Is Providence, Rhode Island Good for Airbnb Investment?

To start an Airbnb in Providence, Rhode Island, begin by researching local regulations as Providence requires short-term rental operators to obtain a business license and register with the city's Planning Department, with properties limited to hosting no more than 90 days per year unless you're an owner-occupant. Contact the Providence Planning Department at 401-421-7740 to understand zoning restrictions, as many residential areas prohibit short-term rentals, and obtain necessary permits including a Certificate of Occupancy and potentially a Special Use Permit depending on your property's zoning. Find a suitable property by focusing on neighborhoods like Federal Hill, The Hill, or downtown areas where short-term rentals are more likely to be permitted, ensuring the property meets safety requirements including smoke detectors, carbon monoxide detectors, and proper egress windows. Furnish the space with quality basics including comfortable bedding, essential kitchen appliances, WiFi, and local guidebooks, while ensuring compliance with Rhode Island's innkeeper laws regarding liability insurance coverage of at least $1 million. Create your Airbnb listing with professional photos, detailed descriptions emphasizing proximity to Brown University, RISD, and downtown attractions, and competitive pricing based on comparable properties in Providence averaging $80-150 per night in 2023. Manage your property by establishing clear house rules, maintaining responsive communication with guests, coordinating cleaning between stays, and keeping detailed records for tax purposes as Rhode Island requires collection of 7% state sales tax plus 1% local occupancy tax on short-term rental income.

To identify profitable short-term rental properties in Providence, Rhode Island, focus on location criteria including proximity to Brown University, RISD, downtown Federal Hill, and the Historic Hill neighborhood, as these areas attract students, business travelers, and tourists year-round. Target properties with 2-4 bedrooms, parking availability, updated kitchens and bathrooms, and unique character features like historic details that appeal to visitors seeking authentic New England experiences. Conduct pricing analysis using AirDNA and Mashvisor to evaluate average daily rates ($80-150 depending on season and location), occupancy rates (typically 60-75% annually), and seasonal demand patterns, with peak periods during university events, summer months, and fall foliage season. Research competition by analyzing similar properties within a 1-mile radius using Airdna, STR Helper, and manual searches on Airbnb and VRBO to identify gaps in amenities or pricing strategies. Utilize Providence-specific resources including the city's STR registration requirements, Rhode Island MLS data through local real estate agents, neighborhood crime statistics from Providence Police Department, and walkability scores from Walk Score to ensure properties meet both regulatory compliance and guest expectations while maximizing revenue potential in this compact but diverse market.

To obtain an Airbnb/STR permit in Providence, Rhode Island, you must first register your property with the City of Providence's Department of Inspections and Standards by submitting an application through their online portal or visiting City Hall at 25 Dorrance Street. Required documents include a completed short-term rental registration form, proof of property ownership or lease agreement, certificate of occupancy, fire safety inspection certificate from the Providence Fire Department, general liability insurance policy with minimum $1 million coverage naming the city as additional insured, floor plan showing maximum occupancy, and contact information for a local responsible party available 24/7. The registration fee is approximately $200 annually, with additional inspection fees of around $150. Providence requires properties to maintain a maximum occupancy of two people per bedroom plus two additional guests, install smoke and carbon monoxide detectors in all bedrooms and common areas, provide emergency contact information to neighbors within 200 feet, maintain off-street parking when available, and comply with noise ordinances with quiet hours from 10 PM to 8 AM. The timeline typically takes 4-6 weeks from application submission to permit approval, provided all inspections pass and documentation is complete. Properties must also comply with zoning regulations, with some residential zones having restrictions on short-term rentals, and operators must collect and remit the 8.5% Rhode Island sales tax plus local hotel tax of 5%.

Short-term rentals (STRs) are legal in Providence, Rhode Island, but operate under strict regulations implemented in 2019. The city requires STR operators to obtain a business license and register their properties, with different rules for owner-occupied versus non-owner-occupied units. Owner-occupied STRs (where the host lives on-site) face fewer restrictions, while non-owner-occupied units are subject to a cap system and stricter oversight. Properties must meet safety requirements including smoke and carbon monoxide detectors, and operators must maintain liability insurance. STRs are prohibited in certain residential zones and cannot operate in buildings with three or more units unless specifically permitted. The city has established a complaint process for neighbors and requires operators to provide local contact information for guests. Recent enforcement efforts have focused on unregistered operators, with the city actively pursuing compliance through fines and legal action against violators.

The best Airbnb investment areas in Providence, Rhode Island include Federal Hill, known for its authentic Italian restaurants and proximity to downtown attractions, drawing food tourists and weekend visitors year-round. The Hill neighborhood offers Victorian architecture and walkability to Brown University and RISD, attracting visiting families, prospective students, and academic conference attendees. Downtown Providence near the Arts & Entertainment District benefits from proximity to the Providence Performing Arts Center, convention center, and Waterfire events, capturing business travelers and cultural tourists. The Elmwood and South Side neighborhoods provide affordable investment opportunities while remaining close to downtown attractions and offering authentic local experiences. Fox Point appeals to visitors wanting historic charm near the waterfront and easy access to both downtown and university areas, particularly during graduation seasons and summer months when tourism peaks around Newport day trips and coastal activities.

