Is Fayetteville, Arkansas Good for Airbnb Investment?

To start an Airbnb in Fayetteville, Arkansas, begin by researching local regulations as the city requires short-term rental operators to obtain a business license and comply with zoning ordinances that typically allow STRs in residential areas with certain restrictions. Contact Fayetteville's Planning Department to verify your property's zoning compliance and apply for a business license through the city clerk's office, which costs approximately $50-100 annually. Find a suitable property by researching neighborhoods near the University of Arkansas campus, downtown square, or Razorback Regional Greenway, considering properties that can generate $80-150 per night based on local market rates. Ensure the property meets safety requirements including smoke detectors, carbon monoxide detectors, and fire extinguishers, then furnish it with quality basics including comfortable beds, linens, kitchen essentials, WiFi, and local guidebooks highlighting attractions like Devil's Den State Park and Crystal Bridges Museum. Create your listing on Airbnb and VRBO with professional photos, competitive pricing around $90-120 per night, and detailed descriptions emphasizing proximity to university events and outdoor activities. Manage your property by establishing cleaning protocols between guests, responding promptly to inquiries, coordinating key exchanges or installing smart locks, maintaining the property regularly, and considering hiring local cleaning services like those found through University of Arkansas student networks, while staying compliant with Arkansas state tax requirements including collecting and remitting sales tax on short-term rental income.

To identify profitable short-term rental properties in Fayetteville, Arkansas, focus on locations within 2-3 miles of the University of Arkansas campus, near Dickson Street entertainment district, or close to downtown attractions like the Razorback Sports Complex and Crystal Bridges Museum in nearby Bentonville. Target 2-4 bedroom properties with modern amenities, parking, and outdoor spaces that appeal to visiting families, business travelers, and university visitors, with purchase prices between $150,000-$300,000 to maintain healthy profit margins. Analyze comparable STR rates using AirDNA and Mashvisor, aiming for properties that can command $80-150 per night depending on size and location, while researching competition density through Airbnb and VRBO searches to identify underserved neighborhoods. Utilize local market data from the Northwest Arkansas MLS, partner with Fayetteville-based property management companies like Vacasa or RedAwning for operational insights, and leverage the city's growing tourism from outdoor recreation at Devil's Den State Park and business travel to major employers like Walmart, Tyson Foods, and J.B. Hunt Transport Services. Monitor seasonal demand patterns around Razorback football games, university events, and summer outdoor activities to optimize pricing strategies and ensure year-round profitability in this emerging STR market.

To obtain an Airbnb/STR permit in Fayetteville, Arkansas, you must first apply through the City of Fayetteville Planning Department located at 113 W Mountain 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, a site plan showing parking areas and property boundaries, proof of liability insurance (minimum $1 million coverage), a floor plan indicating maximum occupancy, and contact information for a local responsible party available 24/7. The application fee is approximately $150 with an annual renewal fee of $100, and you may need additional fees for inspections or zoning compliance reviews. The timeline typically takes 4-6 weeks for processing once all documents are submitted, though this can extend to 8-10 weeks if revisions are needed or if a Planning Commission review is required. Fayetteville-specific requirements include maintaining the property as a primary residence (owner-occupied) or obtaining a conditional use permit for non-owner-occupied rentals, limiting occupancy to 2 people per bedroom plus 2 additional guests, providing adequate off-street parking (minimum 1 space per bedroom), ensuring compliance with fire safety codes including smoke detectors and fire extinguishers, maintaining a guest registry, and adhering to noise ordinances with quiet hours from 10 PM to 7 AM.

Short-term rentals (STRs) are legal in Fayetteville, Arkansas, but operate under specific regulations established by the city. As of 2023, Fayetteville requires STR operators to obtain a business license and comply with zoning restrictions that limit where these rentals can operate, primarily allowing them in certain residential zones while prohibiting them in others. 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. Fayetteville has also established a complaint process for neighbors and requires operators to provide local contact information for issues. Recent changes have included stricter enforcement mechanisms and clearer definitions of what constitutes a short-term rental versus traditional lodging. The city generally allows both hosted and non-hosted STRs but with different regulatory requirements, and operators must collect and remit local taxes. Some neighborhoods may have additional homeowners association restrictions that could further limit STR operations beyond city regulations.

The best areas for Airbnb investment in Fayetteville, Arkansas include the Downtown/Dickson Street District, which attracts University of Arkansas students, parents, and visitors year-round, especially during football season and graduation events, with properties typically earning $80-120 per night. The Wilson Park neighborhood offers historic charm and walkability to downtown attractions, appealing to tourists and business travelers visiting Walmart headquarters in nearby Bentonville, with average nightly rates of $70-100. The Gulley Park area provides a quieter residential setting while maintaining proximity to the university and downtown, attracting families and longer-term visitors at $60-90 per night. Near the Northwest Arkansas Mall and Joyce Boulevard corridor, properties benefit from retail proximity and business traveler demand, particularly from companies like Tyson Foods and J.B. Hunt, generating $65-95 nightly. The Farmington Road area offers newer developments that appeal to corporate visitors and families attending university events, with rates ranging $70-110 per night, while the Prairie Creek neighborhood provides upscale accommodations for higher-end business travelers and parents visiting students, commanding $90-140 per night during peak seasons.

