Estimating STR ROI In Wrightsville Beach

Thinking about buying a beach place in Wrightsville Beach and hosting it as a short‑term rental? Before you fall in love with a view, you need to know what it can realistically earn, what it will cost to operate, and how to stress‑test your assumptions. You want a clear, local process that turns fuzzy estimates into a confident plan.

In this guide, you’ll learn how to build an ROI model tailored to Wrightsville Beach, including seasonality, local rules, essential expenses, and the exact formulas to calculate NOI, cap rate, cash flow, and cash‑on‑cash return. You will also see how to run optimistic, baseline, and conservative scenarios so you can buy with clarity. Let’s dive in.

Why Wrightsville Beach draws STR demand

Wrightsville Beach is a small barrier‑island community next to Wilmington. Demand is driven by beach vacations, weekends and holidays, plus events in nearby Wilmington like concerts, university breaks, local festivals, and weddings. This creates steady interest from spring through fall, with a strong summer peak.

Expect the calendar to shape bookings. Late spring through Labor Day usually sees higher nightly rates and occupancy. Shoulder seasons can be moderate, while winter is typically quieter. Summer often favors week‑long stays. Off‑season, weekends and event dates fill first.

Start with the right comps

Define your property

Begin by matching your target home to real comparables:

• Bedrooms and bathrooms, plus sleeping capacity.
• Property type, like condo or single‑family.
• Micro‑location, such as oceanfront, soundside, canal, or near access points.
• Amenities and finish level, like elevator, garage, updated kitchen, or private beach access.

Where to find revenue data

Use short‑term rental analytics and local sources to ground your assumptions:

• STR analytics providers that report ADR, occupancy, and seasonality by market.
• Major listing platforms to review current nightly rates, calendars, and minimum stays for similar homes.
• Local vacation rental managers who can share realistic ranges and operational details.
• Visitor and tourism calendars for event‑driven spikes.

Adjust for location and features

Oceanfront typically commands a premium compared to non‑oceanfront within the same town. Recent renovations and high‑demand amenities can lift both ADR and occupancy. Compare realized performance, not just listed rates. Exclude comps that show many owner‑blocked dates, since those can understate true revenue potential for a full‑time rental.

Build your revenue model

Set ADR and occupancy

Choose an average daily rate and an annual occupancy rate based on your comps. Then use this simple formula:

• Gross annual rental revenue = ADR × 365 × occupancy

You can also start with nights booked by multiplying 365 by your occupancy rate.

Map the calendar and minimum stays

Layer in Wrightsville Beach patterns. Summer can favor 7‑night minimums, while spring and fall may support shorter stays. Weekends often book first off‑season, with weekday gaps you may need to price competitively. A realistic average length of stay helps you estimate turnovers and cleaning costs.

Account for seasonal swings

Use monthly seasonality from your comps to see how revenue clusters. This helps you plan cash flow for lower‑occupancy months and set aside reserves. It also gives you a baseline for scenario testing when ADR or occupancy move up or down.

Budget operating expenses

Your NOI hinges on getting expenses right. Build an annual budget with these categories:

• Property management fee. Full‑service managers commonly charge a percentage of rental revenue. Self‑managing can reduce this but adds time, systems, and risk.
• Platform fees. Hosting fees can be a percentage of revenue. Some fees are paid by guests while others are charged to hosts.
• Cleaning. Multiply per‑turnover cost by the number of bookings. Your average length of stay influences how many cleanings you pay for.
• Utilities. Electricity, water, gas if applicable, internet, and cable or streaming.
• HOA fees. Condos often have substantial monthly dues and specific STR rules. Confirm that STR use is allowed before buying.
• Property taxes. Pull the annual amount from the county tax assessor.
• Insurance. Plan for a policy that covers short‑term rental activity, plus wind and flood where required.
• Maintenance and repairs. Budget a percentage of revenue or a fixed amount for routine upkeep and minor fixes.
• CapEx reserve. Set aside funds for furniture refreshes and larger items like appliances.
• Marketing and supplies. Restocking, linens, and consumables.
• Licensing and taxes. Include local registration costs if required, plus sales and occupancy tax remittances.
• Mortgage payments. This is debt service, which you include when calculating cash flow and cash‑on‑cash return. Exclude it from NOI and cap rate.

