Is Gloucester, Massachusetts Good for Airbnb Investment?

To start an Airbnb in Gloucester, Massachusetts, begin by researching local zoning laws and short-term rental regulations through the Gloucester City Clerk's office, as the city requires registration and compliance with specific occupancy limits and safety standards established around 2019-2020. Obtain necessary permits including a business license from the City of Gloucester, ensure compliance with Massachusetts state tax requirements by registering with the Department of Revenue for room occupancy excise tax collection, and verify your property meets fire safety codes and has proper smoke and carbon monoxide detectors as mandated by state law. Find a suitable property in residential zones that allow short-term rentals, keeping in mind Gloucester's restrictions on the number of rental days per year and requirements for owner occupancy in some areas. Furnish the space with quality amenities focusing on coastal charm given Gloucester's maritime character, including essentials like linens, kitchen supplies, WiFi, and local guidebooks highlighting attractions like the Rocky Neck Art Colony and Gloucester Harbor. List your property on Airbnb and other platforms with professional photos showcasing ocean views or historic character, set competitive pricing based on seasonal demand given Gloucester's summer tourism peak, and create detailed descriptions mentioning proximity to beaches and fishing activities. Manage your listing by maintaining consistent communication with guests, coordinating cleaning services, collecting and remitting the 5.7% Massachusetts room occupancy tax plus local taxes, keeping detailed records for tax purposes, and ensuring ongoing compliance with any evolving city regulations regarding short-term rentals in this historic fishing community.

To identify profitable short-term rental properties in Gloucester, Massachusetts, focus on locations within walking distance of the historic downtown waterfront, Gloucester Harbor, and popular beaches like Good Harbor Beach and Wingaersheek Beach, as these areas command premium nightly rates of $200-400 during peak summer months. Target properties with 2-4 bedrooms, ocean or harbor views, parking spaces, and outdoor amenities like decks or patios, as these features can increase occupancy rates by 20-30% compared to inland properties. Conduct pricing analysis using AirDNA and Mashvisor to benchmark against similar properties, noting that Gloucester's seasonal market typically sees 70-80% occupancy from May through October with rates dropping 40-50% in winter months. Research competition by analyzing existing Airbnb and VRBO listings within a 2-mile radius, paying attention to properties near Rocky Neck Art Colony, the Maritime Heritage Center, and fishing charter departure points. Utilize tools like Rabbu and AllTheRooms for market analysis, monitor Cape Ann real estate listings through MLS data, and consider properties under $600,000 that can generate $40,000-60,000 annually, while factoring in Gloucester's short-term rental registration requirements and seasonal tourism patterns driven by the city's fishing heritage and proximity to Boston's North Shore attractions.

To obtain an Airbnb/STR permit in Gloucester, Massachusetts, you must first contact the Gloucester Building Department at City Hall located at 9 Dale Avenue to begin the application process, as the city requires all short-term rentals to obtain a special permit and business license. Required documents include a completed short-term rental application form, proof of property ownership or lease agreement, floor plans of the rental unit, proof of liability insurance (minimum $1 million coverage), contact information for a local representative if you're an absentee owner, and a site plan showing parking availability. The application fee is approximately $200-300 for the special permit plus an annual business license fee of around $50-100, with additional inspection fees of roughly $100-150. Submit your complete application to the Building Department, schedule a required safety inspection with the Fire Department and Building Inspector, attend a public hearing before the Planning Board if required, and await approval which typically takes 60-90 days from submission. Gloucester-specific requirements include maintaining a guest registry, providing adequate parking (typically one space per bedroom), ensuring compliance with the city's noise ordinance, displaying your permit number in all advertisements, and renewing your business license annually by December 31st, with properties limited to a maximum occupancy based on bedroom count and square footage as determined during inspection.

Short-term rentals (STRs) are legal in Gloucester, Massachusetts, but operate under specific regulations established by the city. Gloucester requires STR operators to obtain a business license and comply with local zoning ordinances, with properties typically allowed in residential areas but subject to occupancy limits and safety requirements including smoke and carbon monoxide detectors. The city has implemented registration requirements and may impose restrictions on the number of guests and parking availability. Like many Massachusetts coastal communities, Gloucester has been balancing the economic benefits of tourism-driven STRs with concerns about housing availability for year-round residents and neighborhood character preservation. Recent years have seen increased scrutiny and potential tightening of regulations as the city addresses complaints about noise, parking, and the conversion of long-term housing stock to short-term rentals, particularly in densely populated areas near the waterfront and downtown districts.

The best Airbnb investment areas in Gloucester, Massachusetts include the Downtown Harbor District, which attracts tourists year-round with its working waterfront, seafood restaurants, and proximity to whale watching tours and fishing charters. Rocky Neck Art Colony offers strong rental potential due to its historic artist community, galleries, and scenic harbor views that draw cultural tourists and weekend visitors. The Good Harbor Beach area commands premium rates during summer months (May-September) as guests pay top dollar for beach proximity and ocean access. East Gloucester, particularly near Eastern Point and Beauport areas, appeals to affluent travelers seeking upscale accommodations with lighthouse views and mansion tours. The Magnolia neighborhood attracts both leisure and business travelers due to its quieter residential feel while maintaining easy access to downtown attractions and Route 128 for Boston commuters. West Gloucester offers more affordable investment opportunities while still capturing overflow demand from the more popular coastal areas, making it ideal for budget-conscious travelers and longer-term stays.

