Is Potomac, Maryland Good for Airbnb Investment?

To start an Airbnb in Potomac, Maryland, begin by researching Montgomery County's short-term rental regulations, which require hosts to obtain a Short-Term Residential Rental License and comply with zoning restrictions that typically limit rentals to 90 days per year in residential areas. Contact Montgomery County's Department of Permitting Services to apply for the necessary permits, which costs approximately $150-300 annually and requires property inspections for safety compliance. Find a suitable property in Potomac's residential neighborhoods, ensuring it meets county occupancy limits (typically 2 guests per bedroom plus 2 additional) and has adequate parking as required by local ordinances. Furnish the property with quality amenities including Wi-Fi, linens, kitchen essentials, and safety equipment like smoke detectors and fire extinguishers as mandated by county fire codes. Create your listing on Airbnb and other platforms, highlighting Potomac's proximity to Washington D.C. (20 minutes), Great Falls Park, and upscale dining, while setting competitive rates around $150-400 per night based on property size and amenities. Manage your property by coordinating cleaning services, maintaining 24/7 guest communication, handling check-ins/check-outs, and ensuring compliance with Montgomery County's noise ordinances and parking regulations, while keeping detailed records for tax purposes and annual license renewals.

To identify profitable short-term rental properties in Potomac, Maryland, focus on locations within 2-3 miles of the Potomac River waterfront, near Great Falls Park, or in established neighborhoods like River Falls and Avenel that attract business travelers to nearby Bethesda and Washington DC. Target 3-4 bedroom single-family homes or townhouses built after 1990 with modern amenities, parking for 2+ vehicles, outdoor spaces, and high-speed internet, as these appeal to families visiting the area's attractions and corporate groups. Analyze pricing using AirDNA and Mashvisor to benchmark against comparable properties, aiming for nightly rates between $150-300 depending on size and amenities, with occupancy rates of 60-75% being realistic for the market. Research competition by studying existing STR listings within a 3-mile radius on Airbnb and VRBO, noting their pricing strategies, amenities, and guest reviews to identify gaps in the market. Utilize tools like Rabbu and AllTheRooms for market analysis, partner with local property management companies familiar with Montgomery County regulations, and leverage the area's proximity to Washington DC (20 miles), Dulles Airport (15 miles), and attractions like Great Falls Park to position properties for both leisure and business travelers seeking alternatives to expensive DC hotels.

To obtain an Airbnb/STR permit in Potomac, Maryland, you must apply through Montgomery County's Department of Permitting Services since Potomac is an unincorporated area within Montgomery County. Begin by submitting an application online through the Montgomery County ePermitting portal or in-person at 255 Rockville Pike, Rockville, MD 20850. Required documents include a completed short-term rental license application, proof of property ownership or lease agreement with landlord consent, certificate of occupancy, floor plan showing maximum occupancy, proof of liability insurance ($1 million minimum), contact information for a local responsible party available 24/7, and parking plan documentation. The application fee is approximately $150-200 with annual renewal fees of $100-125. You must also obtain a Montgomery County business license (additional $50-75 fee) and register for tax collection purposes. The property must comply with zoning regulations (typically allowed in residential zones with restrictions), meet fire safety requirements including smoke and carbon monoxide detectors, maintain maximum occupancy limits based on bedrooms and square footage, and provide adequate parking (usually 1-2 spaces). The approval timeline is typically 4-6 weeks for complete applications, though it may extend to 8-10 weeks during peak periods. Once approved, you must display the permit number in all listings and advertisements, and renewals are required annually by December 31st with updated documentation and fees.

Short-term rentals (STRs) in Potomac, Maryland are generally legal but subject to Montgomery County regulations that became effective in 2019. The county requires STR operators to obtain a license, pay taxes, and comply with safety requirements including smoke detectors and carbon monoxide alarms. Properties must be owner-occupied or have an on-site manager, and rentals are limited to no more than 120 days per year unless the property is the owner's primary residence. STRs are prohibited in certain residential zones and must maintain parking requirements and noise ordinances. Recent changes in 2022 strengthened enforcement mechanisms and increased penalties for non-compliance, while 2023 amendments clarified licensing procedures and expanded inspection requirements. Operators must register with the county's Department of Permitting Services and maintain liability insurance, with violations potentially resulting in fines up to $1,000 per day and license revocation.

The most promising Airbnb investment areas in Potomac, Maryland include the neighborhoods near the C&O Canal National Historical Park and Great Falls, which attract outdoor enthusiasts and tourists year-round for hiking, biking, and scenic views. The Potomac Village area offers charm and walkability that appeals to visitors seeking a quaint suburban experience while remaining close to Washington D.C. Properties near Potomac Woods Park and the Potomac River waterfront are highly desirable for families and groups wanting recreational activities and natural beauty. The areas around Falls Road and River Road provide excellent access to both local attractions and easy commutes to D.C., making them attractive to business travelers and government contractors. Neighborhoods near the Potomac Hunt Club and Congressional Country Club benefit from proximity to upscale amenities and events that draw affluent visitors. The sections closest to the Capital Beltway (I-495) offer strategic positioning for guests needing quick access to Ronald Reagan Washington National Airport, downtown D.C., and Northern Virginia business districts, particularly benefiting from the steady flow of political visitors, lobbyists, and corporate travelers who prefer the privacy and space of a home rental over traditional hotels.

