Is Kona, Hawaii Good for Airbnb Investment?

To start an Airbnb in 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. Obtain a Nonconforming Use Certificate (NUC) if your property qualifies, or purchase a property that already has valid permits, as new permits are extremely limited. Apply for a General Excise Tax (GET) license from the Hawaii Department of Taxation and register for Transient Accommodations Tax (TAT) collection. Find a suitable property in approved zones like resort areas in Kailua-Kona or properties with existing legal short-term rental status, expecting to pay $800,000-$2 million for oceanfront condos or $1.5-$4 million for single-family homes. Furnish the property with tropical, durable furniture suitable for Hawaii's humid climate, including quality linens, kitchen essentials, beach equipment, and safety items like smoke detectors and first aid kits. Create your Airbnb listing with professional photography showcasing ocean views and local attractions, set competitive rates ($200-$800 per night depending on property type and location), and highlight unique Kona features like proximity to coffee farms and snorkeling spots. Manage the property by either hiring a local property management company (charging 20-35% commission) or handling it yourself, ensuring compliance with Hawaii County's occupancy limits, noise ordinances, and mandatory safety inspections, while maintaining relationships with local cleaning services and maintenance contractors familiar with Hawaii's building requirements.

To identify profitable short-term rental properties in Kona, Hawaii, focus on locations within 1-2 miles of popular beaches like Kailua-Kona Bay and Magic Sands, proximity to Kona International Airport (within 30 minutes), and areas with established vacation rental zoning since Hawaii County has strict STR regulations. Target properties with 2-4 bedrooms, ocean views or partial ocean views, private pools or hot tubs, covered outdoor spaces (lanais), and modern amenities like air conditioning and updated kitchens, as these command premium rates of $200-500+ per night depending on size and location. Analyze comparable properties on Airbnb and VRBO within a 2-mile radius, examining occupancy rates through tools like AirDNA and Mashvisor, while noting that Kona's peak seasons are December-April and June-August with average daily rates 20-40% higher than off-season. Research competition by monitoring established vacation rental management companies like RedAwning and Elite Pacific Properties, checking Hawaii County's short-term rental permit database for legal compliance, and identifying oversaturated areas versus underserved neighborhoods. Utilize market analysis tools including AirDNA for revenue projections, STR Helper for permit research, Zillow and MLS for property values, and consult local real estate agents specializing in investment properties who understand Kona's unique market dynamics, tourism patterns, and regulatory environment that can significantly impact profitability.

To obtain an Airbnb/STR permit in Kona, Hawaii, you must apply through Hawaii County's Planning Department by submitting a Conditional Permit application, as short-term rentals require conditional use permits in most residential zones. Required documents include a completed application form, site plan showing the property layout, floor plans, proof of ownership or authorization letter, tax clearance certificate, and a $1,000 non-refundable application fee plus additional processing fees totaling approximately $1,500-2,000. The property must meet specific requirements including adequate parking (typically 1 space per bedroom), proper septic system capacity, compliance with building codes, and adherence to density restrictions limiting STRs to no more than 1% of housing units in certain areas. The application process typically takes 6-12 months and includes public notification requirements, potential public hearings, and review by the Planning Commission. You must also register with the State of Hawaii Tax Department for GET and TAT licenses, obtain a business license from Hawaii County, and ensure compliance with fire safety codes and health department regulations. Once approved, the permit is valid for a specific time period and may require annual renewals with associated fees.

Short-term rentals (STRs) are legal in Kona, Hawaii, but operate under strict regulations implemented by Hawaii County. As of 2019-2020, Hawaii County established a cap limiting the total number of STR permits and requires all operators to obtain proper permits and pay transient accommodation taxes. In Kona specifically, STRs are generally prohibited in residential areas zoned for single-family use, with most legal operations concentrated in resort and commercial zones along the coast. The county has been actively enforcing these regulations, with unpermitted STRs facing significant fines and shutdown orders. Recent legal changes include stricter enforcement mechanisms, increased penalties for violations, and a moratorium on new permits in certain residential areas to address community concerns about housing availability and neighborhood character. Property owners must comply with occupancy limits, parking requirements, noise ordinances, and maintain 24/7 local contact information, with violations potentially resulting in permit revocation and substantial monetary penalties.

The best Airbnb investment areas in Kona, Hawaii include Kailua-Kona town center, which attracts tourists seeking walkable access to restaurants, shops, and Kailua Bay's beaches, generating strong year-round occupancy from leisure travelers. The Keauhou area offers excellent potential due to its proximity to Keauhou Bay, snorkeling spots, and the Sheraton Kona Resort, appealing to upscale tourists and those attending conferences at nearby hotels. Holualoa village, located in the coffee belt above Kona, attracts visitors interested in authentic Hawaiian culture, coffee farm tours, and art galleries, commanding premium rates for unique cultural experiences. The White Sands Beach (Magic Sands) area draws beach-focused tourists and provides easy access to popular snorkeling and surfing spots, maintaining consistent demand from active travelers. Captain Cook and Honaunau areas near the Place of Refuge National Historical Park attract history enthusiasts and snorkelers visiting the famous Two Step diving location, offering opportunities for longer stays from visitors exploring multiple attractions in South Kona.

