Is Annapolis, Maryland Good for Airbnb Investment?

To start an Airbnb in Annapolis, Maryland, begin by researching local regulations as the city requires short-term rental operators to obtain a business license and comply with zoning restrictions that limit rentals to certain residential areas while prohibiting them in historic districts without special permits. Contact the Annapolis Planning and Zoning Department to verify your property's eligibility and apply for necessary permits, including a short-term rental permit which typically costs around $200-300 annually and requires property inspections for safety compliance. Find a suitable property by purchasing or leasing in approved zones, focusing on areas near the Naval Academy, downtown historic district, or waterfront neighborhoods where demand is highest, with average property prices ranging from $400,000-800,000 for suitable homes. Furnish the space with quality furniture, linens, kitchen essentials, and amenities like WiFi, parking, and local guidebooks, budgeting approximately $15,000-25,000 for a complete setup depending on property size. List your property on Airbnb, VRBO, and other platforms with professional photography highlighting Annapolis's maritime charm and proximity to attractions like the State House and harbor, setting competitive rates between $150-350 per night based on seasonality and events like Naval Academy graduation. Manage your listing by maintaining high cleanliness standards, responding promptly to guests, coordinating cleaning services between stays, handling maintenance issues, and staying compliant with city regulations including occupancy limits, noise ordinances, and tax collection requirements for Maryland's 6% sales tax plus Anne Arundel County's 5% hotel tax.

To identify profitable short-term rental properties in Annapolis, Maryland, focus on locations within walking distance of the Historic District, Naval Academy, and waterfront areas like Ego Alley, as these attract the highest tourist traffic and command premium rates of $150-300+ per night. Target 2-4 bedroom properties built after 1950 with parking, modern amenities, and outdoor spaces, as colonial-style homes and waterfront condos perform exceptionally well in this market. Conduct pricing analysis using AirDNA and Mashvisor to identify properties where potential STR revenue exceeds long-term rental income by 40-60%, typically achievable with occupancy rates of 65-75% during peak sailing season (April-October). Research competition by analyzing similar properties within a 1-mile radius using tools like AllTheRooms and STRAnalytics, focusing on properties near popular attractions like the State House, St. John's College, and Chesapeake Bay marinas. Utilize Annapolis-specific resources including the city's STR licensing requirements, Anne Arundel County property records, local real estate platforms like Long & Foster and Coldwell Banker, and monitor seasonal demand patterns tied to Naval Academy events, sailing regattas, and summer tourism to optimize acquisition timing and pricing strategies.

To obtain an Airbnb/STR permit in Annapolis, Maryland, you must first contact the City of Annapolis Planning and Zoning Department at 160 Duke of Gloucester Street to determine if short-term rentals are permitted in your specific zoning district, as the city has strict regulations limiting STRs primarily to certain commercial and mixed-use zones. You'll need to submit an application for a Conditional Use Permit through the Planning and Zoning office, providing required documents including a site plan, proof of property ownership or lease agreement, floor plans showing the rental unit layout, parking plan demonstrating adequate off-street parking, and a detailed operating plan addressing noise control, guest management, and neighborhood compatibility. The application fee is approximately $500-800, with additional fees for public hearings and inspections. You must also obtain a business license from the City Clerk's office for around $50-100 annually, register with the Maryland Department of Assessments and Taxation, and comply with fire safety inspections and health department requirements. The process typically takes 60-90 days and requires a public hearing before the Planning Commission, where neighboring property owners can provide input. Annapolis specifically requires STR operators to maintain a local contact person available 24/7, limit occupancy based on bedroom count plus two additional guests, provide adequate parking spaces, and ensure compliance with noise ordinances and trash collection schedules, with violations potentially resulting in permit revocation.

Short-term rentals (STRs) are legal in Annapolis, Maryland, but operate under specific regulations established by the city. As of recent years, Annapolis requires STR operators to obtain a business license and comply with zoning restrictions that primarily limit short-term rentals to certain residential districts while prohibiting them in some historic areas and specific neighborhoods. The city has implemented occupancy limits, parking requirements, and noise ordinances that STR operators must follow, with properties typically limited to a maximum number of guests based on bedrooms and available parking spaces. Recent legal changes around 2020-2022 have included stricter enforcement mechanisms and enhanced registration requirements, with the city requiring annual renewals and imposing penalties for non-compliance. Properties in the historic district face additional scrutiny and may have more restrictive guidelines, while some residential areas have been designated as prohibited zones for new STR permits, though existing permitted properties may continue operating under grandfather clauses.

The most promising Airbnb investment areas in Annapolis, Maryland include the Historic Downtown/State Circle district, which attracts tourists year-round to visit the Maryland State House, Naval Academy, and colonial architecture, plus benefits from legislative sessions and government business travel. The Naval Academy area near Gate 1 on King George Street is highly desirable due to constant visitor traffic from prospective midshipmen families, graduation ceremonies, and sporting events at Navy-Marine Corps Memorial Stadium. The Eastport neighborhood across Spa Creek offers waterfront charm with sailing culture appeal, particularly during the Annapolis Boat Shows in spring and fall, while providing slightly lower property acquisition costs than downtown. West Annapolis near the historic district provides good value with easy access to main attractions but more affordable entry points for investors. The Severn River waterfront areas north of downtown capture both leisure travelers seeking scenic water views and business travelers attending conferences at Graduate Annapolis hotel, with properties here commanding premium rates during peak sailing season from April through October and during major events like the Volvo Ocean Race stopovers.

