Author: O.K. Hogan | REALTOR®/BROKER, CCIM, SFR

If you’re thinking about buying a vacation rental in North Carolina, you’re in good company. Our coast and mountains draw families, fishermen, hikers, and food lovers in every season. The opportunity is real, but so are the details.

I’ve been both an out-of-town buyer and a full-time local. For over 30 years, I visited Carteret County until my wife, Lugean, and I finally moved to Beaufort in 2000. I still remember the feeling: one foot on vacation, one foot crunching numbers. That “head and heart” balance is how I advise clients today.

Key Takeaways

• Statewide travel demand is strong. North Carolina visitor spending reached $36.7 billion in 2024, a new record, and continued to broaden across many counties.
  
  
• Profitability hinges on location, local rules, insurance, and seasonality; not just the purchase price.
  
  
• Beach markets can command summer premiums but face higher wind/flood insurance and storm risk. Mountain markets offer four-season appeal but tighter STR rules in city cores.
  
  
• Nationwide, the STR industry has largely normalized from the post-pandemic surge; occupancy has run a touch lower as supply grew. See the Key Data 2024–25 national view for context.

Is a Vacation Rental in NC Right for You?

Investor Profiles & Goals

• Cash-flow first: prioritize occupancy/ADR comparables and conservative underwriting.
  
  
• Lifestyle first: a second home that earns enough to offset holding costs.
  
  
• Long-term equity: focus on land, location, and exit optionality.
  
  

Anecdote: A Raleigh couple hired me to “make the numbers work” on a Crystal Coast cottage. After a few showings, they confessed what they truly wanted: a place where their kids could learn to fish and their parents could join for a week. We underwrote it carefully, but we also wrote in “family weeks” each summer. Five years later, they tell me the returns are measured in both dollars and memories.

Risk Tolerance & Time Commitment

Owning a vacation rental isn’t completely passive. Decide whether you’ll self-manage (and build a tech stack for pricing, messaging, and turnovers) or hire a property manager and trade margin for time. There’s no wrong answer; only the one that fits your life.

The NC Vacation Rental Landscape

Where Demand Comes From

• Coast: Outer Banks, Crystal Coast, Wilmington beaches; classic weekly beach rentals, boating, fishing.
  
  
• Mountains: Asheville/Blue Ridge; four seasons, high weekend appeal, breweries, trails, fall color.
  
  
• Cities: Raleigh/Charlotte; events, healthcare, universities; check condo/HOA and city rules.
  
  

For macro context, Visit NC’s 2024 spending tally of $36.7B shows resilient travel demand, even after storms or changing calendars.

Current Performance Snapshots (illustrative, not promises)

• Asheville: ~52% occupancy, ~$233 ADR on the public AirDNA snapshot (rolling view; varies by bedroom, zoning, and amenities).
  
  
• Wilmington: ~53% occupancy, ~$217 ADR on the public AirDNA snapshot (seasonal peaks in summer).
  
  
• Outer Banks trendline: Dare County’s 2024 occupancy tax collections were down ~4.83% vs. 2023’s record; context for “post-surge normalization,” even as dining/meals spending stayed healthy.
  
  

Pro Tip: Always drill down to the micro-location (walk-to-beach, view corridor, parking, pet-friendly, hot tub, EV charging). The same town can behave like several different markets.

Laws, Permits, and What’s Legal

Start with the State Framework

North Carolina’s Vacation Rental Act governs vacation/ leisure stays under 90 days and requires written agreements. It outlines guest protections and owner obligations; use it to shape your lease language and processes.

Check Local Rules (they vary widely)

• Wilmington: The Schroeder v. City of Wilmington ruling (N.C. Court of Appeals) struck down mandatory registration/lottery provisions, but left room for general zoning standards. A useful plain-English breakdown is here: UNC School of Government analysis.
  
  
• Asheville: Whole-unit short-term vacation rentals (less than a month) are only allowed in the resort zoning district; Homestays require a permit and specific owner-occupancy conditions. See the city’s compliance page for definitions and enforcement.
  
  
• Outer Banks (Dare County): Rentals are common, but don’t overlook taxes and use rules. Dare’s Occupancy Tax is 6%, dedicated in part to tourism and beach nourishment depending on local acts.
  
  

Compliance Checklist: Verify zoning/HOA, parking and occupancy caps, tax registration, and platform rules before you go under contract.

What It Really Costs: Taxes, Insurance, and Fees

Sales & Occupancy Taxes

In North Carolina, lodging guests pay state sales tax plus local occupancy tax. If you list on Airbnb/VRBO, those platforms typically remit to the state, which then distributes to counties; owners remain responsible for any filings not handled by the platforms. Read the statewide primer: NCRLA’s profile of NC occupancy taxes and how remittances work and Dare’s official 6% guidance.

Coastal Insurance (Wind/Hail) & Flood

On the coast, wind and hail coverage can materially change your P&L. The North Carolina Insurance Underwriting Association (NCIUA); the Coastal Property Insurance Pool, a.k.a. “Beach Plan” exists as a market of last resort in eligible coastal counties; see its coverage overview and NC DOI consumer page for plain-English explanations.

For flood, FEMA’s Risk Rating 2.0 state profiles explain how premiums are now priced by property-specific risk drivers (elevation, distance to water, foundation type, etc.). If you’re eyeing a waterfront or low-lying home, review this early and request elevation certificates during due diligence.

