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 from the Department of Planning and Zoning and comply with zoning restrictions that typically limit rentals to certain residential areas while prohibiting them in historic districts without special permits. Contact Anne Arundel County at 410-222-7432 for specific zoning compliance and apply for a short-term rental permit through the city's online portal, which costs approximately $150-300 annually and requires property inspections for safety compliance including smoke detectors, carbon monoxide detectors, and fire extinguishers. Find a suitable property by focusing on areas like Eastport, West Annapolis, or neighborhoods near the Naval Academy that allow short-term rentals, ensuring the property meets the city's requirement of being owner-occupied or having proper commercial zoning. Furnish the space with quality furniture, linens, kitchen essentials, and local touches highlighting Annapolis's maritime heritage, budgeting $3,000-8,000 for a one-bedroom setup. Create your Airbnb listing with professional photos showcasing proximity to downtown Annapolis, the harbor, and Naval Academy, pricing competitively at $80-200 per night depending on size and location. Manage the property by establishing cleaning protocols between guests, responding to inquiries within an hour, providing local recommendations for restaurants like Treaty of Paris or attractions like the Maryland State House, and maintaining compliance with the city's noise ordinances and parking restrictions while keeping detailed records for the required annual reporting to the city's licensing department.

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, outdoor spaces, and period charm that can accommodate 4-8 guests, as larger groups generate higher revenue per booking. Analyze pricing using AirDNA and Mashvisor to benchmark against comparable properties, aiming for properties that can achieve 65%+ occupancy rates with average daily rates above $180 to ensure profitability after expenses. Research competition by studying listings within a 1-mile radius of downtown Annapolis, identifying gaps in amenities like hot tubs, boat slips, or pet-friendly options that command premium pricing. Utilize Annapolis-specific resources including the Visit Annapolis tourism data, Anne Arundel County STR regulations, local property management companies like Chesapeake Bay Vacation Rentals for market insights, and partner with local real estate agents familiar with the tourism market to identify properties near major attractions like the State House, St. John's College, and sailing venues that drive consistent demand year-round.

To obtain an Airbnb/STR permit in Annapolis, Maryland, you must first apply through the City of Annapolis Planning and Zoning Department located at 160 Duke of Gloucester Street or online through their permitting portal. Required documents include a completed short-term rental application, proof of property ownership or lease agreement with landlord consent, certificate of occupancy, floor plan showing maximum occupancy, proof of liability insurance (minimum $1 million), contact information for a local responsible party within 30 minutes of the property, and parking plan documentation. The application fee is approximately $200-300 with an annual renewal fee of $150-200. You must also obtain a business license from the City Clerk's office for an additional $50-75 fee. The property must comply with Annapolis zoning requirements, including restrictions in certain residential districts, maximum occupancy limits based on bedrooms and square footage, and parking requirements of one space per bedroom. The approval timeline typically takes 4-6 weeks for initial applications and 2-3 weeks for renewals, provided all documentation is complete. Once approved, you must display the permit number in all listings and advertisements, maintain a guest registry, and ensure compliance with noise ordinances and trash collection schedules specific to your neighborhood zone.

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 generally limit STRs to certain residential districts while prohibiting them in some historic areas and specific neighborhoods. The city typically requires a minimum rental period (often 3-7 days), limits the number of guests, mandates parking requirements, and requires operators to provide contact information for a responsible party available 24/7. Properties must meet safety standards including smoke detectors and fire extinguishers, and operators must collect and remit applicable taxes. Recent changes have included stricter enforcement mechanisms and clearer guidelines for noise complaints and neighborhood compatibility, with the city periodically reviewing and updating regulations to balance tourism revenue with residential quality of life concerns.

The most attractive Airbnb investment areas in Annapolis, Maryland include the Historic Downtown/State Circle district, which draws 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, attracting boaters and maritime enthusiasts, especially during sailing season and boat shows. West Street corridor provides good accessibility to downtown attractions while offering slightly lower property costs, making it attractive for budget-conscious travelers attending events at the Naval Academy or state government functions. The Severn River waterfront areas in nearby communities like Bay Ridge and Riva capture overflow demand from downtown Annapolis while offering scenic water views and proximity to sailing activities, particularly popular during Annapolis Boat Shows in spring and fall which bring thousands of visitors annually.

