnover and the town's full-time residential population, which stood at roughly 2,078 people at the 2020 Census.

Rental-property owners have challenged the cap in court more than once. In April 2024, a Charleston County circuit judge affirmed that the referendum functions as a business-license regulation rather than a zoning change, reasoning that it does not infringe on vested property rights since a business license itself is not considered a vested right. The South Carolina Court of Appeals upheld that ruling in a decision issued/reported in March 2026 (2026-UP-075). This page does not claim the South Carolina Supreme Court has separately ruled on this specific cap -- no corroborating source for a Supreme Court decision on this case was found, and city council was still actively reviewing the short-term rental ordinance as of mid-2026 reporting, which would be unusual if the state's highest court had already issued a final ruling. Treat the Court of Appeals decision as the most recent confirmed appellate outcome, and confirm current litigation status directly with the city before relying on this as fully and finally settled.

The Waitlist: Full Since 2024, Not Moving Quickly

The practical consequence of the 800-license cap is a waitlist system for anyone wanting a new short-term rental license once the cap is reached -- and multiple sources describe that waitlist as effectively full since it opened in 2024, with reporting as of that period indicating no one had yet moved off it. The city's short-term rental ordinance, Code Chapter 117, includes a two-tiered waitlist structure and specific provisions worth understanding for any investment decision: licenses can be inherited under certain conditions, there are exceptions carved out for documented medical hardship, and a license holder must meet an annual minimum number of nights rented to remain in "good standing" and keep the license active.

This means a buyer purchasing a property specifically because it has no existing license, on the assumption that a new license will become available soon, is making a bet this page cannot responsibly validate -- confirm the actual current waitlist position and realistic timeline directly with the City of Folly Beach before underwriting any investment around a future, not-yet-issued license.

Buying a Property With an Existing License

For a buyer specifically targeting rental income, a property that already carries an active, transferable short-term rental license is a meaningfully different asset than one without, given how constrained new licenses are. Whether a specific license transfers with a sale, and under what conditions, depends on the current terms of Chapter 117 and should be confirmed directly with the seller's listing information and the city -- this page does not assume license transferability is automatic or guaranteed in every case, since ordinance terms can and have changed (the ordinance saw amendments with a first reading on February 14, 2024, and a second reading on February 20, 2024, adding new provisions including a provisional license category).

A buyer should also confirm the specific license's current standing -- whether it has met the minimum annual rented-nights requirement in recent periods -- since a license that has lapsed out of good standing may carry more risk than a straightforwardly active one.

This Page Does Not Project Rental Income

Nightly rate averages, seasonal occupancy percentages, and projected annual rental income for Folly Beach properties were not independently confirmed at a level of reliability this page is willing to publish as fact. Real estate and vacation rental platforms often show projected income estimates, but those figures vary by methodology, season, property type, and marketing assumptions, and none of them was treated as an authoritative, citable number for this build. Anyone evaluating a specific property for rental income should request actual historical booking and revenue data from the current owner or property manager -- not a platform-generated estimate -- as part of due diligence.

Costs That Apply Whether or Not the Cap Affects You

Regardless of licensing status, a rental-investment property on Folly Beach carries the same underlying structural costs covered elsewhere on this site: South Carolina assesses non-owner-occupied property, including rental property, at 6% of fair market value for property tax purposes, versus 4% for owner-occupied primary residences -- a real, material difference for an investment property's carrying cost. Flood insurance, given the presence of both AE and VE flood zones on the island, is a real, non-trivial cost that should be quoted based on the property's actual elevation certificate rather than estimated. And the city's 50-foot building height limit (Ordinance Section 90.05) constrains any plans to build a larger structure to maximize rental capacity.

The Legal and Regulatory Risk Is Real, Not Hypothetical

The short-term rental regulatory environment on Folly Beach has changed meaningfully in the past few years -- a voter referendum, multiple ordinance amendments, and multiple rounds of litigation, with the most recent confirmed appellate ruling from March 2026. Any investor should treat this as an active, evolving regulatory area rather than a settled, static rule, and should build in the real possibility that ordinance terms (minimum rented-nights requirements, waitlist mechanics, transfer rules) could change again. This is not a prediction that they will change in any particular direction -- it is a statement that the recent history shows genuine regulatory volatility, and that history is a legitimate input into any investment risk assessment here.

What This Page Doesn't Cover

This page explains the real, confirmed structure of Folly Beach's short-term rental cap, its legal history, and the licensing mechanics that any rental-focused buyer needs to understand before making an offer. It does not project rental income, state a specific current waitlist position or wait time, or predict the outcome of any future legal or regulatory change, because none of those was treated as a confirmable, citable fact for this build. Confirm current licensing status, waitlist position, and ordinance terms directly with the City of Folly Beach, and get actual historical booking data for any specific property, before underwriting a rental-investment purchase. Nothing on this page is financial, legal, or investment advice.