Is Dothan, Alabama Good for Airbnb Investment?

To start an Airbnb in Dothan, Alabama, begin by researching local regulations through the City of Dothan Planning Department and Houston County offices, as Alabama generally allows short-term rentals but municipalities may have specific zoning requirements and occupancy limits. Obtain necessary permits including a business license from Dothan City Hall (approximately $50-100), ensure your property meets fire safety codes, and verify zoning compliance for residential areas. Find a suitable property in desirable neighborhoods like downtown Dothan or near Landmark Park, considering proximity to Wiregrass Commons Mall and local attractions, with typical investment properties ranging $80,000-150,000. Furnish the space with quality basics including comfortable bedding, kitchen essentials, WiFi, and local touches highlighting Dothan's peanut farming heritage and Southern charm. List your property on Airbnb and VRBO platforms with professional photos showcasing the space and mentioning nearby attractions like the National Peanut Festival grounds and Adventureland Theme Park. For management, establish cleaning protocols between guests, respond promptly to inquiries, maintain competitive pricing around $60-120 per night depending on property size and season, and consider hiring local cleaning services or property management companies familiar with Houston County's market to handle day-to-day operations while ensuring compliance with Alabama's 13% lodging tax requirements.

To identify profitable short-term rental properties in Dothan, Alabama, focus on locations within 10-15 minutes of downtown, near Dothan Regional Airport, close to the Wiregrass Commons Mall area, or properties with easy access to major employers like Southeast Health and Fort Novosel (formerly Fort Rucker) which drives consistent military and medical professional demand. Target 3-4 bedroom single-family homes or 2+ bedroom condos built after 1990 with modern amenities, full kitchens, dedicated parking, outdoor spaces, and strong WiFi capability, as these appeal to both business travelers and families visiting the area. Conduct pricing analysis using AirDNA and Mashvisor to identify properties where monthly STR revenue potential exceeds 1.5-2x traditional rental income, typically ranging $80-150 per night in Dothan's market as of 2023-2024. Research competition by analyzing existing Airbnb and VRBO listings within a 5-mile radius, identifying gaps in amenities or underserved areas, and monitor occupancy rates which typically run 60-75% for well-positioned properties in Dothan. Utilize tools like Rabbu, BiggerPockets calculators, and local MLS data through relationships with Dothan-area realtors, while leveraging STR-specific platforms like AirDNA, Mashvisor, and AllTheRooms for market intelligence, and consider properties under $200,000 to maintain favorable cash-on-cash returns in this secondary Alabama market.

To obtain an Airbnb/STR permit in Dothan, Alabama, you must first contact the Dothan City Planning Department at City Hall located at 126 North Foster Street to determine if short-term rentals are permitted in your specific zoning district, as the city implemented STR regulations around 2019-2020. Submit a completed short-term rental permit application along with required documents including proof of property ownership or lease agreement, a detailed floor plan, proof of liability insurance (minimum $1 million coverage), a parking plan showing adequate off-street parking, contact information for a local property manager if you're not local, and a good neighbor agreement outlining house rules. Pay the application fee of approximately $150-200 plus an annual renewal fee of around $100. The city requires STRs to maintain occupancy limits based on bedrooms (typically 2 guests per bedroom plus 2 additional), provide adequate parking (usually 1 space per bedroom), install smoke and carbon monoxide detectors in all sleeping areas, maintain the property in compliance with housing codes, and ensure a responsible party is available 24/7 for complaints. The approval process typically takes 30-45 days after submitting a complete application, during which time city staff will conduct a property inspection to verify compliance with safety and zoning requirements. Once approved, you must display your permit number in all online listings and renew annually by December 31st.

Short-term rentals (STRs) are generally legal in Dothan, Alabama, as the city has not enacted specific prohibitions against vacation rentals or short-term accommodations. However, STR operators must comply with standard business licensing requirements, zoning regulations that may restrict commercial activities in residential areas, and state tax obligations including lodging taxes. The city follows Alabama state regulations which allow municipalities to regulate STRs through zoning and business license requirements. Properties operating as STRs must typically obtain proper business licenses and may face restrictions in certain residential zoning districts, particularly single-family neighborhoods where commercial activities could be limited. As of recent years, Dothan has not implemented the strict STR regulations seen in larger Alabama cities like Birmingham or Mobile, but operators should verify current zoning compliance and business licensing requirements with the city's planning and development department, as local regulations can change and enforcement may vary by neighborhood and property type.

The best areas for Airbnb investment in Dothan, Alabama include the Downtown Historic District, which attracts business travelers visiting the numerous corporate headquarters and government offices, plus tourists exploring the antebellum architecture and cultural sites. The Westgate area near Ross Clark Circle is ideal due to its proximity to major shopping centers, restaurants, and the Dothan Regional Airport, making it convenient for both leisure and business guests. The Flowers Hospital/HealthSouth vicinity draws medical tourists and families visiting patients at these major healthcare facilities. The area around the Dothan Country Club and Highland Oaks Golf Course appeals to golf enthusiasts and upscale leisure travelers. Near Southeast Alabama Medical Center, properties benefit from consistent demand from medical professionals and patient families. The Wiregrass Commons Mall district offers easy access to shopping and dining, attracting families and weekend visitors. Areas close to the Dothan Civic Center capitalize on event attendees, conferences, and entertainment visitors throughout the year, while the proximity to Fort Novosel (formerly Fort Rucker) in nearby Enterprise creates steady demand from military families and contractors visiting the aviation training hub.

