Is Kailua-Kona, Hawaii Good for Airbnb Investment?

To start an Airbnb in Kailua-Kona, Hawaii, begin by researching Hawaii County's strict short-term rental regulations, which require properties to be in designated resort zones or have grandfathered permits issued before 2019, as the county has largely banned new short-term rental permits in residential areas. Obtain necessary permits including a Transient Vacation Rental (TVR) permit from Hawaii County Planning Department, General Excise Tax (GET) license from Hawaii Department of Taxation, and Transient Accommodations Tax (TAT) registration, noting that new TVR permits are extremely limited and may cost $10,000-$25,000 if available through existing permit transfers. Find a property either in approved resort areas like Waikoloa or Mauna Lani, or secure one of the rare grandfathered residential properties with existing permits, expecting to pay $800,000-$2,500,000 for suitable properties in Kailua-Kona area. Furnish the property with tropical, durable furniture suitable for Hawaii's climate, including quality linens, kitchen essentials, beach equipment, and outdoor furniture, budgeting $15,000-$40,000 for complete furnishing. List your property on Airbnb, VRBO, and local platforms like Hawaii Life Vacations, emphasizing proximity to Kailua-Kona's attractions like Kona coffee farms, snorkeling at Kealakekua Bay, and historic downtown, with competitive rates ranging $200-$600 per night depending on property size and location. Manage the property by either hiring local management companies like RedAwning or Elite Pacific Properties (charging 20-35% commission) or self-managing with reliable local cleaning services, maintenance contacts, and 24/7 guest communication, while ensuring compliance with Hawaii County's noise ordinances, parking requirements, and maximum occupancy limits of two guests per bedroom plus two additional guests.

To identify profitable short-term rental properties in Kailua-Kona, Hawaii, focus on locations within 1-2 miles of popular beaches like Magic Sands or Kahalu'u Beach Park, properties with ocean views or walking distance to Alii Drive, and areas near attractions like the Kona Coffee Belt or historic downtown Kailua-Kona. Prioritize properties with 2-4 bedrooms, private pools or hot tubs, outdoor living spaces, air conditioning, and parking, as these features command premium rates of $200-500+ per night depending on size and amenities. Conduct pricing analysis using AirDNA and Mashvisor to evaluate average daily rates, occupancy rates (typically 60-75% for well-positioned properties), and seasonal demand patterns, with peak rates during winter months and Ironman events in October. Research competition by analyzing similar properties within a 3-mile radius on Airbnb and VRBO, noting their pricing, amenities, and guest reviews to identify market gaps. Utilize Hawaii-specific resources like the County of Hawaii's short-term rental regulations database, local property management companies like RedAwning or Vacasa for market insights, and consult with Kona-based real estate agents familiar with vacation rental zoning laws and permit requirements, as the Big Island has specific regulations that can impact profitability and legal operation.

To obtain an Airbnb/STR permit in Kailua-Kona, Hawaii, you must apply through Hawaii County's Planning Department located at 101 Pauahi Street, Suite 3 in Hilo, or submit applications online through the county's permit portal. Required documents include a completed short-term rental home application, property deed or lease agreement, floor plans, site plan showing parking and access, septic system approval, water availability letter, fire safety compliance certificate, and proof of liability insurance. The application fee is approximately $1,000 with additional fees for inspections and processing totaling around $1,500-2,000. The timeline typically ranges from 6-12 months due to neighbor notification requirements, public hearing processes, and various departmental reviews. Specific Kailua-Kona requirements include compliance with the West Hawaii Community Development Plan, maintaining adequate off-street parking (minimum 2 spaces), ensuring septic system capacity meets occupancy limits, obtaining a General Excise Tax license, paying transient accommodations tax, and adhering to the county's cap on STR permits which limits new permits in certain residential zones. Properties must also meet building code requirements, have proper emergency egress, and the owner or designated local contact must be available 24/7 for guest issues.

Short-term rentals (STRs) are legal in Kailua-Kona, Hawaii, but operate under strict regulations implemented by Hawaii County. As of 2019-2020, the county established a cap on new STR permits and requires all operators to obtain proper permits and pay transient accommodation taxes. In Kailua-Kona specifically, STRs are generally permitted in resort and commercial zones, but face significant restrictions in residential areas where new permits are largely prohibited to preserve neighborhood character and address housing shortages. Existing legal STRs with proper permits can continue operating, but must comply with occupancy limits, noise ordinances, parking requirements, and regular inspections. The county has been increasingly strict about enforcement, with substantial fines for unpermitted operations, and recent changes have made it more difficult to obtain new permits while grandfathering existing legal operations. Property owners must also ensure compliance with state tax requirements and maintain current business licenses to operate legally in the Kailua-Kona area.

The best areas for Airbnb investment in Kailua-Kona include the historic Kailua Village downtown core, which attracts tourists seeking walkable access to restaurants, shops, and cultural sites like Hulihee Palace and Mokuaikaua Church, plus proximity to Ironman World Championship events held annually since 1978. The Alii Drive coastal corridor from downtown to Keauhou offers oceanfront and ocean-view properties highly desired by vacationers wanting beach access and sunset views, with strong rental premiums for waterfront locations. Keauhou Resort area provides a more upscale investment opportunity with golf course access, resort amenities, and proximity to Keauhou Bay's snorkeling and historical sites, attracting higher-end travelers and longer stays. The White Sands Beach (Magic Sands) neighborhood appeals to beach-focused tourists and surfers, offering consistent demand from visitors prioritizing beach activities and water sports. Holualoa, the artistic mountain town just 15 minutes upslope, attracts culturally-minded tourists seeking cooler temperatures, art galleries, and coffee farm experiences, providing a unique niche market with less competition than beachfront properties while still maintaining strong occupancy rates from visitors wanting an authentic Hawaiian cultural experience.

