Is Farmington, Kentucky Good for Airbnb Investment?

To start an Airbnb in Farmington, Kentucky, begin by researching local zoning laws and regulations through the Graves County Planning and Zoning Commission, as Farmington typically falls under county jurisdiction rather than having its own municipal regulations. Contact Graves County Clerk's office to determine if a business license is required and check with the Kentucky Department of Revenue about state tax obligations for short-term rentals. Find a suitable property by searching real estate listings in Farmington's residential areas, focusing on homes near attractions like Kentucky Lake or historic downtown areas, with properties typically ranging from $80,000-$150,000 for modest homes. Once you secure a property, furnish it with essential amenities including comfortable bedding, kitchen supplies, Wi-Fi, and local guidebooks highlighting nearby attractions like Land Between the Lakes. Ensure the property meets safety requirements by installing smoke detectors, carbon monoxide detectors, and providing emergency contact information. List your property on Airbnb and other platforms like VRBO, setting competitive rates around $75-$125 per night based on local market analysis, and create an attractive listing with professional photos showcasing the rural Kentucky charm. For ongoing management, establish a cleaning routine between guests, respond promptly to inquiries and reviews, maintain the property regularly, and consider hiring local cleaning services or property management companies if you live far from Farmington. Register for Kentucky sales tax collection and remit the required 6% state sales tax plus any applicable local taxes to remain compliant with state revenue requirements.

To identify profitable STR properties in Farmington, Kentucky, focus on locations within 15-20 minutes of major attractions like Mammoth Cave National Park, Kentucky Lake, or Land Between the Lakes, as these drive consistent tourist traffic year-round. Target properties with 2-4 bedrooms, outdoor spaces like decks or fire pits, modern amenities including WiFi and updated kitchens, and unique features such as rustic charm or lake views that appeal to visitors seeking authentic Kentucky experiences. Conduct pricing analysis by researching comparable Airbnb and VRBO listings within a 25-mile radius, aiming for properties that can generate $100-200 per night during peak seasons (spring through fall) with 60-70% occupancy rates to ensure profitability after expenses. Research competition using AirDNA, STR Helper, or Mashvisor to analyze supply density, seasonal demand patterns, and revenue potential, while monitoring local Facebook groups and tourism boards for emerging trends. Utilize resources like the Farmington Chamber of Commerce, Kentucky Tourism Board data, Graves County property records, and local real estate agents familiar with investment properties to identify undervalued homes near recreational areas, historic sites, or along scenic routes that attract both leisure travelers and business visitors to the region.

To obtain an Airbnb/STR permit in Farmington, Kentucky, contact the Farmington City Clerk's office at City Hall located at 108 East Main Street or call (270) 345-2061 to begin the application process. You will need to submit a completed business license application, proof of property ownership or lease agreement, certificate of insurance with minimum $1 million liability coverage, floor plan of the rental property, contact information for a local property manager if you live more than 50 miles away, and pay the required fees which typically include a $75 business license fee and $150 annual STR permit fee. Additional requirements specific to Farmington include maintaining occupancy limits of 2 guests per bedroom plus 2 additional guests maximum, providing adequate parking spaces (minimum 1 space per bedroom), ensuring compliance with fire safety codes including smoke detectors in each bedroom and common areas, and registering with the Kentucky Department of Revenue for transient room tax collection. The application process typically takes 2-3 weeks for approval once all documents are submitted, and permits must be renewed annually by December 31st. Properties must also comply with residential zoning requirements and may be subject to periodic inspections by city officials to ensure ongoing compliance with health, safety, and occupancy standards.

Short-term rentals (STRs) in Farmington, Kentucky operate in a largely unregulated environment at the municipal level, as this small city in Graves County has not enacted specific ordinances governing STR operations as of 2023. Property owners can generally operate STRs subject to existing zoning regulations and state tax requirements, including Kentucky's transient room tax and local occupancy taxes collected by Graves County. The city's residential zoning typically allows for rental activities, though operators must comply with basic safety codes, noise ordinances, and parking requirements that apply to all rental properties. Recent trends in Kentucky show increasing municipal attention to STR regulation, with larger cities like Louisville and Lexington implementing registration systems and operational standards, but smaller communities like Farmington have generally maintained a hands-off approach. Property owners should verify current zoning compliance and ensure proper business licensing through Graves County, as the regulatory landscape for STRs continues to evolve across Kentucky municipalities.

The best areas for Airbnb investment in Farmington, Kentucky are downtown Farmington near the historic district, properties close to Farmington Country Club, and areas within walking distance of local antique shops and the Farmington Historic Plantation. Downtown Farmington offers charm for tourists interested in Kentucky's historic architecture and small-town atmosphere, while the country club area attracts golf enthusiasts and weekend getaway visitors from Louisville and Nashville, approximately 45-60 minutes away. The historic plantation area draws heritage tourists and educational groups year-round, and properties near the antique district benefit from collectors and weekend shoppers who prefer overnight stays. Areas along Highway 62 provide easy access for business travelers visiting local agricultural operations and small manufacturing facilities, while neighborhoods near Farmington Elementary serve families attending school events and sports tournaments, creating consistent demand during the academic year.

