Is Paducah, Kentucky Good for Airbnb Investment?

To start an Airbnb in Paducah, Kentucky, begin by researching local regulations through the 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 residential areas. Find a suitable property in desirable neighborhoods like downtown historic district or near Kentucky Lake, considering proximity to attractions like the National Quilt Museum and riverfront areas. Purchase essential furnishings including quality mattresses, linens, basic kitchen appliances, WiFi equipment, and safety items like smoke detectors and fire extinguishers, budgeting approximately $3,000-8,000 for a complete setup. Create your Airbnb listing with professional photos highlighting local attractions, set competitive pricing based on Paducah market rates (typically $60-120 per night depending on property size and location), and write descriptions emphasizing proximity to river activities and cultural sites. Manage your property by establishing cleaning protocols between guests, maintaining responsive communication, coordinating key exchanges or installing smart locks, and keeping detailed records for tax purposes while collecting and remitting Kentucky's 6% sales tax and any applicable local lodging taxes to the Kentucky Department of Revenue.

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 spring quilting shows and summer river festivals. Research competition by analyzing existing STR listings within a 5-mile radius, noting that Paducah has moderate competition with opportunities in underserved neighborhoods like Midtown and areas near Kentucky Dam Village. Utilize tools like BiggerPockets for market analysis, STR Helper for revenue projections, and connect with local real estate agents familiar with McCracken County zoning regulations, while monitoring Paducah tourism data from the Paducah Convention & Visitors Bureau to understand seasonal demand patterns and occupancy rates that typically range from 60-75% for well-positioned properties.

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, and a parking plan showing adequate off-street parking. 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 with the Kentucky Department of Revenue for state tax collection. The process typically takes 30-60 days and may require a public hearing before the Board of Zoning Adjustment if neighboring properties object. Paducah requires STRs to maintain residential character, provide adequate parking (typically 2 spaces), have a responsible party available 24/7 for issues, comply with occupancy limits based on bedrooms, and follow noise ordinances with quiet hours typically from 10 PM to 7 AM.

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 occupancy limits, parking requirements, and noise ordinances that STR operators must follow, along with safety standards including smoke detectors and emergency egress requirements. Recent changes around 2019-2021 included more formalized permitting processes and stricter enforcement mechanisms, with the city requiring annual renewals and imposing penalties for non-compliance. Properties in Paducah's downtown area and certain commercial zones face fewer restrictions, while residential neighborhoods have more stringent rules regarding the number of guests, quiet hours, and property maintenance standards to address neighbor concerns about noise and parking.

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 galleries, studios, and the growing creative economy, while the Riverfront area near the Ohio River provides scenic appeal for tourists interested in riverboat history and outdoor recreation. The area around Kentucky Dam Village State Resort Park, though slightly outside the city center, attracts visitors year-round for fishing, boating, and outdoor activities on Kentucky Lake. Additionally, properties near the Carson Park neighborhood benefit from proximity to both downtown attractions and the interstate system, making them attractive to business travelers visiting local industries like Dippin' Dots headquarters and the Paducah Gaseous Diffusion Plant, as well as tourists attending events at the Luther F. Carson Four Rivers Center.

In Paducah, Kentucky, Airbnb hosts are subject to both state and local lodging taxes that must be collected from guests and remitted to appropriate authorities. The Kentucky state transient room tax is 1% of gross rental receipts for stays under 30 days, collected by the Kentucky Department of Revenue with monthly remittance required for hosts with over $1,000 in monthly collections. McCracken County imposes a 3% occupancy tax on short-term rentals, which must be collected from guests and remitted quarterly to the McCracken County Fiscal Court by the 15th day following each quarter. The City of Paducah levies an additional 2% transient guest tax on lodging accommodations, bringing the total tax burden to approximately 6% of the rental amount. Hosts must register with each taxing authority, obtain the necessary permits, and file returns even if no tax is due during a reporting period. Stays of 30 days or longer are generally exempt from these transient occupancy taxes, and some jurisdictions may offer exemptions for government employees or certain non-profit activities. Airbnb may collect and remit some of these taxes automatically depending on agreements with local authorities, but hosts remain ultimately responsible for compliance and should verify collection status through their Airbnb dashboard and local tax offices.

To start an Airbnb in Paducah, Kentucky, the total initial costs would be 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 typically range $15,000-$25,000 for a complete 2-3 bedroom property including furniture, appliances, linens, and décor 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 in Paducah include business license ($50-$100), short-term rental permit ($200-$500), and potential zoning compliance costs totaling $500-$1,500. Insurance for short-term rentals runs $1,500-$2,500 annually, with six months costing $750-$1,250. Utility setup and deposits for electricity, water, gas, internet, and cable average $500-$800 initially. First six months of operating costs including utilities ($200-$300/month), cleaning services ($75-$100 per turnover), maintenance reserves ($200-$400/month), platform fees (3% of bookings), and marketing expenses total approximately $4,000-$8,000, assuming moderate occupancy rates during the initial period.

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-$300 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 typically achieve 55-70% occupancy rates and 15-25% net profit margins, while suburban locations see 35-50% occupancy with 8-15% margins. Success factors include competitive pricing during peak tourism seasons (spring through fall), professional photography, responsive guest communication, and maintaining properties that highlight Paducah's arts district appeal. A typical 3-bedroom historic home near downtown might generate $28,000 annually with $16,800 in expenses, yielding approximately $11,200 net profit (40% margin), while a suburban 2-bedroom property might earn $18,000 with $12,600 expenses for $5,400 profit (30% margin). The market benefits from Paducah's UNESCO Creative City designation and steady tourism, though seasonal fluctuations and competition from hotels like Hampton Inn and Fairfield Inn impact year-round profitability.

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 district and close to Western Kentucky University's regional campus tend to perform better, with average daily rates of $75-$110 and occupancy rates around 55-65% annually. Initial investment costs are relatively low with median home prices around $120,000-$180,000, requiring approximately $30,000-$50,000 in down payment and renovation costs. Most investors reach profitability within 18-24 months, benefiting from Paducah's growing tourism sector driven by the National Quilt Museum, riverboat gambling, and outdoor recreation along the Ohio River. The market shows steady demand from business travelers visiting local manufacturing facilities and tourists exploring the historic downtown arts district, though seasonal fluctuations occur with peak performance during spring and fall months when river tourism and quilting events drive higher occupancy rates.

STRSearch is a national platform that specializes in identifying profitable short-term rental properties for Airbnb investors and provides market analysis for areas like Paducah, Kentucky. Local real estate agents in Paducah who work with investors include Coldwell Banker Legacy Group, RE/MAX Realty Group, and Crye-Leike Realtors, with agents like those at Berkshire Hathaway HomeServices also serving the western Kentucky market. National services that help investors find Airbnb properties include BiggerPockets for networking and deal analysis, Mashvisor for rental property analytics, AirDNA for short-term rental market data, and Awning for Airbnb-focused real estate services. Additional local resources include Paducah Area Association of Realtors members who specialize in investment properties, and property management companies like Vacasa and RedAwning that also help identify potential rental properties. Real estate investment groups in the broader western Kentucky region, including those connected to Louisville-based firms like Keller Williams and Century 21, often extend services to smaller markets like Paducah for investors seeking vacation rental opportunities near Kentucky Lake and the Ohio River confluence.