Is Block Island, Rhode Island Good for Airbnb Investment?

To start an Airbnb in Block Island, Rhode Island, begin by researching local zoning laws and short-term rental regulations through the New Shoreham Town Hall, as Block Island has specific restrictions on rental properties and may require special permits or licenses for properties rented for less than 30 days. Contact the Rhode Island Department of Health for any required health permits and ensure compliance with fire safety codes through the local fire department. Find a suitable property by working with Block Island real estate agents like Block Island Realty or Ballard Hall Real Estate, focusing on areas zoned for tourist accommodations, keeping in mind that properties near Old Harbor or New Harbor command premium rates of $300-800 per night during peak summer season. Obtain necessary permits including a business license from New Shoreham, a sales tax permit from Rhode Island Division of Taxation, and potentially a special use permit if required by local zoning. Furnish the property with coastal-themed decor, essential amenities, and consider the island's remote location by stocking non-perishables and providing clear instructions for ferry schedules and local services. List your property on Airbnb, VRBO, and local rental sites like Block Island Tourism Council's directory, emphasizing unique island features like proximity to beaches, Mohegan Bluffs, or the Southeast Lighthouse. Manage the property by establishing relationships with local cleaning services, maintenance providers, and consider hiring Block Island property management companies like Island Property Management for remote oversight, while maintaining clear communication with guests about ferry schedules, parking limitations, and island-specific logistics.

To identify profitable short-term rental properties in Block Island, Rhode Island, focus on locations within walking distance of Old Harbor or New Harbor, properties with ocean views or near popular beaches like Ballard's Beach and Mohegan Bluffs, and areas accessible to the ferry terminals since most visitors arrive by boat. Prioritize properties with 3-4 bedrooms, outdoor spaces like decks or patios, parking availability, and period charm typical of the island's Victorian architecture, as these features command premium rates during the peak summer season from June through September. Conduct pricing analysis by monitoring comparable properties on Airbnb and VRBO during different seasons, noting that summer rates can reach $400-800+ per night while shoulder seasons drop to $150-300, and factor in the island's short rental season when calculating annual returns. Research competition by analyzing occupancy rates, guest reviews, and amenities offered by existing STRs, particularly focusing on properties near Water Street, Spring Street, and Dodge Street areas where demand is highest. Utilize tools like AirDNA for market data specific to Block Island's 02807 zip code, monitor the Block Island Chamber of Commerce website for tourism trends, track ferry schedules and capacity from Point Judith and Newport to understand visitor patterns, and connect with local property managers familiar with the island's unique seasonal dynamics and regulatory requirements.

To obtain an Airbnb/STR permit in Block Island, Rhode Island, you must apply through the Block Island Zoning Board of Review and the Town Clerk's office, as the island operates under strict zoning regulations due to its historic district status and limited housing stock. Required documents typically include a completed short-term rental application, proof of property ownership or lease agreement, floor plans showing maximum occupancy, parking plans demonstrating adequate off-street parking, septic system certification, fire safety inspection certificate, and liability insurance documentation of at least $1 million. Application fees generally range from $200-500 for the initial permit plus annual renewal fees of approximately $150-300, with additional inspection fees of $100-200. The timeline usually takes 60-90 days due to required public hearings and neighbor notification periods, as Block Island requires a 14-day public notice period before zoning board review. Specific Block Island requirements include strict occupancy limits based on septic capacity (typically 2 people per bedroom), mandatory off-street parking (minimum 1 space per 2 guests), compliance with historic district guidelines if applicable, seasonal restrictions limiting rentals to May through October in some zones, and adherence to the island's 10% cap on short-term rentals in residential areas. Properties must also meet specific setback requirements, maintain quiet hours from 9 PM to 8 AM, and provide waste management plans due to the island's limited infrastructure.

Short-term rentals (STRs) are legal in Block Island, Rhode Island, but operate under specific local regulations managed by the New Shoreham Town Council. The island allows vacation rentals but requires property owners to obtain proper permits and comply with zoning restrictions, with most STRs concentrated in residential areas away from the most environmentally sensitive coastal zones. Properties must meet health and safety standards, maintain adequate parking, and adhere to occupancy limits typically based on septic system capacity due to the island's infrastructure constraints. Recent changes around 2019-2021 included stricter enforcement of existing regulations and enhanced permit requirements, with the town focusing on balancing tourism revenue with resident quality of life concerns. Some areas near critical wildlife habitats and certain historic districts have additional restrictions, and all STR operators must register with the town, collect and remit local taxes, and ensure compliance with Rhode Island state lodging regulations, making Block Island's approach more regulated than many mainland Rhode Island communities due to its unique island environment and seasonal tourism pressures.

The most attractive areas for Airbnb investment on Block Island, Rhode Island are Old Harbor and New Harbor districts, which serve as the primary ferry terminals and commercial centers with high foot traffic from the approximately 15,000-20,000 visitors who arrive daily during peak summer season. The Crescent Beach area along Water Street offers premium oceanfront proximity attracting beach-goers and families willing to pay higher rates for convenience to the island's most popular swimming beach. The Southeast Light/Mohegan Bluffs region appeals to tourists seeking dramatic cliff views and lighthouse visits, particularly popular with photographers and romantic getaways. Spring Street and the historic district near the Island Cemetery attract visitors interested in Victorian architecture and the island's whaling history, while properties near Rodman's Hollow and the Nature Conservancy lands appeal to eco-tourists and hiking enthusiasts. The Great Salt Pond area draws boating enthusiasts and fishing charters, creating demand from nautical tourists, while the North Light area attracts visitors to the wildlife refuge and offers more secluded, premium-priced accommodations for guests seeking privacy and natural beauty.

