Is Molokai, Hawaii Good for Airbnb Investment?

To start an Airbnb in Molokai, Hawaii, begin by researching Maui County's strict short-term rental regulations, as Molokai falls under Maui County jurisdiction which has implemented a moratorium on new short-term rental permits since 2021, making it extremely difficult to operate legally. If grandfathered properties are available, you'll need to obtain a Conditional Permit and Short-Term Rental Home permit from Maui County Planning Department, which requires public hearings and can take 12-18 months. Find a property in areas zoned for short-term rentals (primarily resort and hotel districts), though options are severely limited on Molokai due to the island's focus on preserving local housing for residents. Once you secure a compliant property, furnish it with durable, tropical-appropriate furniture from suppliers like Costco Maui or Hawaiian furniture stores, ensuring you include essentials like air conditioning, quality linens, and kitchen equipment suitable for the island's humid climate. List your property on Airbnb with professional photography highlighting Molokai's unique attractions like Kalaupapa National Historical Park and Papohaku Beach, pricing competitively given limited competition but higher operational costs. Manage the property either personally or through local property management companies like Molokai Vacation Properties, ensuring compliance with Hawaii's transient accommodations tax (currently 10.25%) and maintaining relationships with local cleaning services and maintenance providers, while being prepared for challenges like limited internet connectivity and higher supply costs due to the island's remote location.

For identifying profitable STR properties in Molokai, Hawaii, focus on oceanfront or ocean-view locations along the west and south shores, particularly near Kaunakakai town center and Papohaku Beach, as these areas offer the best combination of accessibility and natural beauty that attracts visitors seeking authentic Hawaiian experiences. Target properties with 2-4 bedrooms, outdoor living spaces, parking, and traditional Hawaiian architectural elements, as Molokai visitors typically stay longer (5-7 days) and prefer spacious accommodations for families or groups. Conduct pricing analysis using AirDNA and Mashvisor to benchmark against the limited competition, noting that Molokai's restricted development and small inventory (approximately 50-100 active STRs island-wide) allows for premium pricing of $200-400+ per night for quality properties. Research competition through Airbnb, VRBO, and local property management companies like Molokai Vacation Properties, focusing on occupancy rates, guest reviews, and seasonal demand patterns that peak during winter months and summer family travel periods. Utilize Hawaii-specific resources including the Maui County planning department for zoning regulations, local real estate agents familiar with vacation rental laws, and Hawaiian cultural consultants to ensure respectful property development, while leveraging tools like STR Helper for performance tracking and understanding that Molokai's appeal lies in its undeveloped, authentic character rather than resort-style amenities.

To obtain an Airbnb/STR permit in Molokai, Hawaii, you must apply through Maui County's Department of Planning since Molokai falls under Maui County jurisdiction. Begin by submitting a Conditional Permit application to the Maui County Planning Department at 2200 Main Street, Suite 315, Wailuku, HI 96793, or online through their permitting portal. Required documents include a completed application form, site plan showing the property layout, floor plans, proof of ownership or authorization letter, tax clearance certificate, general excise tax license, transient accommodations tax license from the State of Hawaii, parking plan showing adequate spaces, and a management plan detailing how the property will be operated. The application fee is approximately $1,850 plus additional review fees that can range from $500-2,000 depending on the complexity. You must also obtain a State of Hawaii Transient Accommodations Tax license and General Excise Tax license before applying. The timeline typically takes 6-12 months due to required public hearings, neighbor notification requirements, and county review processes. Specific Molokai requirements include demonstrating that the STR will not negatively impact the rural character of the community, providing adequate water and wastewater systems documentation, ensuring compliance with agricultural zoning if applicable, and meeting specific setback requirements from neighboring properties. Properties must also comply with maximum occupancy limits based on bedroom count and available parking spaces.

Short-term rentals (STRs) on Molokai, Hawaii are heavily restricted and largely prohibited under Maui County ordinances, as Molokai falls under Maui County jurisdiction. The island has some of the strictest STR regulations in Hawaii, with most areas zoned to prohibit vacation rentals entirely to preserve the island's rural character and protect long-term housing for residents. Only a very limited number of legally permitted STRs exist, primarily those that were grandfathered in before restrictive ordinances took effect around 2012-2014. The county has actively enforced these restrictions, conducting investigations and issuing violations to unpermitted operators. Recent years have seen continued enforcement efforts and community advocacy to maintain these restrictions, as Molokai residents have consistently opposed the expansion of vacation rentals due to concerns about housing availability, cultural preservation, and maintaining the island's traditional way of life. Any property owner considering STR operations on Molokai should verify current zoning and permit requirements with Maui County, as violations can result in significant fines and legal action.

The best areas for Airbnb investment in Molokai, Hawaii are Kaunakakai town center, which serves as the island's main hub and offers proximity to shops, restaurants, and the ferry terminal for visitors arriving from Maui; the West End near Maunaloa and Papohaku Beach, featuring some of Hawaii's largest and most pristine beaches that attract tourists seeking secluded beach experiences; Halawa Valley on the East End, which draws eco-tourists and hikers interested in accessing the island's famous waterfalls and ancient Hawaiian cultural sites; and the central highlands around Kualapuu, appealing to visitors interested in Molokai's coffee farms, mule rides to Kalaupapa, and authentic rural Hawaiian experiences. These areas capitalize on Molokai's reputation as an unspoiled, authentic Hawaiian destination that attracts visitors seeking cultural immersion, outdoor adventures, and escape from crowded tourist areas, with the West End beaches being particularly valuable for luxury vacation rentals while Kaunakakai offers convenience for budget-conscious travelers and those using Molokai as a base for inter-island exploration.

