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 Annapolis City Hall at 160 Duke of Gloucester Street to verify specific zoning compliance for your property and obtain the required Conditional Use Permit if needed, which costs approximately $500-800 and takes 4-6 weeks to process. Find a suitable property in permitted zones such as residential areas outside the historic core, ensuring it meets safety requirements including smoke detectors, carbon monoxide detectors, and proper egress windows. Furnish the space with quality basics including comfortable beds, linens, towels, kitchen essentials, WiFi, and local guidebooks highlighting Annapolis attractions like the Naval Academy and downtown waterfront. Create your Airbnb listing with professional photos, competitive pricing around $100-200 per night depending on size and location, and emphasize proximity to the Naval Academy, State House, and Chesapeake Bay activities. For ongoing management, establish cleaning protocols between guests, maintain responsive communication, stock supplies regularly, and consider hiring local property management companies like Chesapeake Bay Property Management or RedAwning if you live outside the area, while ensuring compliance with Maryland's 6% sales tax and Annapolis's 5% hotel tax requirements.

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, waterfront or water views, and historic charm, as these features can increase occupancy rates by 15-20% compared to standard properties. Conduct pricing analysis using AirDNA and Mashvisor to identify properties where potential STR revenue exceeds long-term rental income by at least 40%, typically requiring purchase prices under $400,000 for optimal ROI in the Annapolis market. Research competition by analyzing similar properties within a 2-mile radius using Airdna's market data, focusing on occupancy rates above 70% and average daily rates, while noting that downtown Annapolis has approximately 200-300 active STRs creating moderate competition. Utilize tools like Rabbu, AirDNA, and STR Helper for market analysis, while leveraging local resources such as the Anne Arundel County zoning regulations, Visit Annapolis tourism data, and MLS systems through local realtors familiar with STR-friendly neighborhoods like Eastport, Murray Hill, and areas near St. John's College where zoning permits short-term rentals.

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 restrictions on STRs in certain residential areas. You'll need to submit an application through the Planning and Zoning office along with required documents including a site plan, proof of property ownership or lease agreement, certificate of occupancy, fire safety inspection certificate from the Annapolis Fire Department, and proof of liability insurance with minimum $1 million coverage. The application fee is approximately $150-300 depending on property type, with additional inspection fees of around $75-150. You must also obtain a business license from the City Clerk's office for approximately $50-100 annually and register with the Maryland Department of Assessments and Taxation for state tax purposes. The approval process typically takes 4-8 weeks, during which the city will review zoning compliance, conduct safety inspections, and verify that the property meets all building codes and fire safety requirements. Annapolis 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, and comply with noise ordinances, with some neighborhoods having additional restrictions on the number of rental days per year.

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. Properties must meet safety standards including smoke detectors and emergency egress requirements. Annapolis has also established registration requirements and may require operators to collect and remit local taxes. The city has been actively updating its STR regulations in response to community concerns about housing availability and neighborhood character, with some recent discussions about potentially expanding restrictions in certain historic districts. Operators must also comply with Maryland state tax requirements and may face penalties for non-compliance with local ordinances.

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 annual Sailboat and Powerboat Shows in October, while providing slightly lower property costs than downtown. West Annapolis near the historic district provides good value with easy access to main attractions but at more affordable entry points for investors. The Severn River waterfront areas in nearby communities like Herald Harbor or Riva capture overflow demand from downtown while offering scenic water views that command premium nightly rates, especially during summer boating season and the Wednesday night sailing races that draw thousands of spectators weekly from April through September.