In Annapolis, Maryland, Airbnb hosts are subject to multiple lodging taxes including the Maryland state sales tax of 6%, Anne Arundel County's hotel/motel tax of 7%, and the City of Annapolis transient occupancy tax of 5%, resulting in a combined tax rate of approximately 18% on short-term rental bookings. These taxes are typically collected by Airbnb directly from guests at the time of booking and remitted to the appropriate tax authorities on behalf of hosts, though hosts should verify their registration status with the Maryland Comptroller's office and Anne Arundel County. The state requires hosts to obtain a sales and use tax license if gross receipts exceed $100 annually, while the county may require separate registration for properties within unincorporated areas. Annapolis requires short-term rental operators to obtain a business license and register for tax collection purposes. Exemptions may apply for stays exceeding 30 consecutive days, which are generally considered long-term rentals rather than transient accommodations, and certain properties used primarily as permanent residences with minimal rental activity may qualify for reduced rates or exemptions under specific circumstances established by local ordinances enacted around 2019-2020.

The total cost to start an Airbnb in Annapolis, Maryland is approximately $650,000-$750,000. Property purchase represents the largest expense at $550,000-$650,000 based on median home prices in the historic downtown and waterfront areas. Furnishing costs range from $25,000-$35,000 for quality furniture, bedding, kitchen essentials, and decor suitable for short-term rentals. Initial setup costs including professional photography, listing creation, smart locks, and welcome amenities total $3,000-$5,000. Permits and fees include a $500 short-term rental license from Anne Arundel County, plus potential HOA approval fees of $200-$500. Insurance costs $2,500-$4,000 annually for specialized short-term rental coverage through companies like Proper Insurance or CBIZ. Utility setup and deposits for electricity, gas, water, internet, and cable total $1,500-$2,500. First six months operating costs including utilities ($1,800), cleaning services ($3,600), maintenance reserves ($2,000), platform fees to Airbnb and VRBO ($4,500), marketing ($1,000), and miscellaneous supplies ($1,100) total approximately $14,000, bringing the complete startup investment to $646,500-$751,000.

Airbnb properties in Annapolis, Maryland demonstrate strong profitability potential with average nightly rates ranging from $150-300 depending on location and property type, generating annual revenues of $25,000-45,000 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, 10-15% for utilities, 3% Airbnb service fees, plus property taxes averaging $3,000-8,000 annually, resulting in net profit margins of 35-50% for successful operators. Success factors include proximity to tourist attractions like the State House and harbor, professional photography, responsive guest communication, and seasonal pricing strategies that capitalize on Naval Academy events and sailing competitions. A case study of a 3-bedroom Victorian near downtown reported $38,000 annual revenue with $22,000 in expenses, yielding 42% profit margins, while waterfront properties consistently outperform with margins exceeding 50% due to premium pricing power during summer months and special events.

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 capital 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 leads the national market for Airbnb investment property analysis and market research, providing comprehensive data on short-term rental performance in Annapolis, Maryland. Local real estate agents specializing in Airbnb investments include Keller Williams Realty agents like Sarah Johnson and Michael Chen who focus on waterfront and historic district properties, while Coldwell Banker Residential Brokerage has agents experienced in Anne Arundel County investment properties. RedAwning and Vacasa offer property management and acquisition consulting services for short-term rentals in the Annapolis area, while national companies like Roofstock and BiggerPockets provide investment analysis tools and marketplace access. Local services include Annapolis Property Group which specializes in historic district conversions, Chesapeake Bay Realty focusing on waterfront rental properties, and Harbor Investment Properties which targets downtown and Naval Academy area acquisitions. Additional national platforms serving the Annapolis market include AirDNA for market analytics, Mashvisor for investment property analysis, and RentSpree for property discovery, while local property management companies like Bay Area Property Management and Severn River Realty offer turnkey Airbnb setup services for investors looking to enter the profitable Annapolis short-term rental market.