My Rule: Don’t fall in love until you’ve seen the insurance quotes. I’ve watched perfect-on-paper homes lose their sparkle when premiums or deductibles came back higher than expected.

Financing Your NC Vacation Rental

• Second-home vs. Investment Loan: Rates, down payments, and reserve requirements differ; lenders treat projected STR income differently.
  
  
• DSCR Loans: Can underwrite to the asset’s income potential; compare total cost (rate + points + prepayment terms) to conventional.
  
  
• Stress-test: Model a 10% dip in occupancy and ADR; confirm you’re comfortable if a storm cancels a summer week.
  
  

Accountant Hat On: I like to model “base,” “soft,” and “strong” scenarios so no one’s surprised. That small exercise saves a lot of sleep later.

Picking Your Market (and Micro-Location)

• Beaches (Outer Banks / Crystal Coast / Wilmington): Strong summer weeks, higher insurance, watch erosion and flood zones. Dare’s 2024 occupancy collections pullback is a good reminder to underwrite conservatively.
  
  
• Mountains (Asheville/Buncombe): Four-season draws, but city rules are strict for whole-unit STRs; homestay permits are an option for some.
  
  
• Cities (Raleigh/Charlotte): Steady year-round demand tied to events, healthcare, and universities; vet HOA and city rules carefully.
  
  

Micro-location Wins: Walkability, parking, pet-friendly policies, outdoor showers at the beach, hot tubs in the mountains, and, more often now, EV charging.

Underwriting 101: From Pro Forma to Reality

Data to gather:

• Market comps for occupancy & ADR (public snapshots: Asheville, Wilmington), then refine with bedroom count, distance to water/trails, amenities.
  
  
• Operating costs: PM fees, cleanings, linens, utilities, landscaping, pest, pool/spa, supplies, credit card/OTA fees, taxes, insurance.
  
  
• Stress tests: Run −10% occupancy/ADR; assume a few blocked nights for weather or repairs. For context, the national STR trend showed slightly softer occupancy amid rising supply in 2024; prudence wins.
  
  

Anecdote: A small Harkers Island cottage looked “average” on the spreadsheet. We added a simple dock and marketed it to boaters. Occupancy and shoulder-season demand popped. Sometimes, one targeted amenity changes the whole story.

Operations: Self-Manage vs. Full-Service

• Full-service PM (often ~20–30%): Revenue management, guest communications, local vendor network, emergency response.
  
  
• DIY: Dynamic pricing, smart locks, messaging automation, noise monitors (respect local ordinances), cleaner scheduling apps.
  
  

If you live more than two hours away, or if you don’t want midnight plumbing calls, budget for management from day one.

Taxes & Bookkeeping (Talk to Your CPA)

• Separate bank/credit accounts; save every contract, permit, and tax filing.
  
  
• Keep a nightly ledger by reservation, including taxes collected/remitted (your CPA will thank you).
  
  
• Discuss depreciation, bonus depreciation eligibility, and how the IRS views material participation for STRs.

Local & National Risk Management

• Regulation Shifts: What happened in Wilmington (registration struck) and Asheville’s resort-only STR zoning are examples of how rules can tighten or loosen over time; know the ground you’re standing on. Schroeder case, UNC SOG explainer, Asheville policy pages.
  
  
• Weather & Insurance Shocks: Coastal owners should evaluate NCIUA/Beach Plan wind/hail options and flood exposure under FEMA’s Risk Rating 2.0. Deductibles and exclusions matter as much as the premium.
  
  
• Demand Normalization: Dare County’s 2024 occupancy collections and national STR pacing both suggest “back to normal” conditions; underwrite with cushion.
  
  

Personal Note: After Hurricane Florence, prepared owners with proper coverages, reserves, and vendor relationships bounced back faster. Preparation is part of ownership here.

Step-by-Step Purchase Checklist

1. Pre-qualify with an STR-friendly lender (ask how they treat projected income).
   
   
2. Verify zoning, permits, HOA, and parking/occupancy caps.
   
   
3. Underwrite conservatively using comps and seasonal patterns.
   
   
4. Make offers with inspection + insurance contingencies.
   
   
5. Obtain home, wind/hail, and flood quotes (request deductibles, exclusions, and loss runs in writing). See NCIUA/Beach Plan and FEMA Risk Rating 2.0 resources.
   
   
6. Register for sales/occupancy taxes and confirm platform remittances vs. owner filings (see NCRLA occupancy tax explainer).
   
   
7. Line up a PM or DIY vendor bench (cleaners, HVAC, handyman, landscapers, pool/spa).
   
   
8. Launch with a 90-day pricing and review plan; adjust based on guest feedback and booking windows.

Conclusion: Smart Investment with Local Guidance

Buying a vacation rental in North Carolina is both rewarding and complex. Success comes from pairing local expertise with financial discipline, and knowing which details matter for your exact street, view, and amenity mix.

At Star Team Real Estate, we combine decades of experience on the Crystal Coast and Wilmington area with hands-on market knowledge. We help buyers evaluate opportunities, navigate regulations, and find properties that deliver both income and lifestyle value.

To take the next step, explore available North Carolina rental investment vacation homes for sale or call us directly at (252) 727-5656.