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, or near major highways for accessibility to New York City. Obtain required permits including a Certificate of Occupancy, fire safety inspection certificate, and ensure compliance with New Jersey's Hotel and Multiple Dwelling Law if applicable. Furnish the property with essential amenities including WiFi, linens, towels, basic kitchen supplies, and safety equipment like smoke detectors and carbon monoxide detectors as required by New Jersey state law. Create your Airbnb listing with high-quality photos, competitive pricing (typically $75-150 per night in Paterson as of 2023), and highlight proximity to NYC (30 minutes by train). Register for New Jersey sales tax collection through the state's Division of Taxation and collect the required 6.625% state sales tax plus any applicable local taxes. Manage your property by establishing check-in procedures, maintaining cleanliness standards, responding promptly to guests, and keeping detailed records for tax purposes while ensuring compliance with Paterson's noise ordinances and parking regulations.

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, aiming for nightly rates between $80-150 depending on size and amenities, while calculating potential monthly revenue against mortgage, utilities, and maintenance costs. Research competition using AirDNA and Mashvisor to analyze occupancy rates, seasonal demand patterns, and identify underserved areas with fewer than 10 active listings per square mile. Utilize tools like Zillow and Realtor.com for property searches, STR Helper for rental income projections, and connect with local real estate agents familiar with Paterson's zoning regulations and emerging neighborhoods, while monitoring the city's short-term rental ordinances and licensing requirements that may affect profitability.

To obtain an Airbnb/STR permit in Paterson, New Jersey, you must first register your property with the City of Paterson's Business Administration Office located at City Hall, 155 Market Street, by submitting a completed short-term rental application form along with proof of property ownership or lease agreement, certificate of occupancy, general liability insurance policy (minimum $1 million coverage), floor plan of the rental unit, and valid photo identification. Required documents also include a fire safety inspection certificate from the Paterson Fire Department, zoning compliance verification, and payment of the annual registration fee of approximately $150-200 plus a $75 inspection fee. The process typically takes 4-6 weeks from application submission, during which the city will conduct property inspections to ensure compliance with fire safety codes, occupancy limits (maximum 2 guests per bedroom plus 2 additional), parking requirements (one off-street space per unit), and noise ordinance regulations. Paterson requires STR operators to maintain a 24-hour contact number for emergencies, display the permit number in all listings, collect and remit local occupancy taxes, and renew the permit annually by December 31st, with properties limited to rentals of less than 30 consecutive days and prohibited in certain residential zoning districts without special approval.

Short-term rentals (STRs) in Paterson, New Jersey operate in a complex legal environment where the city has not established comprehensive STR-specific regulations as of 2023, creating uncertainty for property owners. While not explicitly prohibited city-wide, STRs must comply with existing zoning ordinances, building codes, and rental property regulations, with many residential zones restricting commercial activities that could include short-term rentals. The city requires rental properties to obtain certificates of occupancy and comply with health and safety standards, and property owners must also navigate state tax requirements including collecting occupancy taxes. Recent years have seen increased scrutiny from code enforcement regarding illegal conversions and overcrowding in rental properties, particularly in densely populated neighborhoods, though no major legislative changes specifically targeting STRs have been enacted. Property owners should verify zoning compliance in their specific district, as some areas may have restrictions on transient accommodations, and the legal landscape remains fluid as the city continues to address housing and tourism-related issues without clear STR guidelines.

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 sites, generating consistent visitor traffic year-round. The Eastside neighborhood offers proximity to New York City (just 20 miles away) making it attractive for business travelers and tourists seeking affordable alternatives to Manhattan hotels, with easy access via NJ Transit and major highways. The Riverside section along the Passaic River provides scenic views and is experiencing gentrification, attracting visitors interested in waterfront activities and cultural events at venues like the Paterson Museum. Downtown Paterson near the transportation hub benefits from business travelers using the extensive bus and train connections, while also serving visitors attending events at venues like the William Paterson University campus. The Totowa section borders more affluent areas and attracts families visiting local colleges and medical facilities, plus offers easy highway access for guests traveling throughout North Jersey and New York metropolitan area.