In Kona, Hawaii, Airbnb hosts must collect and remit several lodging taxes including the Hawaii General Excise Tax (GET) at 4.712% on gross rental income, the Transient Accommodations Tax (TAT) at 10.25% on gross rental receipts, and Hawaii County's additional TAT surcharge of 3% as of 2021. The GET applies to all business income while the TAT specifically targets short-term rentals under 180 days, with both taxes collected from guests and remitted monthly to the Hawaii Department of Taxation by the 20th of the following month using forms G-45 for GET and TA-2 for TAT. Hawaii County also imposes its own real property tax classifications for short-term rentals at higher rates than residential properties. Hosts must register for tax licenses, file returns even with zero activity, and maintain detailed records of all transactions. Airbnb may collect and remit these taxes on behalf of hosts in certain jurisdictions through voluntary collection agreements with the state, but hosts remain ultimately responsible for compliance. Exemptions are limited and typically apply only to rentals exceeding 180 consecutive days to the same guest, government employees on official business, or specific medical situations, with most standard vacation rentals subject to all applicable taxes.

Starting an Airbnb in 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 to create an attractive vacation rental with quality furniture, appliances, linens, and decor that appeals to tourists. Initial setup expenses include professional photography ($500-$800), listing creation, welcome materials, and basic supplies totaling around $2,000-$3,000. Permits and fees are substantial in Hawaii, including transient vacation rental permits ($1,000-$2,500), business licenses ($50-$200), and potential homeowner association approvals. Insurance costs run $3,000-$5,000 annually for vacation rental coverage including liability protection. Utility setup and deposits for electricity, water, internet, and cable typically cost $1,500-$2,500 initially. First six months operating costs include utilities ($300-$500 monthly), cleaning services ($100-$150 per turnover), property management if used (25-30% of revenue), maintenance reserves ($200-$400 monthly), and marketing expenses, totaling approximately $8,000-$15,000 depending on occupancy rates and management approach. The total startup cost ranges from $890,000 to $1.27 million depending on property type and finishing level.

Airbnb properties in Kona, Hawaii demonstrate strong profitability potential with average daily rates ranging from $150-400 depending on property type and location, generating annual revenues of $45,000-120,000 for well-positioned properties. Ocean view condos and vacation homes near Kailua-Kona typically achieve 65-75% occupancy rates year-round, with peak winter months (December-March) commanding premium rates of $300-500 per night. Operating expenses including property management fees (20-30%), cleaning costs ($75-150 per turnover), utilities ($200-400 monthly), insurance ($2,000-4,000 annually), and HOA fees ($300-800 monthly) typically consume 40-55% of gross revenue. Successful properties like beachfront condos in the Shores at Waikoloa or luxury homes in Mauna Kea Resort achieve net profit margins of 25-35%, with annual profits ranging from $15,000-50,000. Key success factors include proximity to beaches, professional photography, responsive guest communication, and partnerships with local property management companies like RedAwning or Vacasa. Properties within walking distance of Kailua-Kona's historic downtown or near popular snorkeling spots like Kahalu'u Beach Park consistently outperform inland locations by 20-30% in both occupancy and rates, making location the primary determinant of profitability in this market.

Airbnb investments in Kona, Hawaii typically generate annual ROI of 8-12% with cash-on-cash returns ranging from 6-10% for well-positioned properties near popular areas like Kailua-Kona or along the Kohala Coast. Properties averaging $800,000-$1.2 million can expect gross rental yields of $80,000-$120,000 annually, with net returns after expenses (property management, maintenance, taxes, insurance) settling around $48,000-$84,000 per year. Most investors achieve profitability within 18-24 months, particularly for oceanview or ocean-adjacent properties that command premium nightly rates of $250-$450. The Big Island's consistent tourism demand, driven by attractions like Hawaii Volcanoes National Park and Mauna Kea, supports occupancy rates of 65-75% year-round, though seasonal variations between peak winter months and slower spring periods can impact monthly cash flows by 20-30%.

STRSearch is a leading national platform that specializes in identifying profitable short-term rental properties for investors in Kona, Hawaii. Local real estate agents like Hawaii Life Real Estate Brokers, Coldwell Banker Island Properties, and Kona Realty have extensive experience helping investors find vacation rental properties in the Kona area since the early 2000s. National services include Mashvisor, which provides Airbnb investment analysis tools, and BiggerPockets, which connects investors with local market expertise. AirDNA offers comprehensive short-term rental market data for the Kona region, while Awning provides end-to-end Airbnb investment services including property identification and management. Local property management companies like RedAwning and Vacasa also assist investors in finding suitable properties while offering management services. Elite Pacific Properties and Berkshire Hathaway HomeServices Island Properties specialize in luxury vacation rental investments in the Kona market. Additional services include Roofstock, which focuses on turnkey rental properties, and local investment groups like Hawaii Real Estate Investment Club that provide networking and deal flow opportunities for Airbnb investors in the Kona area.