Is Paterson, New Jersey Good for Airbnb Investment?

To start an Airbnb in Paterson, New Jersey, begin by researching local regulations as Paterson 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 Paterson City Clerk's office to obtain the necessary business registration and check with the zoning department to ensure your property is in a permitted zone for short-term rentals. Find a suitable property by purchasing or securing a long-term lease agreement that explicitly allows subletting and short-term rentals, focusing on areas near downtown Paterson, the Great Falls National Historical Park, or near major transportation routes to New York City. Ensure the property meets New Jersey's safety requirements including smoke detectors, carbon monoxide detectors, and fire extinguishers, and consider obtaining a Certificate of Occupancy from the city. Furnish the space with quality furniture, linens, kitchen essentials, and amenities like WiFi, focusing on creating a comfortable experience that highlights Paterson's proximity to Manhattan. Create your Airbnb listing with professional photos, competitive pricing (typically $75-150 per night in Paterson as of 2023), and detailed descriptions emphasizing local attractions and easy NYC access. Manage your property by establishing check-in procedures, maintaining cleanliness standards, responding promptly to guests, and keeping detailed records for tax purposes including New Jersey's 6.625% sales tax and potential local occupancy taxes that Paterson may implement.

To identify profitable short-term rental properties in Paterson, New Jersey, focus on locations near major transportation hubs like NJ Transit stations, proximity to New York City (within 30-45 minutes), and neighborhoods with ongoing revitalization such as the Great Falls Historic District and downtown areas. Target properties with 2-4 bedrooms, dedicated parking spaces, updated kitchens and bathrooms, reliable WiFi infrastructure, and unique architectural features that reflect Paterson's industrial heritage. Conduct pricing analysis by researching comparable Airbnb listings within 2-mile radius, analyzing seasonal demand patterns (peak during summer months and NYC event periods), and calculating potential revenue against mortgage, taxes, insurance, and management costs to ensure 15-20% annual returns. Research competition by monitoring occupancy rates of existing STRs on AirDNA, identifying gaps in amenity offerings, and studying guest reviews to understand market preferences. Utilize tools like Mashvisor for investment analysis, Rentometer for local rental comparisons, the City of Paterson's planning department for zoning regulations, New Jersey Division of Taxation for property tax information, and local real estate platforms like Zillow and Realtor.com while connecting with Paterson-based real estate agents who understand the evolving market dynamics in this post-industrial city experiencing gradual gentrification.

To obtain an Airbnb/STR permit in Paterson, New Jersey, you must first contact the Paterson City Clerk's Office at City Hall located at 155 Market Street to inquire about short-term rental licensing requirements, as the city has implemented regulations for STRs since approximately 2019. You'll need to submit a completed business license application, proof of property ownership or lease agreement with landlord consent, certificate of occupancy, fire safety inspection certificate from the Paterson Fire Department, proof of liability insurance (typically $1 million minimum), floor plans of the rental unit, and a notarized affidavit stating compliance with zoning laws. The application fee is estimated at $150-300 annually, with additional inspection fees of approximately $75-150. You must also register with the New Jersey Division of Taxation for sales tax collection and remit the state's 6.625% sales tax plus Paterson's local occupancy tax. The property must pass health and safety inspections, maintain maximum occupancy limits based on square footage, provide adequate parking, and comply with noise ordinances. The approval timeline typically takes 4-8 weeks from submission of complete documentation, and you must renew the permit annually while maintaining all insurance and safety requirements throughout the year.

Short-term rentals (STRs) in Paterson, New Jersey operate in a complex legal environment where the city has not established comprehensive regulations specifically governing platforms like Airbnb and VRBO as of 2023. While STRs are not explicitly prohibited citywide, property owners must comply with existing zoning ordinances, building codes, and rental registration requirements that apply to all rental properties in Paterson. The city requires rental properties to be registered and inspected, and STR operators must ensure their properties meet safety standards and obtain proper certificates of occupancy. Paterson's zoning laws may restrict short-term rentals in certain residential districts, particularly single-family zones where commercial activities are typically prohibited. Property owners should also be aware that homeowners association rules, lease agreements, and state tax obligations may further limit STR operations. Recent discussions at the municipal level suggest Paterson may be considering more specific STR regulations similar to other New Jersey cities, but no major legislative changes have been implemented as of late 2023, leaving operators to navigate existing property and zoning regulations while the legal framework remains somewhat ambiguous.

The best areas for Airbnb investment in Paterson, New Jersey include the Historic District near the Great Falls National Historical Park, which attracts tourists visiting the 77-foot waterfall and Alexander Hamilton's industrial heritage site, generating consistent visitor traffic year-round. The Eastside neighborhood offers proximity to New York City (30 minutes by train) making it ideal for business travelers and tourists seeking affordable alternatives to Manhattan hotels, with companies like Prudential and PSE&G maintaining regional offices nearby. The Riverside section along the Passaic River provides scenic waterfront properties that appeal to leisure travelers, while the area near William Paterson University creates demand from visiting families, prospective students, and academic conference attendees. Downtown Paterson near the transportation hub benefits from its connectivity to NYC via NJ Transit, attracting budget-conscious travelers, and the neighborhood around Lambert Castle and Garret Mountain Reservation draws nature enthusiasts and history buffs exploring the area's museums and hiking trails.

