The Ultimate Guide to Buying an Airbnb Vacation Rental Property in Boston

Investing in an Airbnb vacation rental property can be a lucrative venture, especially in a bustling city like Boston, which draws tourists, business travelers and students alike. However, as with any investment, it comes with its risks and benefits. 

This guide will provide an overview of the pros and cons of entering the Boston Airbnb market, the market potential for your Airbnb investment and outline the relevant laws, regulations and taxes.

Airbnb Investing in Boston: Pros & Cons

Advantages of investing in Boston’s Airbnb market

1. High tourist attraction

Boston is a historical and cultural hub with landmarks such as the Freedom Trail, Museum of Fine Arts, Fenway Park and numerous universities and colleges. The city is also home to numerous events and conferences throughout the year when short-term accommodations experience spikes in demand. This constant influx of tourists, college students and business travelers results in a steady demand for short-term rentals.

1. Strong economy

The city’s economy has been growing steadily since the drop of the pandemic, accounting for a GDP of 504.1 billion in 2022. The economy is expected to maintain its steady growing trajectory providing a stable and fruitful environment for your Airbnb business.

3. Safety

Boston is considered to be a safe city which is a crucial factor for travelers as well as prospective homeowners.

Disadvantages of Investing in Boston's Airbnb market

1. Regulatory environment

While Boston certainly can’t claim to have the most onerous short-term rental regulations, even allowing Airbnb vacation rentals to operate throughout the year, navigating its laws can be tricky, especially when you are just starting out.

1. High property prices

Boston’s real estate market is among the most expensive in the US with home prices up 7.1% compared to last year, which means a high initial investment and larger mortgage payments.

Market Insights: Airbnb Vacation Rental Potential in Boston

According to May 2024 AirDNA data for Boston, Airbnb hosts in the city enjoy an:

• Average annual revenue of $33,200

• Average occupancy rate of 60%

• Average Daily Rate (ADR) of $323.1

• Revenue per Available Rental (RevPAR) of $184.3

According to Zillow, the average home value in Boston is $741,153, slightly higher than the median sale price of $715,000 as of end February 2024.

What is a Short-Term Rental in Boston?

A short-term rental in Boston is defined as the use of a residential property for residential occupancy of less than 28 consecutive days.

Properties permitted to be offered as short-term rentals include owner-occupied condominiums and single-family, two-family and three-family buildings.

In the case of two-family or three-family buildings, the owner must own all the units.

How to Register Your Airbnb Vacation Rental in Boston

Step 1: Check eligibility

Determine if your property is eligible to be a short-term rental against the city’s eligibility criteria.

If your property is ineligible, you can opt for a long-term rental without requiring a short-term rental registration. However, this will involve its own regulations.

Step 2: Apply for a short-term rental license

If your property is eligible, apply for a license, selecting from the three types of short-term rental units allowed.

• Limited share

When you list part of your primary residence, like one or more rooms, for rental and where you reside through the period of each and every rental.

• Home share

When you list your primary residence and you are present during some or all of the rental.

• Owner-adjacent

This is where the host lives in one unit of a multi-unit property and rents out one full unit.

You will have to submit two documents to verify your primary residence, such as a utility bill, voter registration or driver’s license.

Step 3: Add the registration number to your listing

Once approved, include your license number in your Airbnb listing. Make sure to include the ‘STR’ prefix and not just the six digits.

Step 4: Obtain a business certificate

Apply for a business certificate from the City Clerk’s office, which can be done via mail or in person. The certificate is valid for four years.

Step 5: Notify your neighbors

Notify your neighbors using the city’s mailing tool within 30 days of registering your property as a short-term vacation rental.

Zoning Laws for Airbnbs in Boston

The Boston Zoning Code delivers direction for zoning regulation uses in Boston neighborhoods. Consult Article 2 of the code to make sure your listing does not violate any zoning definitions.

Airbnb Taxes in Boston

Boston short-term rentals are subject to both city and state taxes that are collected and remitted by Airbnb on behalf of hosts. These include:

• State excise tax of 5.7%

• Boston excise tax of 6.5%

• Convention center finance fee of 2.75%

• Community impact fee of up to 3%

Securing Success: Smart Strategies for Airbnb Investments in Boston

Investing in an Airbnb property in Boston is promising and requires careful consideration of the regulatory environment, market dynamics and financial implications. With the right property, strategic management and investment in Airbnb management software, you can earn a significant return on your investment.