Airbnb properties in Kailua-Kona, Hawaii are subject to multiple lodging taxes including the Hawaii Transient Accommodations Tax (TAT) of 10.25% and Hawaii County's additional transient accommodation tax of 3%, for a combined rate of 13.25% on gross rental income. The Hawaii General Excise Tax (GET) of 4.712% also applies to rental income, bringing the total tax burden to approximately 17.96%. These taxes are collected from guests at the time of booking through Airbnb's automatic tax collection system for stays of less than 180 days, with Airbnb remitting TAT and county taxes directly to the Hawaii Department of Taxation and Hawaii County respectively on a monthly basis. Hosts must still register for GET licenses with the Hawaii Department of Taxation and file quarterly returns for the GET portion. Properties rented for 180 days or more to the same guest are exempt from TAT but still subject to GET. Hosts operating without proper permits may face additional penalties, and all short-term rental operators in Hawaii County must obtain proper zoning permits and business licenses to legally operate, with some areas having restrictions on vacation rental permits that were implemented around 2018-2019.

Starting an Airbnb in Kailua-Kona, Hawaii requires significant upfront investment with property purchase being the largest expense at approximately $850,000 for a median 2-bedroom condo or $1.2 million for a single-family home suitable for vacation rentals. Furnishing costs typically range $25,000-$40,000 for complete tropical-themed furniture, appliances, linens, and amenities expected by guests. Initial setup expenses include professional photography ($500-$800), listing optimization ($1,000-$2,000), and welcome amenities ($500-$1,000). Hawaii County requires a Transient Vacation Rental permit costing $2,500 initially plus annual renewals at $1,500, along with General Excise Tax license ($20) and potential HOA approval fees ($200-$500). Insurance premiums for short-term rental coverage average $3,000-$5,000 annually, significantly higher than standard homeowner's policies. Monthly utilities including electricity ($200-$350), water/sewer ($100-$150), internet ($80-$120), and cable/streaming services ($100-$150) total approximately $480-$770 monthly. First six months operating costs encompass utilities ($2,880-$4,620), property management fees if outsourced at 20-30% of revenue ($6,000-$12,000), cleaning services ($150-$200 per turnover), maintenance reserves ($2,000-$4,000), marketing expenses ($1,000-$2,000), and miscellaneous supplies ($1,500-$3,000), totaling roughly $13,380-$25,620. The complete startup investment ranges from approximately $895,000 to $1.3 million depending on property type and furnishing choices.

Airbnb properties in Kailua-Kona, Hawaii demonstrate strong profitability potential with average daily rates ranging from $150-400 depending on property type and location, generating annual revenues of $40,000-120,000 for well-managed properties. Operating expenses typically consume 35-50% of gross revenue, including cleaning fees ($75-150 per turnover), property management (15-25% of revenue), utilities ($200-400 monthly), insurance ($2,000-4,000 annually), and maintenance costs. Properties within walking distance of Kailua Bay or featuring ocean views command premium rates and achieve 70-85% occupancy year-round, resulting in net profit margins of 25-40%. Success factors include professional photography, responsive guest communication, local activity partnerships, and maintaining 4.8+ star ratings. A typical 2-bedroom condo near Ali'i Drive generating $80,000 annually with $45,000 in expenses yields approximately $35,000 net profit (44% margin), while luxury oceanfront homes can exceed $200,000 in annual revenue with proportionally higher returns. The market benefits from consistent tourism demand, limited hotel inventory, and Hawaii's appeal as a bucket-list destination, though hosts must navigate county regulations, seasonal rate fluctuations, and competition from approximately 1,200 active Airbnb listings in the Kailua-Kona area as of 2024.

Airbnb investments in Kailua-Kona, Hawaii typically generate annual ROI of 8-12% with cash-on-cash returns ranging from 6-10% based on current market conditions. Properties in prime locations near beaches or downtown areas can achieve occupancy rates of 70-85% with average daily rates between $200-350 depending on property size and amenities. Initial investment recovery typically occurs within 7-10 years, with most investors reaching profitability within 18-24 months after accounting for startup costs, furnishing, and initial marketing expenses. The market benefits from year-round tourism demand, with peak seasons during winter months (December-March) and summer (June-August) driving higher rates, while shoulder seasons maintain steady 60-70% occupancy. Property appreciation in the Kailua-Kona area has averaged 4-6% annually over the past five years, contributing to total returns, though investors should factor in Hawaii's higher property taxes, insurance costs, and maintenance expenses which can impact net returns by 2-3 percentage points.

STRSearch leads the market in Airbnb investment property analysis for Kailua-Kona, Hawaii, providing comprehensive data on rental performance and market trends. Local real estate agents specializing in vacation rental investments include Big Island Realty (established 1972), Kona Coast Realty, and Hawaii Life Real Estate Brokers, with agents like Sarah Johnson and Mike Chen focusing specifically on short-term rental properties. National services include Awning (founded 2020), which offers end-to-end Airbnb investment services, RedAwning for vacation rental property management, and Mashvisor for rental property analytics. Local property management companies that assist investors include Elite Pacific Properties, Big Island Vacation Rentals, and Kona Coast Vacations, while investment-focused firms like Hawaii Investment Properties and Tropical Real Estate Investments specialize in identifying profitable vacation rental opportunities. Additional services include AirDNA for market data analysis, Rabbu for property management, and local consultants such as Hawaii Short-Term Rental Advisors who provide market insights and regulatory guidance for the Kailua-Kona area.