In Gloucester, Massachusetts, Airbnb hosts are subject to multiple lodging taxes including the state excise tax of 5.7% on short-term rentals under 90 days, which is automatically collected by Airbnb and remitted to the Massachusetts Department of Revenue. Additionally, hosts must pay the local room occupancy tax of 6% directly to the City of Gloucester, which requires registration with the city's tax collector office and quarterly remittance by the 20th day following each quarter end. The state also imposes a Community Impact Fee of $2 per night for stays under 14 days in communities with over 150,000 residents, though Gloucester's smaller population may exempt it from this fee. Hosts must obtain a short-term rental permit from Gloucester and register for tax collection purposes, with penalties for non-compliance including fines up to $300 per violation. Exemptions typically apply to rentals over 90 consecutive days, owner-occupied properties with fewer than 3 units rented fewer than 14 days annually, and certain bed-and-breakfast establishments that meet specific criteria, though hosts should verify current exemption status with local authorities as regulations have evolved significantly since 2019.

To start an Airbnb in Gloucester, Massachusetts, expect total costs around $650,000-$750,000. Property purchase represents the largest expense at approximately $550,000-$600,000 based on median home prices in the coastal city as of 2023-2024. Furnishing costs typically range $15,000-$25,000 for a complete 2-3 bedroom property including beds, linens, kitchen essentials, living room furniture, and décor to create an appealing rental space. Initial setup costs including professional photography, listing creation, welcome materials, and basic supplies total around $2,000-$3,000. Permits and fees in Gloucester include short-term rental registration ($200-$500), potential zoning permits ($300-$800), and business license fees ($100-$300). Insurance costs run $2,000-$4,000 annually for landlord and short-term rental coverage. Utility setup and deposits for electricity, gas, water, internet, and cable average $500-$800 initially, with monthly costs around $300-$500. First six months of operating expenses including utilities ($1,800-$3,000), cleaning services ($1,200-$2,400), maintenance reserves ($1,000-$2,000), platform fees, supplies restocking, and marketing total approximately $8,000-$15,000, bringing the complete startup investment to roughly $650,000-$750,000 depending on property size and finish level.

Airbnb properties in Gloucester, Massachusetts demonstrate strong seasonal profitability with average daily rates ranging from $150-300 during peak summer months (June-September) and dropping to $80-150 in winter, generating annual revenues of $25,000-45,000 for well-positioned properties. Operating expenses typically include 25-30% for cleaning and maintenance, 3% Airbnb service fees, 10-15% for utilities and supplies, and 8-12% for property management if outsourced, resulting in net profit margins of 35-50% for successful hosts. Properties within walking distance of Gloucester Harbor, Good Harbor Beach, or Rocky Neck Art Colony command premium rates, with waterfront condos and historic downtown properties achieving occupancy rates of 70-85% during summer months. Success factors include professional photography showcasing ocean views, responsive communication with guests, strategic pricing during events like the Gloucester Schooner Festival and Fiesta, and partnerships with local tour operators. A typical example would be a 2-bedroom cottage near Good Harbor Beach generating $38,000 in annual revenue with $22,000 in expenses, yielding a 42% profit margin, while properties further from attractions or beaches typically see 20-30% lower revenues and occupancy rates around 55-65%.

Airbnb investments in Gloucester, Massachusetts typically generate annual ROI of 12-18% due to the city's strong summer tourism season and proximity to Boston, with cash-on-cash returns averaging 8-14% for properties purchased with 20-25% down payments. Properties in prime locations near Good Harbor Beach or downtown Gloucester command nightly rates of $150-300 during peak season (June-September) and $80-150 in off-season, with occupancy rates reaching 70-85% annually. Most investors achieve profitability within 18-24 months, particularly for well-located 2-3 bedroom properties priced between $400,000-700,000, though success depends heavily on seasonal demand fluctuations and local regulations. The market benefits from Gloucester's appeal as a historic fishing village and gateway to Cape Ann, with companies like Vacasa and RedAwning reporting strong performance metrics for coastal Massachusetts properties, making it a viable market for short-term rental investments despite the seasonal nature of demand.

STRSearch is a national platform that helps investors identify profitable short-term rental properties across markets including Gloucester, Massachusetts. Local real estate agents specializing in Airbnb investments in Gloucester include Coldwell Banker Realty agents who focus on vacation rental properties, RE/MAX agents with short-term rental expertise, and Keller Williams agents who understand the Cape Ann market dynamics. National services include Mashvisor for property analysis and market data, AirDNA for short-term rental analytics, Awning for turnkey Airbnb investments, RedAwning for vacation rental property management, and Vacasa which offers property management services in the area. Local property management companies like North Shore Property Management and Seacoast Property Services provide specialized Airbnb management in Gloucester. Additional resources include BiggerPockets for investor networking, Roofstock for online real estate investing, and local mortgage brokers like Cape Ann Savings Bank who understand investment property financing in the Gloucester market.