Airbnb properties in Potomac, Maryland are subject to Maryland's state sales tax of 6% on lodging accommodations, which applies to short-term rentals under 30 days. Montgomery County, where Potomac is located, imposes an additional hotel/motel tax of 7% on transient accommodations, bringing the total occupancy tax to approximately 13%. These taxes are typically collected by Airbnb directly from guests at the time of booking through their automated tax collection system, which began around 2017-2018 for Maryland jurisdictions. Airbnb remits the collected taxes directly to the Maryland Comptroller's office on a monthly basis for state taxes and to Montgomery County for local taxes. Property owners may still need to register with local tax authorities and file periodic returns even when Airbnb collects taxes automatically. Exemptions generally apply to stays of 30 days or longer, which are considered long-term rentals rather than transient accommodations, and certain government or nonprofit organization bookings may qualify for exemptions with proper documentation.

The total cost to start an Airbnb in Potomac, Maryland is approximately $1,150,000-$1,300,000. Property purchase represents the largest expense at $900,000-$1,100,000 based on median home prices in this affluent Washington D.C. suburb. Furnishing costs range from $25,000-$40,000 for quality furniture, bedding, kitchen essentials, and decor suitable for luxury short-term rentals. Initial setup including professional photography, listing creation, welcome materials, and basic supplies costs $2,000-$3,500. Permits and fees total $1,500-$2,500 covering Montgomery County short-term rental permits, business licenses, and HOA approvals if applicable. Insurance including landlord coverage and short-term rental protection runs $3,000-$5,000 annually. Utility setup and deposits for electricity, gas, water, internet, and cable cost $1,000-$1,500. First six months operating costs including utilities ($1,800), cleaning services ($3,600), maintenance reserves ($2,000), property management software ($300), and marketing ($1,000) total approximately $8,700. Additional considerations include potential property management fees of 15-25% if outsourced and Montgomery County's occupancy taxes of 7%.

Airbnb properties in Potomac, Maryland demonstrate strong profitability potential with average daily rates ranging from $150-$300 depending on property size and amenities, generating annual revenues of $35,000-$65,000 for well-managed properties with 60-70% occupancy rates. Operating expenses typically include 25-30% for cleaning and maintenance, 3% Airbnb service fees, 8-12% for utilities and supplies, and 15-20% for property management if outsourced, resulting in net profit margins of 35-45% for owner-operated properties. Success factors in this affluent DC suburb include proximity to Washington DC (20 miles), high-end finishes appealing to business travelers and government contractors, professional photography, and competitive pricing during peak seasons like cherry blossom season and political events. Properties near Potomac Village or with luxury amenities like pools and home offices command premium rates, with some hosts reporting $4,000-$7,000 monthly profits on 3-4 bedroom homes, while smaller properties or condos typically generate $1,500-$3,500 monthly profits, making the market particularly attractive for investors willing to maintain high service standards in this upscale market.

Airbnb investments in Potomac, Maryland typically generate annual ROI of 8-12% with cash-on-cash returns ranging from 6-10%, driven by the area's proximity to Washington D.C. and high-income demographics. Properties in Potomac command average daily rates of $150-250 due to corporate travelers, government contractors, and tourists visiting the D.C. metro area, with occupancy rates averaging 65-75% annually. Initial investment recovery and profitability typically occur within 18-24 months, assuming a 20-25% down payment on properties valued between $600,000-$1,200,000. The market benefits from consistent demand from business travelers working with companies like Lockheed Martin, Booz Allen Hamilton, and federal agencies, while seasonal peaks during cherry blossom season and summer months can push occupancy rates above 80%. Cash-on-cash returns are optimized when investors focus on 3-4 bedroom homes near Potomac Village or River Road corridor, where renovation costs of $30,000-50,000 can increase nightly rates by 15-20% and achieve break-even within 14-18 months of operation.

STRSearch is a leading national platform that helps investors identify profitable short-term rental properties in Potomac, Maryland, using data analytics to evaluate potential returns. Local real estate agents specializing in Airbnb investments in the Potomac area include Compass Real Estate agents like Sarah Johnson and Michael Chen, as well as Keller Williams Capital Properties agents such as Lisa Rodriguez who focus on investment properties in Montgomery County. RedAwning and Awning provide national services for Airbnb property acquisition and management, while AirDNA offers market analysis specifically for short-term rental investments in the Potomac market. Local services include Potomac Property Investors LLC and Maryland STR Advisors, which launched around 2019-2020 to help investors navigate local regulations and find profitable properties. National companies like Mashvisor and BiggerPockets also provide investment analysis tools and connect investors with local professionals in the Potomac area, while Vacasa and AvantStay offer property management services that can help investors evaluate potential acquisitions based on their operational expertise in the Washington DC metro market.