In Providence, Rhode Island, Airbnb hosts are subject to multiple lodging taxes including the state hotel tax of 5.5% and the Providence local occupancy tax of 6%, for a combined rate of 11.5% on gross rental receipts. These taxes apply to all short-term rentals under 30 days and are collected by Airbnb directly from guests at the time of booking through their automated tax collection system, which began around 2019. Airbnb remits these taxes quarterly to both the Rhode Island Division of Taxation and the City of Providence on behalf of hosts, though hosts remain ultimately responsible for compliance and should verify proper collection and remittance. The state requires registration with the Division of Taxation and the city requires a short-term rental license, with exemptions typically limited to rentals exceeding 28 consecutive days or owner-occupied properties renting fewer than 3 rooms, though specific exemption criteria may vary and hosts should confirm current requirements with local authorities as regulations have evolved significantly since 2018.

Starting an Airbnb in Providence, Rhode Island requires approximately $380,000-$450,000 in total initial investment. Property purchase costs average $320,000-$380,000 based on median home prices in desirable neighborhoods like Federal Hill or The Hill. Furnishing a 2-3 bedroom property runs $15,000-$25,000 including beds, linens, kitchen essentials, living room furniture, and décor. Initial setup costs of $3,000-$5,000 cover professional photography, listing creation, smart locks, and basic technology upgrades. Permits and fees total $500-$1,200 including business license, short-term rental permit, and potential zoning approvals. Insurance increases by $1,500-$2,500 annually for short-term rental coverage beyond standard homeowner's insurance. Utility setup and deposits cost $500-$800 for electricity, gas, water, internet, and cable. First six months operating costs include $3,600 for utilities, $1,800 for cleaning services, $1,200 for supplies and maintenance, $600 for platform fees, and $2,400 for marketing and miscellaneous expenses, totaling approximately $9,600. Additional considerations include potential property management fees of 15-25% if outsourced and emergency repair fund of $2,000-$3,000.

Airbnb properties in Providence, Rhode Island typically generate average daily rates of $85-120 depending on location and property type, with downtown and Federal Hill properties commanding premium rates around $110-140 per night. Annual gross revenues for well-managed properties range from $18,000-35,000, with expenses including cleaning fees ($25-40 per turnover), utilities ($150-250 monthly), property management (15-25% of revenue), insurance ($800-1,200 annually), and maintenance costs averaging 8-12% of gross revenue. Net profit margins typically range from 25-40% for owner-operated properties, with successful hosts near Brown University, the Arts & Entertainment District, and historic Federal Hill achieving higher occupancy rates of 65-75% annually. Properties within walking distance of downtown attractions like WaterFire events and the Convention Center consistently outperform suburban listings, with some hosts reporting annual net profits of $12,000-18,000 on single-family properties purchased for $200,000-300,000, representing solid 4-6% cash-on-cash returns when factoring in mortgage payments, though seasonal fluctuations between summer peak months (June-September) and winter lows significantly impact cash flow consistency.

Airbnb investments in Providence, Rhode Island typically generate annual ROI of 8-12% with cash-on-cash returns ranging from 6-10% depending on property location and management efficiency. Properties near Brown University, downtown Federal Hill, and the Historic Federal Hill neighborhood command premium rates of $80-150 per night, with occupancy rates averaging 65-75% annually. Initial profitability usually occurs within 12-18 months for well-positioned properties, with investors seeing break-even on renovation costs within 2-3 years. The Providence market benefits from consistent demand from university visitors, medical tourism to local hospitals, and business travelers, with seasonal peaks during graduation periods and summer months driving higher returns. Properties requiring $20,000-40,000 in initial setup costs typically generate $15,000-25,000 in annual net income after expenses, maintenance, and platform fees, making the timeframe to full investment recovery approximately 4-6 years for most investors in the Providence market.

STRSearch is a national platform that helps investors identify profitable short-term rental properties in Providence, Rhode Island, along with local real estate agents like Keller Williams Realty of Newport County and RE/MAX Properties who have experience with investment properties in the Providence market. National services include Mashvisor, which provides Airbnb analytics for Providence properties, AirDNA for market data analysis, and BiggerPockets for investor networking and deal sourcing. Local specialists include Ocean State Real Estate Investment Group, Providence Property Management Company, and Blackstone Valley Real Estate, while national companies like Awning, RedAwning, and AvantStay offer turnkey Airbnb investment services. Additional resources include local property management companies such as Rhode Island Property Solutions and New England Vacation Rentals, along with national platforms like Roofstock and Fundrise that occasionally feature Providence-area short-term rental opportunities.