In Paterson, New Jersey, Airbnb hosts are subject to New Jersey's state sales tax of 6.625% on short-term rental accommodations, which applies to stays of less than 90 consecutive days. Additionally, hosts must collect and remit the state's occupancy tax of 5% on rental charges. Paterson itself imposes a local hotel/motel tax of approximately 3% on transient accommodations, bringing the total tax burden to roughly 14.625% on gross rental income. These taxes are typically collected from guests at the time of booking and must be remitted to the New Jersey Division of Taxation on a quarterly basis using Form ST-50 for sales tax and Form HTL for occupancy taxes, with registration required through the state's online portal. Local taxes are remitted to the City of Paterson's tax collector office. Exemptions generally apply to stays exceeding 90 consecutive days, rentals to permanent residents, and accommodations provided to certain government employees or tax-exempt organizations, though hosts must maintain proper documentation to claim these exemptions and may need to obtain certificates of exemption from qualifying guests.

To start an Airbnb in Paterson, New Jersey, 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 area. Furnishing costs typically range $15,000-$25,000 for a complete 2-3 bedroom property including furniture, appliances, linens, and decor. Initial setup costs including professional photography, listing creation, and basic renovations average $3,000-$5,000. Permits and fees in New Jersey include business registration ($125), short-term rental permits ($200-$500), and potential municipal licensing fees totaling approximately $1,000-$2,000. Insurance costs run $1,500-$2,500 annually for landlord and short-term rental coverage. Utility deposits and connections for electricity, gas, water, internet, and cable average $800-$1,200. First six months operating costs including utilities ($900/month), cleaning services ($100 per turnover), maintenance reserves ($200/month), platform fees (3% of bookings), and marketing expenses total approximately $8,000-$12,000 assuming 60-70% occupancy rates and average daily rates of $80-$120 in the Paterson market.

Airbnb properties in Paterson, New Jersey typically generate average monthly revenues of $1,800-$2,500 for entire homes and $800-$1,200 for private rooms, with annual occupancy rates ranging from 60-75% according to AirDNA market data from 2023. Operating expenses generally consume 40-50% of gross revenue, including cleaning fees ($75-$100 per turnover), utilities ($150-$200 monthly), property management (15-25% of revenue), insurance ($1,200-$1,800 annually), and maintenance costs averaging $200-$300 monthly. Properties near downtown Paterson or within walking distance of NJ Transit stations to New York City command premium rates of $120-$180 per night compared to $80-$120 for suburban locations. A typical 2-bedroom property purchased for $180,000 in the Riverside or Eastside neighborhoods can generate net profits of $12,000-$18,000 annually after expenses, representing profit margins of 25-35%. Success factors include proximity to NYC transportation, professional photography, competitive pricing strategies, and maintaining 4.5+ star ratings through consistent cleanliness and guest communication. Properties that cater to business travelers and NYC commuters tend to outperform those targeting leisure guests, with some hosts reporting ROI improvements of 15-20% when focusing on weekday bookings and monthly stays.

Airbnb investments in Paterson, New Jersey typically generate annual ROI of 8-12% with cash-on-cash returns ranging from 6-10% based on current market conditions. Properties in desirable neighborhoods near downtown Paterson or close to NYC transportation hubs can achieve higher returns of 12-15% annually, while properties requiring significant renovation may see initial returns of 6-8%. The average timeframe to profitability is 6-12 months after initial setup and marketing, with most investors breaking even on their initial investment within 18-24 months. Cash-on-cash returns are generally strongest for properties purchased under $200,000 with renovation budgets under $30,000, where investors can expect monthly gross rental income of $2,500-$4,000 depending on property size and location. Market factors including Paterson's proximity to New York City, average daily rates of $80-120, and occupancy rates of 65-75% contribute to these return projections, with seasonal variations affecting performance during summer months when demand typically increases by 15-20%.

STRSearch is a leading national platform that helps investors identify profitable short-term rental properties in Paterson, New Jersey, offering data analytics and market insights. Local real estate agents specializing in Airbnb investments in Paterson include Keller Williams Realty agents who focus on investment properties, RE/MAX professionals with short-term rental expertise, and Century 21 agents familiar with the Paterson market dynamics. National services like Mashvisor provide property analysis tools for Paterson's rental market, while AirDNA offers comprehensive market data and revenue projections for the area. Roofstock, though primarily focused on traditional rentals, has expanded to include short-term rental opportunities in New Jersey markets including Paterson. Local property management companies such as Awning and RedAwning provide turnkey Airbnb management services for investors purchasing in Paterson. BiggerPockets connects investors with local Paterson real estate professionals experienced in short-term rentals, while LoopNet features commercial and multi-family properties suitable for Airbnb conversion. Additionally, local investment groups and meetups in the greater New York metropolitan area often include Paterson-focused opportunities, and companies like Vacasa offer property management services that can help investors evaluate potential Airbnb properties in the Paterson market.