Is Hot Springs, Arkansas Good for Airbnb Investment?

To start an Airbnb in Hot Springs, Arkansas, begin by researching local regulations through the Hot Springs Planning Department and City Clerk's office, as the city requires short-term rental permits and business licenses, with properties needing to comply with zoning ordinances that typically allow STRs in residential areas with restrictions on occupancy limits (usually 2 guests per bedroom plus 2 additional). Obtain necessary permits including a business license ($25-50 annually), short-term rental permit ($100-200), and ensure compliance with fire safety codes and health department requirements. Find a suitable property by researching neighborhoods near Bathhouse Row, Lake Hamilton, or downtown areas where tourism is high, considering properties with 2-4 bedrooms that can accommodate families visiting Hot Springs National Park. Purchase essential furnishings including quality mattresses, linens, towels, kitchen appliances, WiFi equipment, and local guidebooks, budgeting $5,000-15,000 for a complete setup depending on property size. Create your Airbnb listing with professional photos highlighting proximity to hot springs, national park access, and local attractions like Oaklawn Racing Casino Resort, setting competitive rates based on seasonal demand (peak rates $80-200/night during racing season and summer months). Manage the property by establishing cleaning protocols between guests, responding to inquiries within an hour, coordinating key exchanges through lockboxes or smart locks, maintaining relationships with local cleaning services and handymen, and staying updated on Hot Springs tourism events to optimize pricing during peak periods like racing season (January-May) and summer lake activities.

To identify profitable short-term rental properties in Hot Springs, Arkansas, focus on locations within 1-2 miles of Bathhouse Row and Hot Springs National Park, as well as properties near Lake Ouachita and Lake Hamilton which attract year-round visitors. Target 2-4 bedroom homes or condos built after 1980 with updated kitchens, multiple bathrooms, outdoor spaces like decks or patios, hot tubs, and reliable WiFi, as these features command premium rates from tourists seeking relaxation and recreation. Conduct pricing analysis using AirDNA and Mashvisor to identify properties where potential STR revenue exceeds long-term rental income by at least 40-60%, with average daily rates ranging from $80-200 depending on size and amenities. Research competition by analyzing existing Airbnb and VRBO listings within a 3-mile radius, identifying gaps in amenities or underpriced properties, and studying seasonal demand patterns that peak during spring racing season at Oaklawn Park, summer lake activities, and fall foliage periods. Utilize tools like Rabbu, STR Helper, and local MLS data through Arkansas Regional MLS, while connecting with Hot Springs Board of Realtors members who understand the tourism market, and verify compliance with city STR regulations which require permits and occupancy limits in certain residential zones.

To obtain an Airbnb/STR permit in Hot Springs, Arkansas, you must first contact the Hot Springs Planning and Development Department at City Hall located at 133 Convention Boulevard to determine if your property is in a zone that allows short-term rentals, as the city implemented STR regulations around 2019-2020. Submit a completed short-term rental permit application along with a site plan showing the property layout, proof of property ownership or lease agreement, a floor plan indicating maximum occupancy, contact information for a local property manager if you're not local, and proof of liability insurance with minimum $1 million coverage. The application fee is typically around $100-150 with an annual renewal fee of approximately $75-100. You'll also need to obtain a business license from the City Clerk's office for an additional $25-50 fee and register for local occupancy taxes with the Hot Springs Advertising and Promotion Commission. The property must meet all building and fire safety codes, have working smoke and carbon monoxide detectors, provide adequate parking (usually 1-2 spaces per unit), and maintain quiet hours typically from 10 PM to 8 AM. The approval process generally takes 30-45 days after submitting a complete application, and you must display the permit number in all online listings and at the property entrance once approved.

Short-term rentals (STRs) are legal in Hot Springs, Arkansas, but operate under specific municipal regulations established around 2019-2020. The city requires STR operators to obtain a business license and comply with zoning restrictions that generally allow STRs in residential areas with certain limitations on density and proximity to other rental properties. Hot Springs prohibits STRs in some historic districts and requires properties to meet safety standards including smoke detectors, carbon monoxide detectors, and fire extinguishers. The city has implemented occupancy limits based on property size, typically allowing two guests per bedroom plus two additional guests, and requires designated parking spaces. Recent changes include stricter enforcement of noise ordinances and neighbor complaint procedures, with the city conducting periodic reviews of STR regulations to balance tourism revenue with residential neighborhood preservation. Operators must also collect and remit local lodging taxes, and the city maintains a registry of approved STR properties to ensure compliance with health, safety, and zoning requirements.

The best Airbnb investment areas in Hot Springs, Arkansas include the Historic Downtown District, particularly near Central Avenue and Bathhouse Row, which attracts tourists year-round to the Hot Springs National Park and historic bathhouses established in the early 1900s. The Oaklawn Racing Casino Resort area on Central Avenue is highly lucrative due to the horse racing season (January-May) and casino operations drawing visitors from across the region. The Lake Hamilton and Lake Ouachita areas, approximately 5-10 miles from downtown, offer premium rental opportunities for families and groups seeking waterfront vacation experiences with boating, fishing, and water sports. The Garland County Fairgrounds vicinity benefits from events throughout the year including the annual Hot Springs Music Festival and various trade shows. The Hot Springs Village area, about 20 minutes north, attracts golf enthusiasts and retirees visiting the largest gated community in Arkansas with multiple golf courses and recreational amenities. Properties near the Hot Springs Convention Center capture business travelers and conference attendees, while the historic Quapaw Quarter neighborhood offers charm for tourists seeking authentic Victorian-era accommodations within walking distance of major attractions.