Airbnb properties on Block Island, Rhode Island are subject to multiple lodging taxes including the Rhode Island state hotel tax of 8% and the Block Island local occupancy tax of 6%, resulting in a combined rate of approximately 14% on short-term rental bookings. The state hotel tax is collected by Airbnb directly through their platform and remitted to the Rhode Island Division of Taxation quarterly, while the local Block Island occupancy tax must typically be collected by hosts and remitted directly to the Block Island Tax Assessor's office on a monthly or quarterly basis depending on booking volume. Properties rented for less than 30 consecutive days are generally subject to these taxes, while long-term rentals exceeding 30 days may be exempt from the occupancy tax portion. Hosts must register with both state and local authorities, obtain proper permits from the Block Island Zoning Board, and maintain detailed records of all bookings and tax collections, with penalties applying for late remittance or non-compliance with registration requirements.

Starting an Airbnb on Block Island, Rhode Island requires significant upfront investment due to the island's premium real estate market. Property purchase costs average $800,000-$1,200,000 for a suitable rental property, with waterfront or ocean-view homes commanding higher prices. Furnishing costs typically range $15,000-$25,000 for a complete setup including beds, linens, kitchen essentials, outdoor furniture, and coastal-themed decor. Initial setup expenses include professional photography ($500), listing optimization ($300), and welcome amenities ($200). Permits and fees include Rhode Island lodging license ($100), Block Island business permit ($150), and potential zoning compliance costs ($500-$2,000). Insurance premiums for short-term rental coverage cost approximately $2,500-$4,000 annually. Utilities including electricity, water, internet, and seasonal heating average $300-$500 monthly. First six months operating costs encompass cleaning services ($150 per turnover), maintenance reserves ($200 monthly), Airbnb platform fees (3% host fee), marketing expenses ($200 monthly), and property management if outsourced (20-30% of revenue). Total startup costs range from $850,000-$1,270,000, with the property purchase representing 85-90% of initial investment, making Block Island one of the more expensive markets for Airbnb ventures in New England.

Airbnb properties on Block Island, Rhode Island demonstrate strong seasonal profitability with average daily rates ranging from $300-800 during peak summer months (June-September) when the island's population swells from 1,000 to over 20,000 visitors. A typical 3-bedroom property generates approximately $45,000-65,000 in annual revenue, with expenses including property taxes ($8,000-15,000), utilities ($3,000-5,000), cleaning fees ($8,000-12,000), maintenance ($4,000-8,000), and Airbnb fees (3% host + 14% guest fees), resulting in net profit margins of 35-45% for well-managed properties. Success factors include proximity to beaches like Crescent Beach or Mohegan Bluffs, modern amenities, professional photography, and responsive hosting, with properties near the ferry landing or downtown New Shoreham commanding premium rates. The island's limited accommodation options (only about 200 hotel rooms) create strong demand, though profitability is highly seasonal with 70-80% of annual revenue concentrated in the 16-week summer period, requiring hosts to optimize pricing strategies and maintain high occupancy rates during the brief but lucrative tourist season when visitors pay premium prices for the island's pristine beaches, Victorian architecture, and car-free atmosphere.

Airbnb investments in Block Island, Rhode Island typically generate annual ROI of 12-18% due to the island's premium summer tourism market and limited accommodation supply. Cash-on-cash returns range from 8-14% annually, with properties commanding $300-600 per night during peak season (June-September) and $150-250 during shoulder months. The seasonal nature means 70-80% of annual revenue occurs between May and October, with average occupancy rates of 75-85% during summer months. Initial profitability typically occurs within 18-24 months for well-positioned properties near beaches or downtown New Shoreham, though the limited ferry access and seasonal workforce challenges can impact operational costs. Properties purchased in the $800K-$1.5M range have shown consistent appreciation of 4-6% annually since 2019, with gross rental yields averaging 10-15% before expenses, making Block Island a strong market for investors willing to manage seasonal fluctuations and higher property acquisition costs compared to mainland Rhode Island markets.

STRSearch is a national platform that specializes in identifying profitable short-term rental investment properties including Airbnb opportunities in Block Island, Rhode Island. Local real estate agents serving Block Island include Ballard Hall Real Estate, Block Island Realty, and The Champlin Company, which have been helping investors identify vacation rental properties since the 1980s and 1990s. National services like BiggerPockets, Roofstock, and AirDNA provide market analysis and investment property identification tools for Block Island's seasonal rental market. Mashvisor and RentSpree offer property analysis specifically for short-term rental investments in Rhode Island coastal areas. Local property management companies such as Block Island Property Management and Island Vacation Rentals can assist with identifying turnkey investment opportunities, while national firms like RedAwning and Vacasa provide comprehensive investment and management services for Airbnb properties in the Block Island market, which has seen significant growth in vacation rental demand since 2015.