Is Frankfort, Kentucky Good for Airbnb Investment?

To start an Airbnb in Frankfort, Kentucky, begin by researching local regulations through the Frankfort City Commission and Franklin County offices, as Kentucky generally allows short-term rentals but municipalities may have specific zoning requirements and occupancy limits. Obtain necessary permits including a business license from the City of Frankfort (approximately $25-50 annually), ensure your property meets fire safety codes, and check if you need a transient room tax permit since Kentucky imposes a 6% transient room tax plus potential local taxes. Find a suitable property in desirable areas like downtown Frankfort near the Kentucky State Capitol, Historic South Frankfort, or neighborhoods close to Kentucky State University, considering properties with 2-3 bedrooms that can accommodate families visiting for government business or university events. Furnish the space with quality basics including comfortable beds, linens, towels, kitchen essentials, WiFi, and local touches highlighting Kentucky bourbon culture or state government history. Create your listing on Airbnb with professional photos, competitive pricing (typically $75-150 per night in Frankfort as of 2023), and highlight proximity to attractions like the Kentucky History Center, Buffalo Trace Distillery (30 minutes away), and government buildings. Manage your property by establishing cleaning protocols between guests, maintaining responsive communication, coordinating key exchanges or installing smart locks, and staying compliant with tax obligations including collecting and remitting the 6% Kentucky transient room tax and any applicable Franklin County or Frankfort city taxes.

To identify profitable short-term rental properties in Frankfort, Kentucky, focus on locations within 2-3 miles of downtown government buildings, Kentucky State University, and the Kentucky State Capitol, as these areas generate consistent business and government traveler demand. Target 2-4 bedroom properties built after 1980 with modern amenities, parking, and outdoor spaces, as Frankfort's market favors comfortable accommodations for extended stays. Analyze pricing using AirDNA and Mashvisor to benchmark against the $80-150 nightly rate range typical for the market, while researching competition through Airbnb and VRBO searches to identify gaps in amenities or locations with fewer than 10 active listings within a 1-mile radius. Utilize STR Helper and Rabbu for market analysis specific to Franklin County, monitor the Kentucky Tourism Board data for seasonal trends around legislative sessions and university events, and leverage local real estate platforms like MLS and Zillow to identify properties under $200,000 that can achieve 65%+ occupancy rates. Consider properties near the Kentucky River for recreational appeal and ensure compliance with Frankfort's zoning regulations by consulting the city planning department, as government-related travel and university visitors provide the most stable revenue streams in this smaller capital city market.

To obtain an Airbnb/STR permit in Frankfort, Kentucky, you must first contact the Frankfort City Hall Planning and Zoning Department at 315 West Second Street or call (502) 352-2090 to begin the application process. Required documents typically include a completed short-term rental application form, proof of property ownership or lease agreement, certificate of occupancy, fire safety inspection certificate from the Frankfort Fire Department, proof of liability insurance (minimum $500,000), floor plan of the rental unit, and a $150 application fee plus $75 annual renewal fee. The process involves submitting your application to the Planning and Zoning office, scheduling required inspections with both building and fire departments, attending a public hearing if required for your zoning district, and waiting for final approval which typically takes 30-45 days from submission. Frankfort requires STR properties to maintain off-street parking, display permit numbers prominently, limit occupancy to 2 people per bedroom plus 2 additional guests, maintain quiet hours from 10 PM to 7 AM, and designate a local contact person available 24/7 for any issues, with properties in residential zones requiring additional neighbor notification and potentially conditional use permits depending on the specific R-1 or R-2 zoning classification.

Short-term rentals (STRs) are legal in Frankfort, Kentucky, but operate under specific regulations established by the city. As of 2023, Frankfort requires STR operators to obtain a business license and comply with zoning restrictions that primarily limit short-term rentals to commercial and mixed-use districts, while generally prohibiting them in residential neighborhoods to preserve community character. The city has implemented occupancy limits, parking requirements, and noise ordinances that STR operators must follow, along with safety standards including smoke detectors and emergency exit plans. Recent changes in 2022-2023 have strengthened enforcement mechanisms and increased penalties for non-compliance, while also establishing a complaint process for neighbors. Properties must maintain liability insurance and operators are required to provide local contact information for guests, with violations potentially resulting in license revocation and fines up to $500 per day.

The most promising Airbnb investment areas in Frankfort, Kentucky include the Historic Downtown District near the Kentucky State Capitol, which attracts government officials, lobbyists, and tourists visiting state buildings and the Kentucky History Center. The Woodford Reserve Distillery area and surrounding Versailles Road corridor offer excellent potential due to bourbon tourism, with visitors seeking authentic Kentucky experiences near this iconic distillery established in 1996. The area near Kentucky State University provides opportunities for parent visits, graduation events, and academic conferences. The Elkhorn Creek and Kentucky River waterfront areas appeal to outdoor enthusiasts and those seeking scenic retreats, while the neighborhoods around the Salato Wildlife Education Center attract families and nature tourists. The Buffalo Trace Distillery vicinity, though technically in nearby Frankfort, draws significant bourbon trail traffic from companies like Sazerac Company. Areas near the Floral Clock and Capitol Avenue benefit from state government business travel, legislative sessions, and political events, making them ideal for short-term rentals targeting professional travelers who need convenient access to government facilities.