Taxes and lodging taxes

In North Carolina, short‑term rentals are generally subject to state sales tax and local occupancy taxes on gross rental charges. Some booking platforms collect and remit certain taxes on your behalf. Confirm which taxes the platform handles and which you must remit yourself. For federal income tax, rental proceeds are typically reported as rental income and expenses may be deductible. Rules like the 14‑day rule and passive activity rules can apply. Speak with a CPA for guidance on your situation.

Insurance and hazard coverage

Standard homeowners policies often exclude or limit short‑term rental activity. Look for a short‑term rental endorsement, a landlord policy, or a vacation‑rental policy that includes liability for transient guests. Wrightsville Beach properties face coastal risks, so evaluate FEMA flood zones and confirm flood and wind coverage needs. Pay attention to hurricane deductibles and consider an umbrella policy for added liability protection.

Property management and cleaning

If you hire a full‑service manager, include their percentage fee and any setup or marketing charges. For cleaning, estimate the per‑turnover cost and multiply by expected bookings. Shorter stays increase turnover costs, which can reduce net revenue even if gross revenue rises.

HOA, utilities, and supplies

HOA dues, utilities, linens, and consumables add up. Build in a realistic monthly average for utilities, and a supplies budget that reflects your expected occupancy.

Calculate NOI, cap rate, and cash flow

Use these standard definitions to evaluate performance and compare properties.

• Gross Rental Revenue = ADR × 365 × occupancy
• Operating Expenses = sum of management, platform fees, cleaning, utilities, HOA, property taxes, insurance, maintenance, CapEx, supplies, licenses, and taxes remitted
• Net Operating Income (NOI) = Gross Rental Revenue − Operating Expenses
• Cap Rate = NOI ÷ Purchase Price
• Annual Debt Service = monthly mortgage payment × 12
• Cash Flow (before taxes) = NOI − Annual Debt Service

Cap rate helps you compare income performance against price, independent of financing. Cash flow shows how much money is left after paying the mortgage.

Cash‑on‑cash return and breakeven

Cash‑on‑cash return shows how hard your invested cash is working.

• Cash Invested = Down payment + closing costs + initial furnishing/setup + immediate repairs
• Cash‑on‑Cash Return = Cash Flow ÷ Cash Invested

To find a simple breakeven occupancy at a given ADR, solve for the occupancy rate that covers total annual costs:

• Breakeven occupancy ≈ (Operating expenses + Annual debt service) ÷ (ADR × 365)

You can refine this by separating fixed costs from variable, since some expenses scale with revenue. For a quick check, the simple version is a useful benchmark.

Run three scenarios

Coastal STR performance moves with seasons, travel trends, and competition. Always test your model under multiple conditions.

• Optimistic. Increase ADR by 10 to 15 percent and occupancy by 10 to 20 percent. Assume smooth operations and limited repairs.
• Baseline. Use the median ADR and occupancy from your best comps. Keep expense assumptions realistic.
• Conservative. Reduce ADR by 10 to 15 percent and occupancy by 10 to 20 percent. Increase management fees or cleaning costs, and model a spike in insurance or an unplanned repair.

Also check how results change if you self‑manage versus using a full‑service manager. Compare the time you invest with the net gain to see what fits your goals.

Local rules and compliance checks

Before you buy, confirm that short‑term renting is allowed for your specific address. Review Town of Wrightsville Beach ordinances and New Hanover County rules to see whether registration, inspections, occupancy limits, parking, or quiet‑hours apply. Many HOAs and condo associations regulate or prohibit short‑term rentals, so read the covenants and bylaws carefully.

Plan for taxes and filings. Confirm state sales tax and local occupancy tax requirements, and which taxes booking platforms remit for you. For federal income tax treatment of rental income and deductible expenses, consult IRS guidance and a CPA who understands vacation rentals.

Risk factors to model

• Regulatory change. Local rules and HOA policies can evolve. Model the impact of tighter rules or added fees.
• Natural hazards. Hurricanes, storm surge, and flood risk can interrupt bookings and increase insurance costs. Include business interruption effects for peak season.
• Competition. New listings and professional portfolios can compress ADR or occupancy. Monitor supply and be realistic with pricing.
• Operations. Faster turnovers, guest wear and tear, and urgent maintenance are part of STRs. Strong systems and vendor reliability matter.
• Market cycle. Leisure travel can soften in economic downturns. Build a reserve to carry lower‑demand months.

