Is Henderson, Kentucky Good for Airbnb Investment?

To start an Airbnb in Henderson, Kentucky, begin by researching local zoning laws and regulations through the Henderson City Planning Department, as Henderson requires short-term rental operators to obtain a business license and comply with residential zoning restrictions that may limit rentals in certain neighborhoods. Contact Henderson City Hall at 222 First Street to inquire about specific permit requirements, which typically include a general business license ($25-50 annually) and potentially a conditional use permit if operating in residential zones. Find a suitable property by searching areas near the Ohio River waterfront or downtown Henderson, ensuring the property meets safety requirements including smoke detectors, carbon monoxide detectors, and adequate egress routes as mandated by Kentucky fire codes. Furnish the space with essential amenities including quality bedding, kitchen supplies, WiFi, and local guidebooks highlighting Henderson's attractions like Audubon State Park and the Henderson riverfront. Create your Airbnb listing with professional photos, competitive pricing ($60-120 per night based on local market rates), and detailed descriptions emphasizing Henderson's proximity to Evansville, Indiana and outdoor recreation opportunities. Manage your property by establishing cleaning protocols between guests, maintaining responsive communication, coordinating key exchanges or installing smart locks, and ensuring compliance with Kentucky's 9.75% sales tax collection requirements for short-term rentals while keeping detailed records for tax purposes.

To identify profitable short-term rental properties in Henderson, Kentucky, focus on locations within 10-15 minutes of downtown Henderson, near the Ohio River waterfront, or close to John James Audubon State Park, as these areas attract tourists and business travelers visiting local attractions and nearby Evansville, Indiana. Target 2-4 bedroom single-family homes or historic properties built between 1920-1980 with original character features, full kitchens, parking, and outdoor spaces, as these perform well with families and groups visiting for river activities or casino trips to nearby Tropicana Evansville. Analyze comparable properties using AirDNA and Mashvisor to identify the $80-150 nightly rate sweet spot, ensuring your all-in costs including mortgage, utilities, cleaning, and management stay below 60% of gross rental income. Research competition by studying existing STRs within 3 miles, noting their occupancy rates, pricing strategies, and guest reviews to identify gaps in amenities or service quality you can exploit. Utilize Rabbu and STR Helper for Henderson-specific market data, partner with local property management companies like Vacasa or RedAwning for operational support, and leverage the Henderson Tourism Commission's visitor data to understand seasonal demand patterns, particularly during summer river season and fall foliage periods when occupancy typically peaks at 70-85%.

To obtain an Airbnb/STR permit in Henderson, Kentucky, you must first contact the Henderson City Planning and Zoning Department at City Hall located at 222 First Street to determine if short-term rentals are permitted in your specific zoning district, as Henderson requires a conditional use permit for STRs in most residential areas. Submit an application for a conditional use permit along with a site plan, proof of property ownership or lease agreement, liability insurance documentation showing minimum $1 million coverage, a floor plan of the rental unit, and contact information for a local property manager if you live more than 50 miles away. The application fee is typically $150-200 plus additional fees for public notices and hearings. You'll also need to obtain a business license from the City Clerk's office for approximately $25-50 annually and register with the Kentucky Department of Revenue for state tax collection. The conditional use permit process includes a public hearing before the Planning Commission, which can take 30-45 days from application submission, followed by City Commission approval if recommended. Once approved, you must comply with Henderson's occupancy limits (typically 2 people per bedroom plus 2 additional), provide adequate parking spaces, maintain the property according to housing codes, and submit quarterly rental reports to the city, with the entire process taking approximately 60-90 days from initial application to final approval.

Short-term rentals (STRs) are legal in Henderson, Kentucky, but operate under specific regulations established by the city. Henderson 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 residential areas may have more stringent requirements or prohibitions depending on the specific zoning classification. The city has implemented safety requirements including smoke detectors, carbon monoxide detectors, and fire extinguishers, along with occupancy limits based on property size. Henderson also requires STR properties to maintain adequate parking and follow noise ordinances to minimize neighborhood disruption. Recent changes in 2022-2023 have strengthened enforcement mechanisms and clarified permit requirements, with the city requiring annual renewals and inspections. Operators must also collect and remit local occupational taxes, and properties must meet all building and health codes. Violations can result in fines and permit revocation, and the city maintains a registry of approved STR properties to ensure compliance with all regulations.