In Dothan, Alabama, Airbnb hosts are subject to both state and local lodging taxes. The Alabama state lodging tax is 4% on gross receipts from short-term rental accommodations under 180 days. Houston County imposes an additional 2% lodging tax, and the City of Dothan levies a 5% occupancy tax on transient accommodations, bringing the total tax rate to approximately 11%. These taxes are typically collected from guests at the time of booking through Airbnb's automatic tax collection system for state taxes, though hosts may need to register separately with local authorities for city and county taxes. Remittance procedures require monthly filing and payment to the Alabama Department of Revenue for state taxes, while local taxes must be remitted to Houston County and the City of Dothan according to their respective schedules, usually monthly or quarterly depending on volume. Exemptions generally apply to stays exceeding 30 consecutive days, government employees on official business, and certain nonprofit organization bookings, though documentation may be required to qualify for these exemptions.

The total cost to start an Airbnb in Dothan, Alabama is approximately $185,000-$220,000. Property purchase costs around $140,000-$160,000 based on median home prices in the area as of 2023. Furnishing a 2-3 bedroom property requires $15,000-$25,000 for quality furniture, appliances, linens, and decor to create an attractive rental space. Initial setup costs including professional photography, listing creation, and marketing materials total $1,500-$3,000. Permits and fees vary but typically include business license ($50-$200), short-term rental permit if required ($100-$500), and potential HOA approval fees. Insurance for short-term rentals costs $2,000-$4,000 annually, significantly higher than standard homeowner's insurance. Utility setup and deposits for electricity, water, gas, internet, and cable run $500-$1,000. First six months operating costs including utilities ($200-$300/month), cleaning services ($75-$150 per turnover), maintenance reserves ($200-$400/month), property management software ($30-$50/month), and marketing expenses total approximately $4,000-$8,000, assuming 60-70% occupancy rates typical for the Dothan market.

Airbnb properties in Dothan, Alabama typically generate modest returns with average daily rates ranging from $65-85 for entire homes and $35-50 for private rooms, resulting in monthly revenues of $1,200-2,100 for well-managed properties with 60-70% occupancy rates. Operating expenses including cleaning fees ($25-40 per turnover), utilities ($150-200 monthly), insurance ($100-150 monthly), property management (20-25% of revenue), and maintenance ($200-300 monthly) typically consume 45-55% of gross revenue. Net profit margins generally range from 15-25% for experienced hosts, with properties near Fort Novosel (formerly Fort Rucker) commanding premium rates due to military personnel demand. Success factors include competitive pricing below Montgomery and Birmingham markets, professional photography, rapid guest communication, and targeting business travelers and military families for longer stays. A typical 3-bedroom home generating $1,800 monthly revenue with $1,000 in expenses yields approximately $800 monthly profit or $9,600 annually, representing a 44% profit margin, though seasonal fluctuations and Alabama's tourism patterns can impact consistency throughout the year.

Airbnb investments in Dothan, Alabama typically generate annual ROI of 8-12% with cash-on-cash returns ranging from 6-10% based on current market conditions. Properties in desirable neighborhoods near Fort Novosel (formerly Fort Rucker) and downtown areas command higher occupancy rates of 65-75% annually, with average daily rates between $85-120 depending on property size and amenities. Initial investment recovery and profitability generally occurs within 18-24 months for well-positioned properties, considering Dothan's steady military presence, regional medical facilities, and business travel demand. The market benefits from limited hotel inventory and growing short-term rental acceptance, though seasonal fluctuations during summer months and military deployment cycles can impact consistency. Properties requiring minimal renovation in established neighborhoods typically achieve break-even within 14-18 months, while those needing significant improvements may extend profitability timelines to 24-30 months.

STRSearch is a national platform that specializes in identifying profitable short-term rental properties for investors in Dothan, Alabama. Local real estate agents like Keller Williams Dothan, Coldwell Banker Alfred Saliba Realty, and RE/MAX Dothan have experience helping investors find Airbnb-suitable properties in the area. National services include Mashvisor, which provides Airbnb analytics and property search tools, AirDNA for market data and investment analysis, and Awning for short-term rental investment guidance. Local property management companies such as Dothan Property Management and Wiregrass Property Solutions can assist with ongoing operations. BiggerPockets marketplace and Roofstock also offer investment property listings that may include suitable Airbnb opportunities in the Dothan market. Additionally, local investors often work with Century 21 Dothan Realty and Exit Realty to identify properties in desirable neighborhoods near attractions like the Dothan Area Botanical Gardens and downtown entertainment districts.