In Annapolis, Maryland, Airbnb hosts are subject to both state and local lodging taxes that must be collected from guests and remitted to tax authorities. The Maryland state sales tax of 6% applies to short-term rental accommodations, along with the state's 3.5% hotel rental tax, for a combined state rate of 9.5%. Anne Arundel County imposes an additional 5% hotel/motel tax on short-term rentals, bringing the total tax rate to approximately 14.5%. Hosts must register with the Maryland Comptroller's office to obtain a sales tax license and file monthly returns by the 20th of the following month, remitting collected taxes electronically through the state's bFile system. The county portion is typically collected through the same state system, which then distributes funds to local jurisdictions. Airbnb may collect and remit these taxes automatically for hosts in some cases through their platform, but hosts remain ultimately responsible for compliance and should verify collection status. Exemptions are generally limited to stays exceeding 30 consecutive days, which are considered long-term rentals rather than transient accommodations, and certain government or charitable organization bookings may qualify for exemptions with proper documentation.

Starting an Airbnb in Annapolis, Maryland requires approximately $650,000-750,000 in total initial investment. Property purchase costs average $580,000 for a median 3-bedroom home suitable for short-term rentals in desirable neighborhoods near the Naval Academy or downtown historic district. Furnishing costs range $15,000-25,000 for quality furniture, bedding, kitchen essentials, and décor to create an attractive listing. Initial setup expenses include $2,000-3,000 for professional photography, listing optimization, and basic renovations or improvements. Permits and fees total approximately $500-800, including business license registration with Anne Arundel County and short-term rental permit applications. Insurance costs $1,200-2,000 annually for landlord and short-term rental coverage beyond standard homeowner's policies. Utility setup and deposits require $500-800 for electricity, gas, water, internet, and cable services. First six months of operating costs average $8,000-12,000, covering utilities ($200-300/month), cleaning services ($75-100 per turnover), property management software subscriptions ($50-100/month), maintenance reserves, and marketing expenses, assuming 60-70% occupancy rates typical for Annapolis's seasonal tourism patterns.

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 earning up to $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 $8,000-15,000 annually, resulting in net profit margins of 35-45% for successful operators. Success factors include proximity to downtown attractions, Naval Academy events, and the waterfront, with properties offering parking, modern amenities, and professional photography performing best. Case studies show that a 3-bedroom historic home near State Circle generated $52,000 in revenue in 2023 with $31,000 in expenses for a 40% profit margin, while a waterfront condo in Eastport achieved $48,000 revenue with higher margins due to lower maintenance costs, demonstrating that Annapolis's tourism economy, government business, and Naval Academy events create consistent demand supporting profitable short-term rental operations.

Airbnb investments in Annapolis, Maryland typically generate annual ROI of 8-12% with cash-on-cash returns ranging from 6-10% based on the city's strong tourism market driven by the Naval Academy, historic downtown district, and Chesapeake Bay waterfront attractions. Properties within walking distance of the Naval Academy or downtown State Circle command premium nightly rates of $150-250, while waterfront properties can achieve $200-350 per night during peak sailing season from April through October. Investors can expect to reach profitability within 18-24 months, with average annual gross rental yields of $35,000-55,000 for well-positioned 2-3 bedroom properties purchased in the $400,000-600,000 range. The market benefits from consistent demand from Naval Academy visitors, state government travelers, sailing enthusiasts, and weekend tourists from the Washington DC and Baltimore metropolitan areas, with occupancy rates typically maintaining 65-75% annually and peak summer months achieving 85-90% occupancy.

STRSearch is a national platform that specializes in identifying profitable short-term rental properties for investors in Annapolis, Maryland. Local real estate agents like Keller Williams Annapolis and Long & Foster Annapolis have agents experienced in investment properties and short-term rental markets. National services include Mashvisor, which provides Airbnb analytics and property search tools, and AirDNA for market data analysis. RedAwning offers property management and investment services for short-term rentals. Local companies such as Annapolis Property Management Group and Chesapeake Bay Property Services provide management for Airbnb properties. BiggerPockets marketplace connects investors with local real estate professionals familiar with STR investments. Roofstock and Arrived Homes are national platforms that sometimes feature properties suitable for short-term rentals in the Annapolis area. Local agents at RE/MAX and Coldwell Banker in Annapolis often work with investors seeking vacation rental properties near the Naval Academy and downtown historic district.