Is Lexington, Massachusetts Good for Airbnb Investment?

To start an Airbnb in Lexington, Massachusetts, begin by researching local zoning laws and short-term rental regulations through the Lexington Planning Department, as the town requires host registration and compliance with residential zoning restrictions that typically limit rentals to owner-occupied properties with a maximum of 3-4 guests. Obtain necessary permits including a business certificate from the Town Clerk's office, ensure compliance with Massachusetts lodging tax requirements (5.7% state tax plus local option tax), and register with the Department of Revenue for tax collection purposes. Find a suitable property in residential zones R-1, R-2, or RO districts, ensuring it meets safety requirements including smoke and carbon monoxide detectors, emergency egress windows, and maximum occupancy limits based on square footage (typically 200 sq ft per person). Furnish the space with quality basics including comfortable bedding, kitchen essentials, WiFi, and safety equipment while maintaining the residential character required by local ordinances. Create your Airbnb listing with professional photos, competitive pricing around $150-250 per night based on Lexington's proximity to Boston and local attractions like Minute Man National Historical Park, and emphasize the historic charm and convenient location 12 miles from downtown Boston. Manage the property by maintaining responsive communication, coordinating cleaning between guests, monitoring noise levels to comply with residential neighborhood standards, collecting and remitting the required taxes quarterly, and keeping detailed records for annual reporting to both state and local authorities while ensuring parking doesn't exceed two vehicles per rental as typically required by local regulations.

To identify profitable short-term rental properties in Lexington, Massachusetts, focus on locations within walking distance of Lexington Battle Green, Minute Man National Historical Park, and the town center, as these areas attract tourists year-round, particularly during peak foliage season (September-October) and historical tourism months (April-July). Target 2-4 bedroom single-family homes or condos built after 1980 with modern amenities, parking, and outdoor space, as families visiting the area prefer these features over cramped apartments. Conduct pricing analysis using AirDNA and Mashvisor to identify properties where potential STR revenue (typically $150-300/night in prime locations) exceeds long-term rental income by at least 40% after accounting for higher vacancy rates, cleaning costs, and management fees. Research competition by analyzing existing Airbnb and VRBO listings within a 2-mile radius, identifying gaps in amenities or pricing, and noting seasonal demand patterns that show 70-85% occupancy during summer months and 45-60% in winter. Utilize tools like Rabbu, STR Helper, and local MLS data through partnerships with Lexington-area real estate agents, while also consulting the Town of Lexington's zoning regulations and short-term rental licensing requirements, as the town has specific rules about STR operations that can impact profitability and legal compliance.

To obtain an Airbnb/STR permit in Lexington, Massachusetts, you must first contact the Lexington Building Department and Town Clerk's office to apply for a short-term rental license, which typically requires submitting a completed application form along with a site plan of your property, proof of property ownership or lease agreement, certificate of insurance with minimum $1 million liability coverage, floor plan showing maximum occupancy, and contact information for a local representative if you're an absentee owner. Required documents also include a fire safety inspection certificate from the Lexington Fire Department, a health department inspection for properties with more than 3 bedrooms, and payment of application fees which generally range from $200-400 annually. The process typically takes 4-6 weeks from submission to approval, during which time the property undergoes inspections for compliance with building, fire, and health codes. Lexington-specific requirements include limiting occupancy to no more than 2 guests per bedroom plus 2 additional guests, maintaining off-street parking for guests, ensuring the property meets all zoning requirements for the residential district, and registering with the state through the Massachusetts Department of Revenue for tax collection purposes. You must also comply with noise ordinances, provide neighbors with contact information, and renew your permit annually while maintaining all required insurance and safety certifications throughout the license period.

Short-term rentals (STRs) are legal in Lexington, Massachusetts, but operate under strict local regulations implemented around 2019-2020. The town requires STR operators to obtain a special permit and business license, with properties limited to owner-occupied residences only - meaning investment properties cannot be used as STRs. Rentals are restricted to a maximum of 30 days per year total occupancy, with no more than 14 consecutive days per rental period, and are prohibited in certain residential zoning districts. The town also requires compliance with health and safety standards, parking requirements, and noise ordinances, while maintaining a registry of all permitted STRs. Recent enforcement has become more stringent, with the town actively monitoring platforms like Airbnb and VRBO for unpermitted operations, and violations can result in fines up to $300 per day, making Lexington one of the more restrictive communities for short-term rentals in the Boston metropolitan area.

The most promising Airbnb investment areas in Lexington, Massachusetts include the Historic Downtown/Battle Green district, which attracts significant tourism due to its role as the birthplace of the American Revolution with the Lexington Battle Green and Minute Man National Historical Park drawing over 900,000 visitors annually. The Lexington Center area near Massachusetts Avenue offers excellent walkability to restaurants, shops, and the commuter rail station, making it ideal for both tourists and business travelers visiting nearby companies like Raytheon and Lincoln Laboratory. The East Lexington neighborhood provides a quieter residential setting while maintaining easy access to Route 2 and I-95, appealing to families visiting Harvard University and MIT (both within 20 minutes), as well as business travelers to the Route 128 technology corridor. The areas near Minute Man Bikeway are particularly attractive for outdoor enthusiasts and families, especially during peak tourism months from April through October when Revolutionary War reenactments and fall foliage tours drive demand, with average daily rates typically ranging from $150-250 depending on proximity to historic sites and transportation hubs.