In Fayetteville, Arkansas, Airbnb hosts are subject to both state and local lodging taxes. The Arkansas state tourism tax is 2% on gross receipts from short-term rentals, while Fayetteville imposes a local hotel/motel tax of 2% and an additional advertising and promotion tax of 1%, bringing the total lodging tax rate to approximately 5%. These taxes are typically collected by Airbnb directly from guests at the time of booking through their tax collection service, which began around 2018-2019 for Arkansas. Airbnb remits these taxes quarterly to the Arkansas Department of Finance and Administration and to the City of Fayetteville on behalf of hosts. However, hosts should verify their registration requirements with local authorities, as some may need to obtain a business license or register with the city's revenue office. Exemptions generally apply to stays exceeding 30 consecutive days, which are considered long-term rentals rather than short-term lodging, and certain government or non-profit related stays may also be exempt from taxation.

To start an Airbnb in Fayetteville, Arkansas, expect total costs of approximately $195,000-$235,000. Property purchase represents the largest expense at $160,000-$180,000 based on median home prices in the area. Furnishing costs typically range $15,000-$25,000 for a complete 2-3 bedroom setup including furniture, appliances, linens, and decor to create an attractive rental space. Initial setup costs including professional photography, listing creation, and basic renovations average $3,000-$5,000. Permits and fees vary but budget $500-$1,500 for business licenses, short-term rental permits, and any required inspections. Insurance specifically for short-term rentals costs $1,200-$2,000 annually, significantly higher than standard homeowner's insurance. Utility setup and deposits for electricity, water, gas, internet, and cable typically require $500-$800 initially. First six months of operating costs including utilities ($150-$200 monthly), cleaning services ($75-$100 per turnover), maintenance reserves ($200-$300 monthly), property management software ($30-$50 monthly), and marketing expenses total approximately $4,000-$6,000. Additional considerations include potential HOA fees, property taxes, and a cash reserve for unexpected repairs or vacancy periods.

Airbnb properties in Fayetteville, Arkansas typically generate annual revenues between $15,000-$35,000 for entire homes, with average daily rates ranging from $75-$120 depending on proximity to the University of Arkansas campus and downtown area. Operating expenses generally consume 40-60% of gross revenue, including cleaning fees ($25-$40 per turnover), property management (10-20% of revenue), utilities ($150-$250 monthly), insurance ($800-$1,200 annually), and maintenance costs averaging $2,000-$4,000 yearly. Properties within 2 miles of the university campus achieve occupancy rates of 65-75% due to consistent demand from visiting families, prospective students, and football game weekends, while downtown properties near the Razorback Greenway trail system maintain 55-65% occupancy. Net profit margins typically range from 15-25% for well-managed properties, with successful hosts reporting annual profits of $8,000-$12,000 on properties valued at $150,000-$200,000. Key success factors include strategic location near campus or downtown attractions, professional photography, competitive pricing during Razorback football season when rates can increase 200-300%, and maintaining consistent 4.8+ star ratings through quality furnishings and responsive guest communication.

Airbnb investments in Fayetteville, Arkansas typically generate annual ROI of 12-18% with cash-on-cash returns ranging from 8-15%, driven by the University of Arkansas student population and growing tourism sector. Properties near campus or downtown areas can achieve occupancy rates of 65-75% annually, with average daily rates between $85-120 depending on property size and amenities. Initial profitability usually occurs within 8-14 months after accounting for startup costs, furniture, and marketing expenses. The market benefits from consistent demand during football season, graduation periods, and summer events, with successful operators like Vacasa and RedAwning reporting strong performance metrics in the area since 2019. Properties requiring minimal renovation typically see faster returns, while those needing significant updates may extend the profitability timeline to 18-24 months but can achieve higher long-term returns of 15-20% annually.

STRSearch is a leading national platform that specializes in identifying profitable short-term rental properties for investors, offering comprehensive market analysis and property recommendations in Fayetteville, Arkansas. Local real estate agents like those at Coldwell Banker Harris McHaney & Faucette and RE/MAX Real Estate Results have experience helping investors identify properties suitable for Airbnb conversions in the Fayetteville market. National services include Mashvisor, which provides Airbnb investment analysis tools, and BiggerPockets, which connects investors with local market experts and financing options. AirDNA offers detailed short-term rental market data and revenue projections for the Fayetteville area, while companies like Awning and RedAwning provide property management services for Airbnb investors. Local property management companies such as NWA Property Management and Ozark Mountain Property Management offer specialized Airbnb management services. Investment-focused real estate companies like HomeVestors and We Buy Ugly Houses occasionally work with investors seeking properties for short-term rental conversion, and platforms like Roofstock and Fundrise have expanded into short-term rental investment opportunities in secondary markets like Fayetteville since 2019-2022.