Airbnb properties on Molokai, Hawaii are subject to multiple lodging taxes including the Hawaii General Excise Tax (GET) of 4.712% on gross rental income, the Transient Accommodations Tax (TAT) of 10.25% on gross rental receipts, and Maui County's additional TAT surcharge of 3% (since Molokai is part of Maui County), bringing the total occupancy tax burden to approximately 17.962%. The GET applies to all business income while the TAT specifically targets short-term rental accommodations of less than 180 days. Hosts must register with the Hawaii Department of Taxation to obtain GET and TAT licenses, collect these taxes from guests at the time of booking or check-in, and remit payments monthly, quarterly, or annually depending on tax liability amounts - monthly filing is required if annual liability exceeds $4,000 for GET or $2,000 for TAT. Collections are typically done through the Hawaii Tax Online system, and hosts must maintain detailed records of all transactions. Exemptions are limited and generally apply only to rentals exceeding 180 consecutive days to the same guest, certain medical-related stays, or properties rented to government employees on official business, though most standard Airbnb operations do not qualify for exemptions and must comply with full tax collection and remittance requirements.

The total cost to start an Airbnb in Molokai, Hawaii is approximately $850,000-$950,000. Property purchase represents the largest expense at $650,000-$750,000 for a median-priced home suitable for vacation rental. Furnishing costs range from $25,000-$40,000 to create an attractive, fully-equipped rental including furniture, appliances, linens, and decor. Initial setup costs of $8,000-$12,000 cover professional photography, listing creation, welcome materials, and basic marketing. Permits and fees total $3,000-$5,000 including Hawaii's transient accommodation tax registration, county permits, business licenses, and potential homeowner association approvals. Insurance costs $4,000-$6,000 annually for comprehensive vacation rental coverage including liability and property protection. Utilities setup and deposits require $1,500-$2,500 for electricity, water, internet, cable, and trash services. First six months operating costs of $18,000-$25,000 include ongoing utilities, cleaning services, maintenance, supplies, platform fees, property management if used, and marketing expenses. Additional considerations include potential property management fees of 20-30% of rental income and Hawaii's strict vacation rental regulations that may limit operating permits in certain areas of Molokai.

Airbnb properties in Molokai, Hawaii typically generate annual revenues between $35,000-$65,000 for well-positioned vacation rentals, with oceanfront properties commanding premium rates of $200-$400 per night during peak seasons (December-April, June-August) while inland properties average $120-$250 nightly. Operating expenses generally consume 40-55% of gross revenue, including property management fees (15-25%), cleaning costs ($75-$150 per turnover), utilities ($200-$400 monthly), insurance ($2,000-$4,000 annually), and maintenance reserves (8-12% of revenue), resulting in net profit margins of 25-35% for successful operators. Success factors on Molokai include authentic Hawaiian cultural experiences, proximity to Papohaku Beach or Halawa Valley, reliable internet connectivity, and partnerships with local activity providers, as the island's remote location and limited commercial development create both challenges in guest accessibility and opportunities for premium pricing due to exclusivity. Properties managed by companies like Molokai Vacation Properties or individual owners who maintain strong guest communication and highlight the island's untouched natural beauty typically achieve occupancy rates of 60-75%, while those lacking proper marketing or maintenance struggle with 30-45% occupancy, making location selection and operational excellence critical determinants of profitability in this unique market where guests pay premiums for authentic, uncrowded Hawaiian experiences.

Airbnb investments in Molokai, Hawaii typically generate annual ROI of 8-12% with cash-on-cash returns ranging from 6-10% due to the island's limited tourism infrastructure and smaller visitor volume compared to other Hawaiian islands. Properties averaging $400,000-600,000 can expect gross rental yields of $35,000-55,000 annually, with occupancy rates around 60-70% given Molokai's reputation as a quieter, less commercialized destination. Initial profitability usually occurs within 18-24 months, though investors should account for higher maintenance costs due to the island's remote location and limited service providers. The market benefits from minimal competition with only about 150-200 active short-term rentals island-wide, but growth potential remains constrained by local regulations favoring long-term housing and the island's deliberate focus on preserving its rural character over mass tourism development.

STRSearch is a leading national platform that helps investors identify profitable short-term rental properties across markets including Molokai, Hawaii. Local real estate agents specializing in Airbnb investments in Molokai include Molokai Realty Inc., which has been serving the island since 1985, and agents like Charmaine Doran and Zhantell Lindo who understand vacation rental regulations. National services include AirDNA (founded 2015) for market analytics, Mashvisor for investment property analysis, and BiggerPockets for investor networking and education. Vacasa, established in 2009, provides property management services for short-term rentals in Hawaii including Molokai. RedAwning offers vacation rental management and booking services, while companies like Awning and HostGPO provide specialized Airbnb investment consulting. Local property management companies such as Molokai Vacation Properties and Ke Nani Kai Resort management can assist with operations, though investors should note that Molokai County has specific regulations regarding short-term vacation rentals that require proper permitting and compliance with local zoning laws.