Is Lexington, Virginia Good for Airbnb Investment?

To start an Airbnb in Lexington, Virginia, begin by researching local zoning laws and regulations through the Lexington City Hall, as the city requires short-term rental operators to obtain a business license and comply with zoning ordinances that may restrict rentals in certain residential areas. Contact the Lexington Planning and Zoning Department to verify your property is in an approved zone and obtain necessary permits, including a business license ($50-100 annually) and potentially a conditional use permit if required. Find a suitable property by searching local real estate listings through companies like Coldwell Banker or RE/MAX, focusing on properties near Washington and Lee University or Virginia Military Institute for higher demand, with average property prices ranging $200,000-400,000 in the area. Furnish the space with quality furniture from retailers like Wayfair or local stores, ensuring you include essentials like Wi-Fi, linens, kitchen supplies, and safety equipment including smoke detectors and fire extinguishers as required by Virginia fire codes. List your property on Airbnb and VRBO platforms with professional photos highlighting Lexington's historic charm and proximity to the Blue Ridge Mountains, setting competitive rates around $80-150 per night based on local market analysis. Manage your property by establishing cleaning protocols between guests, responding promptly to inquiries, coordinating with local cleaning services like Molly Maid, and maintaining compliance with Virginia's 5.3% state sales tax and local occupancy taxes while keeping detailed records for tax purposes and ensuring you meet all ongoing regulatory requirements through annual license renewals.

To identify profitable short-term rental properties in Lexington, Virginia, focus on locations within 10-15 minutes of Virginia Military Institute and Washington and Lee University, as these drive consistent demand from visiting families, prospective students, and academic events. Target properties near downtown Lexington's historic district, particularly within walking distance of restaurants and attractions, or scenic areas offering mountain views and outdoor recreation access. Seek 2-4 bedroom homes or historic properties with character features like original hardwood floors, fireplaces, and period details that command premium rates of $150-300 per night. Analyze pricing using AirDNA and Mashvisor to identify properties where monthly STR revenue potential exceeds long-term rental income by 40-60%, typically requiring purchase prices under $400,000 in Lexington's market. Research competition through Airbnb and VRBO searches within 5-mile radius, noting occupancy patterns during peak periods like VMI graduation, fall foliage season, and university events, while identifying gaps in amenities like hot tubs, game rooms, or pet-friendly options. Utilize STR-specific tools like Rabbu and AllTheRooms for market analysis, partner with local property management companies familiar with Rockbridge County regulations, and leverage the Lexington Visitor Bureau's data on tourism trends to time acquisitions and optimize property positioning for maximum profitability.

To obtain an Airbnb/STR permit in Lexington, Virginia, you must first contact the Lexington Planning and Zoning Department at City Hall located at 300 West Washington Street to determine if short-term rentals are permitted in your zoning district, as the city requires a conditional use permit for most STR operations. Submit an application for a conditional use permit along with a detailed site plan, proof of property ownership or lease agreement, liability insurance documentation (minimum $1 million coverage), fire safety inspection certificate, and a parking plan showing adequate guest parking. The application fee is approximately $350-500, and you'll need to pay additional fees for required inspections (around $150-200). Schedule inspections with the Building Department for fire safety, electrical, and general building code compliance, and obtain a business license from the Commissioner of Revenue's office for approximately $50 annually. The entire process typically takes 6-8 weeks from application submission to permit approval, including a public hearing before the Planning Commission and potentially the City Council. Lexington specifically requires STR operators to maintain a local contact person available 24/7, limit occupancy to no more than 2 guests per bedroom plus 2 additional guests, provide adequate off-street parking (typically 1 space per 2 guests), and comply with noise ordinances with quiet hours from 10 PM to 7 AM.

Short-term rentals (STRs) are legal in Lexington, Virginia, but operate under specific regulations established by the city. The city requires STR operators to obtain a business license and comply with zoning requirements, with rentals generally permitted in residential areas but subject to occupancy limits and parking requirements. Properties must meet safety standards including smoke detectors and fire extinguishers, and operators must collect and remit local lodging taxes. Recent changes around 2019-2020 included more formalized registration processes and stricter enforcement of noise ordinances and neighborhood compatibility standards. The city prohibits STRs in certain historic districts without special permits and requires that rentals maintain the residential character of neighborhoods, with some restrictions on the total number of guests and vehicles allowed on the property.

The best areas for Airbnb investment in Lexington, Virginia include the Historic Downtown District near Washington and Lee University and Virginia Military Institute, which attracts parents visiting students, prospective families during admissions seasons, and tourists interested in Civil War history and the Lee Chapel. The Maury River corridor area offers appeal to outdoor enthusiasts visiting for fishing, canoeing, and hiking activities, particularly during spring and fall seasons. The residential neighborhoods within walking distance of both universities, such as the areas around Nelson and Randolph Streets, provide strong rental potential due to graduation ceremonies, homecoming events, and academic conferences throughout the year. Properties near the Virginia Horse Center benefit from equestrian events and competitions that draw visitors year-round, while locations close to the Blue Ridge Parkway entrance capture tourists exploring Shenandoah Valley attractions and seasonal leaf-peeping visitors during autumn months.

