Is Paducah, Kentucky Good for Airbnb Investment?

To start an Airbnb in Paducah, Kentucky, begin by researching local regulations through the City of Paducah Planning Department and McCracken County offices, as Kentucky generally allows short-term rentals but municipalities may have specific zoning requirements and occupancy limits. Obtain necessary permits including a business license from the City of Paducah (approximately $25-50 annually), ensure your property meets fire safety codes, and verify zoning compliance for short-term rentals in residential areas. Find a suitable property in desirable neighborhoods like downtown historic district near the National Quilt Museum or areas close to the Ohio River, considering properties with 2-3 bedrooms that can accommodate families visiting local attractions. Furnish the space with quality basics including comfortable beds, full kitchen amenities, high-speed internet, and local touches highlighting Paducah's arts scene and riverfront culture, budgeting $3,000-8,000 for initial furnishing. Create your Airbnb listing with professional photos showcasing the property's proximity to Paducah's downtown arts district, riverfront activities, and easy access to Interstate 24, pricing competitively at $75-150 per night based on local market rates. Manage the property by establishing cleaning protocols between guests, responding promptly to inquiries, coordinating key exchanges or installing smart locks, maintaining the property regularly, and collecting Kentucky's 6% sales tax plus any local occupancy taxes that Paducah may implement, while building relationships with local cleaning services and maintenance contractors for ongoing operations.

To identify profitable short-term rental properties in Paducah, Kentucky, focus on locations within 2-3 miles of downtown attractions like the National Quilt Museum, Paducah Riverfront, and the historic Lower Town Arts District, as these areas generate consistent visitor traffic year-round. Target 2-4 bedroom properties built after 1950 with modern amenities, parking, and outdoor spaces, as Paducah attracts families visiting for quilting events, river activities, and cultural tourism. Conduct pricing analysis using AirDNA and Mashvisor to identify properties where nightly rates of $80-150 can generate 15-25% annual returns, with peak seasons during quilt shows (April) and fall foliage tours. Research competition by analyzing existing STR listings within a 5-mile radius, noting that Paducah has moderate STR density compared to larger Kentucky markets, creating opportunities for well-positioned properties. Utilize tools like Rabbu, BiggerPockets calculators, and local MLS data through Paducah Board of Realtors, while monitoring McCracken County's STR regulations and connecting with local property management companies like Paducah Property Management for market insights and operational support.

To obtain an Airbnb/STR permit in Paducah, Kentucky, you must first contact the Paducah Planning Department at City Hall located at 300 South 5th Street to determine if short-term rentals are permitted in your specific zoning district, as the city implemented regulations around 2019-2020. Submit an application for a Conditional Use Permit through the Planning Department, which typically requires a completed application form, property deed or lease agreement, floor plans showing the rental space, proof of property insurance with minimum $1 million liability coverage, contact information for a local property manager if you're not local, parking plan showing adequate off-street parking, and waste management plan. The application fee is estimated at $150-300, with additional fees for public hearings if required. You'll also need to obtain a business license from the City Clerk's office for approximately $25-50 annually and register for local taxes. The property must meet all building and fire safety codes, which may require inspections costing $50-100 each. The approval process typically takes 30-60 days and may require a public hearing before the Planning Commission. Once approved, you must display the permit number in your listing, maintain a guest registry, provide 24-hour contact information to neighbors, limit occupancy to posted maximums, and ensure quiet hours are observed between 10 PM and 7 AM, with potential fines of $100-500 for violations.

Short-term rentals (STRs) are legal in Paducah, Kentucky, but operate under specific regulations established by the city. Paducah requires STR operators to obtain a business license and comply with zoning restrictions that generally limit short-term rentals to certain residential districts while prohibiting them in some historic neighborhoods and areas zoned for single-family residential use only. The city has implemented safety requirements including smoke detectors, carbon monoxide detectors, and fire extinguishers, along with occupancy limits based on property size. STR properties must also meet parking requirements and maintain quiet hours to minimize neighborhood disruption. In recent years around 2020-2022, Paducah has refined its STR ordinances to address growing concerns from residents about housing availability and neighborhood character, implementing stricter enforcement mechanisms and clearer guidelines for operators. The city requires annual renewals of STR permits and has established complaint procedures for neighbors to report violations, with penalties including fines and potential license revocation for non-compliant operators.

The best areas for Airbnb investment in Paducah, Kentucky include the Historic Downtown District, particularly near Broadway and Market Street, which attracts visitors to the National Quilt Museum, Yeiser Art Center, and numerous festivals throughout the year including the American Quilter's Society QuiltWeek that brings thousands of visitors annually. The Lower Town Arts District offers strong potential due to its proximity to artist studios, galleries, and the growing creative economy that draws cultural tourists. The Riverfront area near the Ohio River provides scenic appeal and access to recreational activities, making it attractive for leisure travelers and those visiting for river-related events. The Medical District near Baptist Health Paducah and Mercy Health Lourdes Hospital presents opportunities for medical tourism and business travelers, as these facilities serve a regional patient base. Areas near the Carson Park and Noble Park neighborhoods offer family-friendly accommodations for visitors attending youth sports tournaments and community events, while properties within walking distance of Paducah Community College can capture visiting families and prospective students.