Step‑by‑step ROI checklist

1. Define the property type by bedrooms, baths, property type, and micro‑location.
2. Pull ADR and occupancy from close comps and reputable STR data providers.
3. Calculate gross revenue with ADR × 365 × occupancy.
4. Gather fixed costs: property taxes, HOA, insurance quotes, utilities.
5. Estimate variable costs: management percentage, cleaning per turnover, maintenance percentage, CapEx reserve.
6. Confirm tax obligations: state sales tax and local occupancy tax, and note which taxes platforms may remit.
7. Compute NOI by subtracting operating expenses from gross revenue.
8. Model your mortgage and annual debt service.
9. Calculate cash flow and cash‑on‑cash return based on your cash invested.
10. Build optimistic, baseline, and conservative scenarios.
11. Verify permissibility with Town, County, and HOA rules.
12. Obtain insurance quotes for STR activity, wind, and flood.
13. Validate assumptions with local professionals, including a CPA for tax treatment.

Example worksheet template

Use these placeholders to structure your model. Replace each with your numbers.

• Inputs:

  • Purchase price = P
  • Down payment = DP
  • Loan amount = P − DP
  • ADR = A
  • Occupancy = O (decimal)
  • Management fee = M% of revenue
  • Platform fees = PF% of revenue if applicable
  • Cleaning cost per turnover = C
  • Average length of stay = L nights
  • Annual property tax = T
  • Annual insurance = Ins
  • HOA annual = HOA
  • Utilities annual = U
  • Maintenance = m% of revenue
  • CapEx reserve = CapEx
  • Mortgage rate and term to compute payment

• Derived:

  • Nights booked = 365 × O
  • Bookings per year ≈ nights booked ÷ L
  • Gross revenue = A × 365 × O
  • Management fee = M% × gross revenue
  • Platform fees = PF% × gross revenue
  • Cleaning total = C × bookings per year
  • Maintenance = m% × gross revenue
  • Operating expenses = sum of T, Ins, HOA, U, management, platform fees, cleaning, maintenance, CapEx, licenses, and taxes remitted
  • NOI = Gross revenue − Operating expenses
  • Annual debt service = monthly mortgage payment × 12
  • Cash flow = NOI − annual debt service
  • Cash invested = DP + closing costs + setup/furnishings + immediate repairs
  • Cash‑on‑cash return = Cash flow ÷ Cash invested

How we can help

If you want to pursue an STR on the island, you deserve local guidance, clean numbers, and a smooth purchase. Our team pairs neighborhood expertise with organized systems so you can compare properties, validate assumptions, and move from offer to closing with confidence. When you are ready to evaluate options and align your ROI goals with the right home, connect with Living By The Coast Realty Group.

FAQs

How do I estimate short‑term rental revenue in Wrightsville Beach?

• Start with close comps that match bedroom count, property type, and micro‑location, then apply the formula Gross revenue = ADR × 365 × occupancy.

What seasons matter most for Wrightsville Beach STRs?

• Peak demand runs late spring through summer with higher rates and occupancy, shoulder seasons are moderate, and winter is typically slower.

Which expenses impact NOI the most for a beach STR?

• Management fees, cleaning turnover costs, insurance including wind and flood, HOA dues for condos, and property taxes are often the largest line items.

Do I need special insurance for a short‑term rental?

• Yes. Standard homeowners policies may not cover STR activity, so look for a policy or endorsement that includes liability for transient guests plus wind and flood as needed.

What taxes apply to short‑term rentals in North Carolina?

• State sales tax and local occupancy taxes typically apply to gross rental charges. Confirm which taxes your platform collects and what you must remit.

How do I calculate cap rate for an STR purchase?

• Cap Rate = NOI ÷ Purchase Price. Use NOI before debt service and income tax to compare properties.

What is cash‑on‑cash return and why does it matter?

• Cash‑on‑cash return is Cash flow ÷ Cash invested, which shows your annual pre‑tax cash yield on the money you put into the deal.

How can I stress‑test my Wrightsville Beach STR model?

• Build optimistic, baseline, and conservative cases by adjusting ADR and occupancy, changing management assumptions, and adding shocks like higher insurance or a major repair.