Airbnb properties in Frankfort, 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 Kentucky Department of Revenue requires hosts to register for a transient room tax account and remit taxes quarterly by the 20th day following the end of each quarter, with payments made online through the Kentucky Tax Portal. Franklin County imposes an additional local occupancy tax of 3% on short-term rentals, collected and remitted monthly to the Franklin County Clerk's office by the 20th of the following month. The City of Frankfort levies a municipal occupancy tax of 2% on gross rental receipts for stays under 30 consecutive days, with monthly remittance required by the 15th of the following month to the City Clerk's office. Airbnb automatically collects and remits the state 1% tax on behalf of hosts as of 2019, but hosts remain responsible for collecting and remitting the county and city taxes directly from guests. Exemptions include rentals to permanent residents staying 30 days or more, government employees on official business, and certain non-profit organization bookings, though documentation must be maintained to support exempt transactions.

To start an Airbnb in Frankfort, Kentucky, expect total costs around $180,000-$220,000. Property purchase costs approximately $150,000 based on median home prices in the area as of 2023. Furnishing a 2-3 bedroom property runs $8,000-$12,000 including beds, linens, kitchen essentials, and living room furniture. Initial setup costs $2,000-$3,000 covering professional photography, listing creation, welcome materials, and basic amenities. Permits and fees total $500-$800 including business license, short-term rental permit, and potential HOA approvals. Insurance adds $1,200-$1,800 annually for short-term rental coverage beyond standard homeowner's insurance. Utilities average $150-$200 monthly including electricity, water, internet, and cable. First six months operating costs reach $6,000-$8,000 covering utilities ($1,200), cleaning services ($2,400 at $40 per turnover), Airbnb host fees (3% of estimated $4,000 monthly revenue), maintenance supplies ($800), and marketing/miscellaneous expenses ($1,000). Additional considerations include property taxes averaging $1,500 annually and potential property management fees of 10-20% if outsourced.

Airbnb properties in Frankfort, Kentucky typically generate modest returns with average daily rates ranging from $75-120 depending on property type and location proximity to downtown or the Kentucky State Capitol. A typical 2-bedroom property can expect 40-60% occupancy rates annually, generating gross revenues of $15,000-25,000 per year, while expenses including mortgage, utilities, cleaning fees, Airbnb service charges, insurance, and maintenance typically consume 60-75% of gross revenue, leaving net profit margins of 25-40% or roughly $4,000-8,000 annually. Properties within walking distance of the State Capitol or historic downtown perform better due to business traveler demand, while those near Kentucky State University benefit from family visit bookings. Success factors include competitive pricing against local hotels like Hampton Inn ($89-109/night), professional photography, consistent 4.8+ star ratings, and targeting the state government employee and university visitor markets. A case study of a renovated Victorian home near downtown reported $22,000 gross revenue in 2023 with $6,500 net profit after all expenses, while a suburban 3-bedroom property averaged $18,000 gross with $4,200 net profit, demonstrating that location and property differentiation significantly impact profitability in this smaller capital city market.

Airbnb investments in Frankfort, Kentucky typically generate annual ROI of 8-12% with cash-on-cash returns ranging from 6-10% based on current market conditions. Properties in downtown Frankfort near the Kentucky State Capitol and historic districts command higher nightly rates of $80-120, while suburban locations average $60-90 per night. Initial investment costs for suitable properties range from $120,000-200,000, with investors typically achieving profitability within 18-24 months after accounting for renovation costs, furnishing, and initial marketing expenses. The market benefits from steady demand from state government visitors, bourbon trail tourists, and Kentucky State University events, with occupancy rates averaging 65-75% annually. Cash-on-cash returns are optimized when investors purchase properties requiring moderate renovations in the $140,000-160,000 range, as these can achieve premium pricing while maintaining reasonable acquisition costs, resulting in monthly net cash flows of $400-800 after expenses including property management, utilities, and maintenance reserves.

STRSearch is a leading national platform that specializes in identifying profitable short-term rental properties for Airbnb investors, offering comprehensive market analysis and property recommendations in Frankfort, Kentucky. Local real estate agents like those at Rector Hayden Realtors and Coldwell Banker McMahan have experience with investment properties in the Frankfort market and understand the local regulations affecting short-term rentals. RE/MAX and Keller Williams offices in the area also have agents who work with investors seeking Airbnb properties. National services include Mashvisor, which provides rental property analytics and ROI calculations, AirDNA for market data and performance metrics, and BiggerPockets for investor networking and deal sourcing. Awning offers property management services specifically for short-term rentals, while RedAwning provides vacation rental management and booking services. Local property management companies like Kentucky Property Management Group can assist with ongoing operations, and platforms like Roofstock and HomeUnion offer turnkey investment properties that can be converted to short-term rentals. Additionally, HostGPO provides purchasing power and resources for Airbnb hosts, and companies like Vacasa offer full-service vacation rental management in the Kentucky market.