All Forum Posts by: Wes M.

Also remember that some local governments may allow homestays (room/ADU STRs) and not a whole-house rental. If that is the case, then yes, you would see many legal operating STRs. Enforcement varies from jurisdiction to jurisdiction. Some local governments have dedicated staff specifically for STR enforcement and that is their full-time job. Others operate on a complaint based system, where a neighbor may call to report an illegal STR.

I am a new host -- one of three on my street in the last year. So, I am likely contributing to the problem of over saturation. We have had a great March and April, but have lots of open days in May. We are located in Oak Island. The summer is about half booked, and my prices are fairly high, with anticipation of lowering rates as we get closer. 95% of my bookings are AirBNB with a 19.4 average day lead time.

@Account Closed Sorry for the complicated post -- and full disclosure I am not an attorney nor offering legal advice. 

You are right, the City was not playing nice. In reality, the City was very cavalier in the language they decided to include in their ordinance -- i.e. "registration." If the City merely based its regulations on zoning related authority and was careful in its wording and did not include a lottery, then there would have likely been no invalidation of the City's rules. This case is really the result of a poorly constructed ordinance. 

Could you clarify this part a bit:
> In my opinion, it would be unwise to invest in an STR location that has existing regulations in place under the assumption this court case has somehow preempted that authority.

I would not use the ruling in this case to support an investment in an area that would not be permitted based on already established regulations. For example, even given this court ruling, I would not invest in a whole-house STR rental in a prohibited area in the City of Wilmington. I suspect the existing ordinance will be modified and the City will continue to regulate STRs in a similar fashion.

From a statewide perspective, this tells NC local governments that wish to regulate STRs that they may continued to do so, but with some additional guidance. In the traditional North Carolina vacation rental markets, STRs are not typically regulated as the economy in these areas are reliant on the tourism and occupancy tax dollars. In the larger cities where STRs have not been part of the historic neighborhood fabric, STR regulations may increase for whole-house rentals. The larger cities have economies based on more than tourism and are already facing affordability issues that are only exacerbated by STRs. Certainly there may be some areas that are appropriate for STRs in larger cites, but you may find whole-house rentals increasingly prohibited in residentially zoned areas. I do not have a crystal ball, so only time will tell how this impacts North Carolina.

In short, if you are investing in the historic vacation rental markets -- and are either properly permitted based on existing regulations or not subject to any regulations -- then this court case result is generally a good thing as it will funnel future STR occupants to your market.

A ruling has finally been issued for NC Court of Appeals case involving the City of Wilmington's STR ordinance. Ultimately, the court found portions of the City's ordinance to be invalid. Specifically, the City's requirement for "registration" and "lottery" of STRs was found to be invalid. Some may read the news headlines regarding this decision as an unequivocal prohibition of STR regulations in North Carolina, but that is not the case. If your read the entire decision and opinion, the Court affirms local government authority to regulation STRs through zoning enabling legislation. Effectively, any local government in North Carolina still has the authority to prohibit STRs in certain zoning districts as it so chooses. I would anticipate the City of Wilmington will modify their existing ordinance to remove the term "registration" from its existing ordinance in accord with the court's ruling and continue to regulate STRs in certain zoning districts -- but that's just my opinion.

Barring future legislative action by the General Assembly to explicitly preempt local government zoning regulation of STRs, it appears this court ruling will have little effect on existing STR ordinances throughout North Carolina. Few North Carolina local governments use the term "registration" in their ordinance, which is the reasoning for court invalidation in this particular case.

I share this information in an effort to help educate NC STR investors on their future decisions. In my opinion, it would be unwise to invest in an STR location that has existing regulations in place under the assumption this court case has somehow preempted that authority.

Language from Court opinion:

We hold that the following provisions of the ordinance are not preempted by Section 160D-1207(c) and remain in effect: (1) the restriction of whole-house lodging to certain zoning districts, i.e., the entirety of Sec. 18-331.1.

https://www.wect.com/2022/04/0...

@Clint Harris

Love it. These guys are diving in and providing all the details for everyone to learn. Clint's stories on BP are truly inspiring. In fact, I now have an STR as a result of he and another Carolina Beach investor @Joe Prillaman

Congrats on the latest deal! And I hope to make it Thursday.

@Dan Sayre Congrats on your decision to move east. It really depends on your budget. Southeastern NC will offer better opportunities in general for employment due to the population numbers. Brunswick County is not a bad choice - anywhere from the Oak Island/Southport area up to Leland. Wilmington is fantastic, but being close to the beach here will be more costly. Jacksonville/New Bern will be less expensive, but offer less opportunity for beach areas. Best of luck. We have ample need for good handymen and cleaners in southeastern NC.

@Hunter Crim That is correct, only 15% down and 30-year fixed at 4.25%. PMI is an additional $87 per month.

While their home price seems to be a bit off, I have found their rental manager provides excellent comps for determining your rental price. I would recommend checking it out. I listed a property for rent higher than I otherwise would based on their comps.

Best of luck -- if you can meet the "burden of proof" for your application, then it should be approved. You should be able to locate meeting minutes or previously recorded hearings for past CUPs. This would give you some insight into the process and things you will need to prepare for. 

@Justin Hinckley Best of luck, keep me posted on your ADU funding. I am considering doing the same and am estimating about $120k for a 900 square foot unit.