Airbnb properties in Farmington, Kentucky are subject to Kentucky's state transient room tax of 1% on gross rental receipts, which applies to all short-term rental accommodations under 30 days. The state tax is typically collected by the host and remitted quarterly to the Kentucky Department of Revenue using Form 51A111. At the local level, Farmington may impose additional occupancy taxes ranging from 1-3%, though specific rates for this small city in Graves County are not readily available and would need to be confirmed with local authorities. Collection and remittance procedures for local taxes vary by municipality, with some requiring monthly or quarterly filings directly to the city clerk's office. Exemptions generally apply to stays exceeding 30 consecutive days, government employees on official business, and in some cases, stays by permanent residents. Hosts should register with both state and local tax authorities, maintain detailed records of all bookings and tax collections, and ensure compliance with both Kentucky Department of Revenue requirements and any local ordinances specific to Farmington's jurisdiction.

To start an Airbnb in Farmington, Kentucky, the total estimated costs would be approximately $185,000-$220,000. Property purchase costs around $120,000-$140,000 based on median home prices in rural Kentucky markets. Furnishing a 2-3 bedroom property with quality furniture, appliances, linens, and décor typically runs $15,000-$25,000. Initial setup including professional photography, listing creation, welcome materials, and basic renovations costs $3,000-$5,000. Permits and fees including business license, short-term rental permits, and inspection fees total approximately $500-$1,500. Insurance for short-term rental coverage adds $2,000-$3,000 annually. Utilities setup and deposits for electricity, water, gas, internet, and cable cost around $1,000-$2,000. First six months operating costs including utilities ($600/month), cleaning services ($100 per turnover), maintenance, supplies, platform fees, and marketing total approximately $8,000-$12,000. Additional considerations include property taxes, potential HOA fees, and a reserve fund for unexpected repairs, bringing the comprehensive startup investment to the upper end of this range.

Airbnb properties in Farmington, Kentucky show moderate profitability potential with average daily rates ranging from $75-120 depending on property size and amenities, generating monthly revenues of $1,800-3,200 for well-managed properties with 60-70% occupancy rates. Operating expenses typically consume 40-50% of gross revenue, including cleaning fees ($30-50 per turnover), utilities ($150-250 monthly), property management (15-25% of revenue), insurance ($100-200 monthly), and maintenance costs ($200-400 monthly). Net profit margins generally range from 15-25% after expenses, with successful properties near Mammoth Cave National Park or Lake Barkley commanding premium rates and achieving 25-35% margins. Key success factors include strategic location within 30 minutes of tourist attractions, professional photography, responsive guest communication, and maintaining 4.8+ star ratings. A typical 3-bedroom property purchased for $180,000 in 2022 generates approximately $28,000 annual revenue with $21,000 in expenses, yielding $7,000 net profit (12% cash-on-cash return), while premium lakefront properties can achieve 18-22% returns due to higher nightly rates of $150-200 and extended seasonal demand from March through October.

Airbnb investments in Farmington, Kentucky typically generate annual ROI of 8-12% with cash-on-cash returns ranging from 6-10%, based on average property acquisition costs of $85,000-$140,000 and monthly rental income of $800-$1,400 for 2-3 bedroom properties. The rural location near Mammoth Cave National Park and Land Between the Lakes attracts seasonal tourists, with occupancy rates averaging 45-60% annually and nightly rates of $75-$125. Initial profitability usually occurs within 18-24 months after accounting for renovation costs of $15,000-$25,000, ongoing maintenance, cleaning fees, and platform commissions. Properties within 30 minutes of major attractions like Mammoth Cave perform better, achieving the higher end of ROI ranges, while those requiring significant updates or in less desirable locations may see returns closer to 6-8% annually with break-even periods extending to 30-36 months.

STRSearch leads the national market for Airbnb investment property analysis and market research, providing comprehensive data on short-term rental performance in Farmington, Kentucky. Local real estate agents specializing in investment properties include Coldwell Banker McMahan Co. and RE/MAX Real Estate Professionals, both established in the region since the 1980s. National services like Awning (founded 2017), RedAwning, and Vacasa offer end-to-end Airbnb investment solutions including property identification, purchase assistance, and management services. AirDNA provides market analytics and revenue projections for the Farmington area, while Mashvisor offers investment property analysis tools. Local property management companies such as Kentucky Lake Vacation Rentals and Lake Barkley Properties assist with both acquisition and ongoing management of short-term rental investments. BiggerPockets, the national real estate investment platform, connects investors with local professionals and provides market insights for Kentucky markets. Roofstock and Arrived Homes offer turnkey Airbnb investment opportunities, though their Kentucky inventory varies seasonally.