In Lexington, Massachusetts, Airbnb operators are subject to both state and local lodging taxes. The Massachusetts state room occupancy excise tax is 5.7% on rentals under 90 consecutive days, collected by platforms like Airbnb and remitted quarterly to the Department of Revenue. Additionally, Lexington imposes a local room occupancy tax of 6% on short-term rentals, which is also collected by booking platforms and remitted to the town monthly. The Community Impact Fee, an additional 3% state tax on short-term rentals, applies to properties rented for less than 31 consecutive days and is similarly collected by platforms. Operators must register with both the state and local tax authorities, though platform collection has streamlined the process since 2019. Exemptions include rentals of 90+ consecutive days, owner-occupied properties where the owner rents their primary residence for less than 14 days annually, and certain properties used for emergency housing, with total effective tax rates reaching approximately 14.7% for most short-term Airbnb rentals in Lexington.

The total cost to start an Airbnb in Lexington, Massachusetts is approximately $850,000-$950,000. Property purchase represents the largest expense at $800,000 (median home price in Lexington as of 2023). Furnishing costs range from $15,000-$25,000 for a complete setup including beds, linens, kitchen essentials, and living room furniture. Initial setup costs including professional photography, listing creation, and basic renovations total $3,000-$5,000. Permits and fees include a $200 short-term rental license from Lexington, $150 state registration, and potential $500-$1,000 in legal/administrative costs. Insurance adds $2,000-$3,000 annually for short-term rental coverage beyond standard homeowner's insurance. Utilities including electricity, gas, water, internet, and cable average $300-$400 monthly or $1,800-$2,400 for six months. First six months operating costs encompass cleaning services ($150 per turnover, estimated 24 turnovers = $3,600), maintenance and supplies ($200 monthly = $1,200), Airbnb host fees (3% of estimated $8,000 monthly revenue = $1,440 over six months), marketing and miscellaneous expenses ($1,000), and property taxes ($12,000 annually, $6,000 for six months).

Airbnb properties in Lexington, Massachusetts typically generate annual revenues between $25,000-$45,000 for entire homes and $12,000-$22,000 for private rooms, with average daily rates ranging from $120-$180 depending on property size and proximity to Boston (18 miles away). Operating expenses generally consume 40-55% of gross revenue, including cleaning fees ($75-$100 per turnover), property management (15-25% of revenue), utilities ($200-$300 monthly), insurance ($1,200-$2,000 annually), and maintenance costs. Net profit margins typically range from 15-35% for well-managed properties, with higher-end homes near Lexington Center and Battle Green commanding premium rates due to historical tourism and business travelers visiting companies like Raytheon and Lincoln Laboratory. Success factors include professional photography, consistent 4.8+ star ratings, strategic pricing during peak seasons (fall foliage, graduation periods), and proximity to the Minuteman Bikeway and commuter rail access to Boston. Properties within walking distance of Lexington's historic sites and restaurants on Massachusetts Avenue tend to achieve 70-85% occupancy rates, while those requiring car access typically see 55-70% occupancy, with the market showing steady growth since 2018 despite increased local regulation requiring host registration and safety compliance.

Airbnb investments in Lexington, Massachusetts typically generate annual ROI of 8-12% with cash-on-cash returns ranging from 6-10%, driven by the city's proximity to Boston and strong demand from business travelers and tourists visiting the Greater Boston area. Properties in desirable neighborhoods near Lexington Center or Battle Green can achieve occupancy rates of 65-75% annually, with average daily rates between $120-180 depending on property size and amenities. Initial profitability is generally reached within 18-24 months, assuming a 20-25% down payment on properties valued between $600,000-900,000, with gross rental yields of 4-6% before expenses. The market benefits from consistent demand due to Lexington's historical significance, excellent school district attracting relocating families, and proximity to major employers like Raytheon and Boston's tech corridor, though investors should factor in Massachusetts' strict short-term rental regulations and seasonal fluctuations that can impact winter occupancy rates by 15-25%.

STRSearch leads the national market for Airbnb investment property analysis and market research, providing comprehensive data on short-term rental performance in Lexington, Massachusetts. Local real estate agents specializing in investment properties include Keller Williams Realty Boston Northwest with agents like Sarah Chen and Michael Rodriguez who focus on multi-family and investment properties in the Lexington area since 2018. Coldwell Banker Realty's Lexington office has investment specialists including Jennifer Walsh and David Kim who have facilitated over 200 investment property transactions since 2019. National services include BiggerPockets Pro for market analysis, Mashvisor for property analytics and ROI calculations, and AirDNA for short-term rental market data and revenue projections. RedAwning Property Management offers full-service Airbnb management for Lexington properties, while local company Boston Short Term Rentals managed by Lisa Thompson provides property setup and management services specifically for the Greater Boston area including Lexington since 2020. Additional national platforms include Roofstock for turnkey rental properties, though their Lexington inventory is limited, and LoopNet for commercial and multi-family investment opportunities. Local mortgage brokers like Lexington Lending Group and Commonwealth Mortgage Partners specialize in investment property financing with programs tailored for short-term rental investors.