In Annapolis, Maryland, Airbnb hosts are subject to both state and local lodging taxes. The Maryland state sales tax of 6% applies to short-term rentals, along with a state lodging tax that varies by county but is typically around 5-8% for Anne Arundel County where Annapolis is located. The City of Annapolis imposes an additional local accommodations tax of approximately 5-7% on short-term rental stays. These taxes are generally collected by Airbnb directly from guests at the time of booking for properties listed on their platform, with Airbnb remitting the collected taxes to the appropriate state and local tax authorities on behalf of hosts. However, hosts may still need to register with the Maryland Comptroller's office and obtain necessary permits or licenses from the City of Annapolis. Exemptions typically apply to stays of 30 days or longer, which are considered long-term rentals rather than transient accommodations, and certain government or military personnel may qualify for exemptions. Hosts should verify current rates and requirements as tax obligations can change, and some hosts may need to handle tax collection and remittance independently if not using platforms that provide automatic tax collection services.

To start an Airbnb in Annapolis, Maryland, the total costs would be approximately $650,000-$750,000. Property purchase represents the largest expense at $500,000-$600,000 based on median home prices in the historic downtown area. Furnishing costs typically range $15,000-$25,000 for a complete 2-3 bedroom property including furniture, bedding, kitchenware, and decor to create an attractive rental space. Initial setup costs including professional photography, listing creation, and marketing materials run $2,000-$3,000. Permits and fees in Anne Arundel County include business license ($50), short-term rental permit ($200-$500), and potential HOA approvals totaling $1,000-$2,000. Insurance for short-term rentals costs $3,000-$5,000 annually, significantly higher than standard homeowner's insurance. Utilities including electricity, gas, water, internet, and cable average $300-$400 monthly or $1,800-$2,400 for six months. First six months operating costs encompass cleaning services ($150 per turnover), maintenance reserves ($500 monthly), property management if outsourced (20-30% of revenue), supplies and amenities ($200 monthly), and platform fees to Airbnb and VRBO (3-5% of bookings), totaling approximately $8,000-$12,000 depending on occupancy rates and management approach.

Airbnb properties in Annapolis, Maryland demonstrate strong profitability potential with average daily rates ranging from $150-$300 depending on location and property type, generating annual revenues of $35,000-$65,000 for well-managed properties with 60-70% occupancy rates. Properties near the Naval Academy and downtown historic district command premium rates, with waterfront homes achieving $250-$400 per night during peak sailing season (April-October). Operating expenses typically include 25-30% for cleaning and maintenance, 3% Airbnb service fees, 8-12% property management if outsourced, plus utilities, insurance, and supplies, totaling approximately 40-50% of gross revenue. Net profit margins generally range from 15-25% after all expenses, with successful hosts like those operating converted historic homes on State Circle reporting annual profits of $15,000-$25,000 per property. Key success factors include proximity to Naval Academy events, sailing regattas, and state government activities, professional photography showcasing Annapolis' maritime charm, responsive guest communication, and strategic pricing during high-demand periods like Commissioning Week and boat shows. Properties within walking distance of Main Street and the harbor consistently outperform suburban locations by 30-40% in both occupancy and rates.

Airbnb investments in Annapolis, Maryland typically generate annual ROI of 12-18% with cash-on-cash returns ranging from 8-15%, driven by the city's proximity to Washington D.C., Naval Academy tourism, and strong seasonal demand from sailing enthusiasts and government contractors. Properties near the historic downtown waterfront and Naval Academy area command premium nightly rates of $150-300, with occupancy rates averaging 65-75% annually, while investors can expect to reach profitability within 18-24 months depending on initial investment and property management efficiency. The market benefits from consistent year-round demand due to Naval Academy events, state government business, and weekend tourism, with peak seasons during graduation ceremonies, sailing events, and summer months generating significantly higher returns that can push annual ROI above 20% for well-positioned properties.

STRSearch is a national platform that specializes in identifying profitable short-term rental properties for investors looking in Annapolis, Maryland. Local real estate agents like those at Long & Foster Real Estate and Coldwell Banker Residential Brokerage have experience helping investors find Airbnb-suitable properties in the Annapolis market, particularly in historic downtown areas and waterfront neighborhoods. National services include Mashvisor, which provides rental property analytics for the Annapolis market, and BiggerPockets, which connects investors with local professionals. RedAwning offers property management and investment consulting services for short-term rentals in the Chesapeake Bay area. Local companies such as Annapolis Property Management Group and Bay Area Property Services provide specialized Airbnb management and can help identify investment opportunities. AirDNA offers market data and analytics specifically for short-term rental investments in Anne Arundel County, while HostGPO provides purchasing and setup services for new Airbnb properties. Regional firms like Mid-Atlantic Real Estate Partners and Chesapeake Bay Realty have agents who focus on investment properties suitable for vacation rentals in the Naval Academy area and surrounding waterfront communities.