In Hot Springs, Arkansas, Airbnb properties are subject to both state and local lodging taxes. The Arkansas state tourism tax is 2% on gross receipts from short-term rentals, while Garland County imposes an additional 2% lodging tax, and the City of Hot Springs adds a 3% hotel/motel tax, bringing the total occupancy tax rate to approximately 7%. 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 properties. Airbnb remits these taxes quarterly to the Arkansas Department of Finance and Administration and local tax authorities on behalf of hosts. However, individual hosts may still need to register with local tax authorities and file periodic returns even when Airbnb collects the taxes. Properties rented for 30 days or longer are generally exempt from these occupancy taxes as they're considered long-term rentals rather than transient lodging. Hosts should verify their registration requirements with the Arkansas Department of Finance, Garland County, and the City of Hot Springs, as some jurisdictions may require separate business licenses or permits regardless of Airbnb's tax collection services.

The total cost to start an Airbnb in Hot Springs, Arkansas is approximately $185,000-$225,000. Property purchase costs around $150,000 based on the median home price in Hot Springs as of 2023. Furnishing a 2-3 bedroom property requires $8,000-$12,000 for quality furniture, bedding, kitchen essentials, and decor to create an attractive rental space. Initial setup costs including professional photography, listing creation, welcome materials, and basic renovations total $2,000-$3,000. Permits and fees in Hot Springs include business license ($50-$100), short-term rental permit ($200-$500), and potential HOA approvals. Insurance for short-term rentals costs $1,200-$2,000 annually, significantly higher than standard homeowner's insurance. Utilities including electricity, water, gas, internet, and cable average $200-$300 monthly. First six months operating costs encompass utilities ($1,200-$1,800), cleaning services ($150 per turnover, approximately $900-$1,500), maintenance and repairs ($500-$1,000), platform fees to Airbnb and VRBO (3% of bookings, estimated $1,000-$2,000), marketing ($300-$500), and miscellaneous supplies ($400-$600), totaling approximately $4,300-$7,400 for the initial six-month period.

Airbnb properties in Hot Springs, Arkansas typically generate annual revenues between $18,000-$35,000 for well-positioned properties, with average daily rates ranging from $75-$150 depending on proximity to Hot Springs National Park and property amenities. Operating expenses generally consume 40-60% of gross revenue, including cleaning fees ($25-40 per turnover), property management (15-25% of revenue), utilities ($150-250 monthly), insurance ($1,200-2,000 annually), and maintenance costs averaging $2,000-4,000 yearly. Properties within walking distance of Bathhouse Row and downtown attractions achieve occupancy rates of 65-75% with profit margins of 25-35%, while those further from tourist centers see 45-55% occupancy and 15-25% margins. Success factors include professional photography, consistent 4.8+ star ratings, rapid guest communication, and seasonal pricing strategies that capitalize on peak tourism periods from March through October. A typical 2-bedroom historic home near the national park might generate $28,000 annually with $17,000 in expenses, yielding approximately $11,000 net profit, representing a 39% profit margin that makes Hot Springs a moderately attractive market for short-term rental investment compared to larger Arkansas cities.

Airbnb investments in Hot Springs, Arkansas typically generate annual ROI of 12-18% due to the city's strong tourism market driven by Hot Springs National Park, historic bathhouses, and Oaklawn Racing Casino Resort. Cash-on-cash returns generally range from 8-14% annually, with properties near the national park and downtown historic district performing at the higher end of this range. Most investors achieve profitability within 18-24 months, particularly for properties priced between $150,000-$300,000 that can command nightly rates of $80-$150 depending on size and location. The market benefits from year-round tourism, with peak seasons during spring and fall generating occupancy rates of 70-85%, while off-season months maintain 45-60% occupancy. Properties within walking distance of Bathhouse Row and Central Avenue typically see the strongest performance, with some investors reporting ROI as high as 20-22% when factoring in property appreciation of 4-6% annually in desirable neighborhoods.

STRSearch is a national platform that helps investors identify profitable short-term rental properties in Hot Springs, Arkansas by providing market data and investment analysis. Local real estate agents specializing in Airbnb investments include Coldwell Banker Heritage Real Estate, RE/MAX Real Estate Partners, and Century 21 Arkansas Properties, with agents like those at Garland County Realty focusing on vacation rental properties near Lake Ouachita and the historic downtown district. National services include Awning (formerly RedAwning) which offers end-to-end Airbnb investment services, Roofstock which specializes in rental property investments, and BiggerPockets marketplace connecting investors with properties. Local property management companies like Hot Springs Vacation Rentals and Spa City Property Management assist with both acquisition and ongoing management of short-term rentals. Investment-focused firms such as Mashvisor provide market analysis tools, while HostGPO offers purchasing assistance for vacation rental properties. Regional companies like Arkansas Investment Properties and Ozark Mountain Realty have experience with Hot Springs' unique market dynamics, particularly properties near Bathhouse Row and the national park areas that attract tourists year-round.