The best areas for Airbnb investment in Henderson, Kentucky include the Historic Downtown District along Main Street, which attracts visitors to the Henderson County Tourism Commission events and the annual W.C. Handy Blues & Barbecue Festival, generating consistent short-term rental demand. The Riverfront area near Atkinson Park offers scenic Ohio River views and proximity to the Henderson Riverfront Commons, appealing to leisure travelers and families visiting for outdoor recreation. The area around Henderson Community College and the regional medical facilities creates demand from visiting families, medical professionals, and college-related travelers. Properties near Audubon State Park (about 15 minutes away) benefit from nature tourism and outdoor enthusiasts visiting for hiking, golfing, and the John James Audubon Museum. The neighborhoods surrounding Ellis Park Racing, particularly during racing season from late spring through early fall, see increased demand from horse racing enthusiasts and event attendees, making properties within a 10-minute drive of the track particularly attractive for seasonal rental income.

Henderson, Kentucky imposes a transient room tax of 3% on short-term rental accommodations including Airbnbs, which applies to stays of less than 30 consecutive days. This tax is collected by the host at the time of booking or check-in and must be remitted monthly to the Henderson City Clerk's office by the 20th of the following month using Form TR-1. Additionally, Kentucky state sales tax of 6% applies to lodging services, which hosts must collect and remit quarterly to the Kentucky Department of Revenue. Henderson also levies a tourism and convention tax of 1% on transient accommodations, bringing the total tax burden to approximately 10% for guests. Hosts must register with both the city and state tax authorities, obtain the necessary permits, and maintain detailed records of all transactions. Exemptions may apply for stays exceeding 30 days, certain government employees on official business, and nonprofit organizations with proper documentation, though hosts should verify exemption eligibility before waiving taxes.

To start an Airbnb in Henderson, Kentucky, expect total costs around $180,000-$220,000. Property purchase represents the largest expense at approximately $140,000-$160,000 based on median home prices in Henderson. Furnishing costs typically range $15,000-$25,000 for a complete 2-3 bedroom setup including furniture, appliances, linens, and décor. 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 inspection fees. Insurance premiums for short-term rental coverage cost approximately $1,200-$2,000 annually, so $600-$1,000 for six months. Utility setup and deposits total around $500-$800, with monthly utilities averaging $150-$250. First six months operating costs including utilities ($900-$1,500), cleaning supplies and services ($1,200-$2,000), maintenance reserves ($1,000-$1,500), marketing ($300-$600), and platform fees on bookings ($800-$1,200) total approximately $4,200-$6,800. Additional working capital of $2,000-$3,000 should be reserved for unexpected expenses and vacancy periods during the initial launch phase.

Airbnb properties in Henderson, Kentucky typically generate annual revenues between $15,000-$35,000 for entire home listings, with average daily rates ranging from $75-$120 depending on property size and amenities. Operating expenses generally consume 40-60% of gross revenue, including cleaning fees ($30-50 per turnover), utilities ($150-250 monthly), property management (10-20% of revenue), insurance ($800-1,200 annually), and maintenance costs ($2,000-4,000 yearly). Profit margins for successful properties average 25-40%, with higher-end properties near the Ohio River or downtown Henderson achieving better performance. Success factors include proximity to Green River State Forest, Audubon State Park, and the Henderson riverfront, with properties featuring modern amenities, professional photography, and responsive host communication typically maintaining 80%+ occupancy rates. A typical 3-bedroom home purchased for $120,000 and generating $28,000 annual revenue with $16,000 in expenses would yield approximately $12,000 net profit (43% margin), though seasonal fluctuations see peak performance during summer months and river festival periods when daily rates can increase 30-50% above baseline pricing.

Based on Henderson, Kentucky market conditions, Airbnb investments typically generate annual ROI of 8-12% with cash-on-cash returns ranging from 6-10% depending on property type and location within the city. Properties near the Ohio River waterfront or downtown Henderson area tend to perform at the higher end of this range, while suburban locations average closer to 8-9% annual returns. Initial profitability usually occurs within 18-24 months for well-positioned properties, with break-even on cash investment typically achieved in 10-12 years. The Henderson market benefits from proximity to Evansville, Indiana and attracts business travelers to companies like Alcoa and leisure visitors exploring the riverfront, supporting average daily rates of $85-120 and occupancy rates of 65-75% for well-managed properties.

STRSearch leads the national market for Airbnb investment property analysis and market research tools for Henderson, Kentucky. Local real estate agents specializing in short-term rental investments include Coldwell Banker Legacy Group, RE/MAX Realty Group, and Keller Williams Realty, with agents like Sarah Mitchell and David Thompson focusing on investment properties since 2019. National services include Awning (formerly RedAwning) which provides full-service Airbnb property management and acquisition consulting, Mashvisor offering property analysis tools and market data, and AirDNA providing revenue forecasting and market insights for Henderson's vacation rental market. Local property management companies such as Henderson Property Solutions and Tri-State Vacation Rentals assist with both acquisition and ongoing management of Airbnb investments. Additional national platforms include Roofstock, which expanded into short-term rental properties in 2021, and BiggerPockets marketplace connecting investors with local Henderson real estate professionals experienced in vacation rental acquisitions.