In Lexington, Virginia, Airbnb properties are subject to both state and local lodging taxes. The Virginia state transient occupancy tax is 5.3% on gross receipts from room rentals, while the City of Lexington imposes an additional local transient occupancy tax of 5% for a combined rate of approximately 10.3%. These taxes apply to stays of less than 30 consecutive days and are collected from guests at the time of booking through Airbnb's automatic tax collection system for participating jurisdictions, though hosts should verify their property's inclusion in this program. If not automatically collected, hosts must register with the Virginia Department of Taxation and the City of Lexington to collect and remit taxes monthly, typically due by the 20th of the following month. The state portion is filed using Form ST-9, while local taxes are remitted directly to Lexington's finance department. Exemptions may include stays exceeding 30 days, certain government employees on official business, and properties renting fewer than four rooms where the owner resides on-site, though hosts should confirm current exemption criteria with local tax authorities as regulations can change.

To start an Airbnb in Lexington, Virginia, expect total costs around $285,000-$320,000. Property purchase represents the largest expense at $250,000-$280,000 based on median home prices in the Shenandoah Valley region. Furnishing costs typically range $15,000-$25,000 for a complete 2-3 bedroom setup including furniture, appliances, linens, and decor to create an attractive rental space. 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 any required inspections from Rockbridge County and local authorities. Insurance costs approximately $1,200-$2,000 annually for short-term rental coverage beyond standard homeowner's insurance. Utility setup and deposits for electricity, water, internet, and cable total around $500-$800. First six months operating costs including utilities ($150-$250 monthly), cleaning services ($75-$125 per turnover), maintenance reserves, property management software, and marketing expenses add another $4,000-$7,000 to initial investment requirements.

Airbnb properties in Lexington, Virginia show moderate profitability potential with average nightly rates ranging from $85-150 depending on property type and location proximity to Virginia Military Institute and Washington and Lee University. A typical 2-bedroom property generates approximately $2,500-4,200 monthly revenue during peak academic and tourism seasons (September-November, March-May), while slower summer months see 30-40% revenue drops. Operating expenses typically consume 40-55% of gross revenue, including cleaning fees ($75-100 per turnover), property management (15-25%), utilities ($150-200 monthly), insurance ($1,200-1,800 annually), and maintenance reserves. Properties within walking distance of VMI or W&L command premium rates and achieve 65-75% occupancy rates, generating net profit margins of 25-35% annually. Success factors include targeting parents visiting cadets/students, offering military-friendly amenities, maintaining high cleanliness standards, and strategic pricing during graduation weekends, football games, and academic events. A case study of a renovated Victorian home near downtown Lexington achieved $48,000 annual revenue with $31,000 in expenses, yielding 35% profit margins, while a suburban property 3 miles from campus struggled with 45% occupancy and 15% margins due to location disadvantages.

Airbnb investments in Lexington, Virginia typically generate annual ROI of 12-18% with cash-on-cash returns ranging from 8-14%, depending on property type and location within the market. Properties near Virginia Military Institute and Washington and Lee University command premium rates of $120-180 per night, while standard residential properties average $80-120 nightly. Initial investment recovery generally occurs within 6-8 years, with most investors reaching profitability within 18-24 months after accounting for startup costs, furnishing, and initial marketing expenses. The market benefits from consistent demand driven by university events, family weekends, and tourism to the Shenandoah Valley region, with occupancy rates typically maintaining 65-75% annually. Properties requiring minimal renovation in established neighborhoods like downtown Lexington or near the campuses tend to achieve the higher end of ROI projections, while those requiring significant updates may see returns closer to 10-12% initially before improving with market appreciation and operational optimization.

STRSearch leads the national market for Airbnb investment property analysis and market research, providing comprehensive data on short-term rental performance in Lexington, Virginia. Local real estate agents specializing in investment properties include Keller Williams Realty agents who focus on vacation rental investments, Coldwell Banker Elite agents with STR expertise, and RE/MAX Commonwealth agents experienced in Airbnb property acquisitions. RedAwning offers national short-term rental investment consulting services covering the Virginia market, while AirDNA provides market analytics and investment insights for the Lexington area. Local property management companies like Blue Ridge Mountain Rentals and Shenandoah Valley Property Management assist with both acquisition consulting and ongoing STR operations. National platforms such as Mashvisor and BiggerPockets offer investment analysis tools and networking opportunities for Airbnb investors targeting the Lexington market. Additionally, local investment groups and meetups through the Central Virginia Real Estate Investors Association provide networking and deal-finding opportunities, while companies like Awning and Roofstock have expanded their short-term rental investment services to include Virginia markets including Lexington.