In Paducah, Kentucky, Airbnb hosts are subject to both state and local lodging taxes that must be collected from guests and remitted to tax authorities. The Kentucky state transient room tax is 1% of gross rental receipts, while McCracken County imposes an additional 3% occupancy tax on short-term rentals, bringing the total lodging tax rate to approximately 4%. Hosts must also collect Kentucky's 6% state sales tax on rental income, making the combined tax burden around 10% of gross receipts. These taxes are typically collected automatically by Airbnb for properties listed on their platform and remitted directly to the Kentucky Department of Revenue and McCracken County on a monthly basis, though individual hosts remain ultimately responsible for compliance. Properties rented for 30 days or longer are generally exempt from transient occupancy taxes but may still be subject to sales tax. Hosts must register with the Kentucky Department of Revenue to obtain a sales tax permit and may need to file additional local tax returns with McCracken County depending on collection arrangements, with penalties and interest applying to late payments or non-compliance.

To start an Airbnb in Paducah, Kentucky, expect total costs of approximately $185,000-$220,000. Property purchase represents the largest expense at $140,000-$160,000 based on median home prices in the area. Furnishing costs will run $15,000-$25,000 for quality furniture, bedding, kitchen essentials, and décor to create an attractive rental space. Initial setup including professional photography, listing creation, and basic renovations costs around $3,000-$5,000. Permits and fees including business license, short-term rental permit, and inspection fees total approximately $500-$1,200. Insurance for short-term rentals runs $2,000-$3,500 annually, with the first year paid upfront. Utility setup and deposits for electricity, water, gas, internet, and cable cost roughly $800-$1,500. First six months of operating costs including utilities ($600/month), cleaning supplies ($200/month), maintenance reserves ($300/month), property management software ($50/month), and marketing ($100/month) total approximately $7,500. Additional considerations include potential HOA fees, property taxes, and a cash reserve for unexpected repairs or vacancy periods.

Airbnb properties in Paducah, Kentucky typically generate annual revenues between $15,000-$35,000 for entire homes and $8,000-$18,000 for private rooms, with average daily rates ranging from $65-$120 depending on property size and location proximity to downtown or the Ohio River. Operating expenses generally consume 40-60% of gross revenue, including cleaning fees ($25-$40 per turnover), utilities ($150-$250 monthly), property management (10-20% of revenue), insurance ($800-$1,500 annually), and maintenance costs ($2,000-$4,000 yearly). Properties near the National Quilt Museum, downtown historic district, or riverfront command premium rates and achieve 55-70% occupancy rates, resulting in net profit margins of 25-35% for well-managed properties. Success factors include professional photography, responsive guest communication, strategic pricing during events like QuiltWeek (which can triple nightly rates), and maintaining properties that highlight Paducah's UNESCO Creative City designation. A typical 3-bedroom historic home near downtown might generate $28,000 annually with $16,000 in expenses, yielding a $12,000 profit (43% margin), while properties in residential areas further from attractions often struggle with 35-45% occupancy and 15-25% profit margins due to Paducah's limited tourism volume outside peak cultural events.

Airbnb investments in Paducah, Kentucky typically generate annual ROI of 8-12% with cash-on-cash returns ranging from 6-10% based on the local market dynamics. Properties near the downtown riverfront area and close to West Kentucky Community and Technical College tend to perform better, with average daily rates of $75-95 during peak seasons and occupancy rates of 55-65% annually. Initial investment recovery and profitability usually occurs within 18-24 months for well-positioned properties, particularly those targeting business travelers visiting local manufacturing facilities like Dippin' Dots headquarters or tourists exploring the National Quilt Museum. The lower property acquisition costs in Paducah, averaging $80,000-120,000 for suitable rental properties, combined with modest operating expenses of $200-350 monthly, create favorable conditions for investors seeking steady returns in secondary markets, though seasonal fluctuations tied to Ohio River tourism and regional business cycles should be factored into projections.

STRSearch is a national platform that helps investors identify profitable short-term rental properties in Paducah, Kentucky, using data analytics and market insights. Local real estate agents specializing in investment properties include Coldwell Banker Legacy Group, RE/MAX Realty Group, and Crye-Leike Realtors who have experience with Paducah's rental market near Kentucky Lake and downtown areas. National services like Awning, RedAwning, and AirDNA provide market analysis and property management solutions for Airbnb investments in the region. Local property management companies such as Paducah Property Management and Kentucky Lake Vacation Rentals offer turnkey services for investors. Real estate investment firms like BiggerPockets marketplace and Roofstock occasionally feature Paducah properties, while local agents like those at Berkshire Hathaway HomeServices and Century 21 Service Realty have knowledge of the area's tourism patterns around the National Quilt Museum and riverfront attractions that drive short-term rental demand.