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 the state 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%. These taxes are typically collected directly from guests at the time of booking through Airbnb's automated tax collection system for most jurisdictions, though hosts remain ultimately responsible for ensuring proper remittance. Tax payments must be filed monthly with the New Jersey Division of Taxation using Form ST-51 for sales tax and appropriate occupancy tax forms, with payments due by the 20th of the following month. 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 register for tax collection permits with both state and local authorities.

To start an Airbnb in Paterson, New Jersey, expect total costs of approximately $285,000-$315,000. Property purchase costs around $220,000 based on median home prices in the area. Furnishing a 2-3 bedroom property requires $15,000-$25,000 for quality furniture, bedding, kitchen essentials, and decor. Initial setup costs including professional photography, listing creation, and basic renovations total $3,000-$5,000. Permits and fees including business registration, short-term rental permits, and potential zoning compliance cost $500-$1,500. Insurance including landlord and short-term rental coverage runs $2,000-$3,000 annually. Utilities setup and deposits for electricity, gas, water, internet, and cable cost $500-$800. First six months operating costs including utilities ($1,800), cleaning services ($2,400), maintenance ($1,000), property management software ($300), and marketing ($500) total approximately $6,000. Additional considerations include potential HOA fees, property taxes, and a 10-15% contingency fund for unexpected expenses, bringing the comprehensive startup investment to the estimated range.

Airbnb properties in Paterson, New Jersey typically generate annual revenues between $15,000-$35,000 for entire home listings, with average daily rates ranging from $65-$120 depending on property size and location proximity to New York City. Operating expenses generally consume 40-60% of gross revenue, including cleaning fees ($30-50 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 downtown Paterson or with easy NYC transit access achieve higher occupancy rates of 60-75% compared to 40-55% for suburban locations. Successful hosts in the market typically maintain profit margins of 25-40% by optimizing pricing during peak periods like summer months and NYC events, investing in quality furnishings and amenities, and maintaining superhost status through consistent 4.8+ ratings. A typical 2-bedroom property purchased for $180,000 in Paterson's Eastside neighborhood can generate approximately $28,000 in annual revenue with $16,000 in expenses, yielding a 6.7% cash-on-cash return after mortgage payments, though properties within walking distance of transportation hubs like the Paterson train station command premium rates and achieve returns exceeding 10%.

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 like Eastside and Downtown Paterson 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 18-24 months, considering initial setup costs, furnishing expenses, and market establishment. Cash-on-cash returns are generally lower than gross ROI due to ongoing operational expenses including utilities, cleaning, maintenance, and Airbnb fees, which typically consume 30-40% of gross rental income. Properties purchased at $150,000-250,000 with 20-25% down payments can expect monthly gross revenues of $2,000-3,500 depending on property size, location, and seasonal demand fluctuations. The proximity to New York City enhances demand from business travelers and tourists, supporting occupancy rates of 65-75% annually, though local regulations and competition from traditional hotels may impact long-term profitability projections.

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 AirDNA provide market data and revenue projections for Paterson properties, while Mashvisor offers investment property analysis tools specific to the area. Roofstock, though primarily focused on traditional rentals, has expanded into short-term rental investments and covers the Paterson market. Local property management companies such as RedAwning and Vacasa operate in New Jersey and can assist with property acquisition and management in Paterson. Real estate investment firms like BiggerPockets connect investors with local agents experienced in Airbnb properties, and companies like Awning provide comprehensive services from property identification to management in the Paterson area. Additionally, local real estate brokerages such as Prominent Properties Sotheby's International Realty and Coldwell Banker have agents who specialize in investment properties suitable for short-term rentals in Paterson's growing market.