Is Salem, Massachusetts Good for Airbnb Investment?

To start an Airbnb in Salem, Massachusetts, begin by researching local regulations as Salem requires short-term rental operators to obtain a business license from the City Clerk's office and comply with zoning ordinances that may restrict rentals in certain residential areas. Contact the Salem Building Department to determine if you need special permits, as properties must meet health and safety codes including smoke and carbon monoxide detectors, and some areas may require conditional use permits. Find a suitable property by considering proximity to Salem's historic attractions like the Witch Museum and waterfront, ensuring the property allows short-term rentals per lease agreements or HOA rules. Furnish the space with quality basics including comfortable bedding, kitchen essentials, WiFi, and Salem-specific touches like local guidebooks and maps to historic sites. Create your Airbnb listing with professional photos highlighting unique features and Salem's walkability to attractions, setting competitive rates based on seasonal demand (October being peak due to Halloween tourism). For ongoing management, establish check-in procedures, maintain prompt guest communication, coordinate cleaning between stays, collect and remit Massachusetts 5.7% state lodging tax plus Salem's local room occupancy tax, keep detailed records for tax purposes, and consider hiring local property management companies like Awning or RedAwning if you live outside the area, while staying updated on Salem's evolving short-term rental regulations through the city's official website.

To identify profitable short-term rental properties in Salem, Massachusetts, focus on locations within walking distance of key attractions like the Salem Witch Museum, House of Seven Gables, and the historic waterfront district, particularly properties in the McIntire Historic District and Chestnut Street area which command premium rates during peak tourist season from September through November. Target 2-4 bedroom historic homes or condos with period features, parking availability, and modern amenities, as these typically generate $150-300 per night during peak season and $80-150 during off-season. Conduct pricing analysis using AirDNA and Mashvisor to evaluate average daily rates, occupancy rates (typically 60-75% annually in Salem), and seasonal demand patterns, while researching competition through Airbnb and VRBO to identify gaps in amenities or pricing strategies. Utilize the City of Salem's online permitting system to understand STR regulations and licensing requirements, partner with local property management companies like North Shore Vacation Rentals for market insights, and leverage Salem's tourism data from Destination Salem to understand visitor patterns and optimize your property's appeal to the estimated 1+ million annual tourists who visit this historic coastal city.

To obtain an Airbnb/STR permit in Salem, Massachusetts, you must first register with the Massachusetts Department of Revenue for state lodging taxes and obtain a Certificate of Registration, then apply to the City of Salem's Inspectional Services Department located at 93 Washington Street for a Short-Term Rental License. Required documents include a completed application form, proof of property ownership or lease agreement with landlord consent, floor plan of the rental unit, certificate of occupancy, proof of liability insurance (minimum $1 million), contact information for a local representative available 24/7, and the state lodging tax registration certificate. The city application fee is approximately $200-300 annually, plus state registration fees of around $50, and you may need additional inspections costing $100-150. Submit your complete application to Salem's Inspectional Services Department, schedule required safety and building code inspections, and allow 4-6 weeks for processing and approval. Salem-specific requirements include maintaining a local contact person within 25 miles who can respond to issues within one hour, limiting occupancy to no more than two guests per bedroom plus two additional guests, providing adequate parking, ensuring compliance with noise ordinances, and renewing your license annually by December 31st. The property must also meet all building, fire, and health codes, and you must collect and remit both state and local lodging taxes.

Short-term rentals (STRs) are legal in Salem, Massachusetts, but operate under strict regulations implemented in 2019-2020. The city requires all STR operators to obtain a business license and comply with zoning restrictions that limit rentals primarily to owner-occupied properties or properties in certain commercial districts. Salem prohibits STRs in some residential areas and requires operators to register with the city, maintain liability insurance, collect local taxes, and follow occupancy limits typically capped at 8-10 guests depending on the property size. The regulations were strengthened around 2020 following concerns about housing availability and neighborhood impacts, with the city implementing stricter enforcement mechanisms including fines for non-compliance. Properties must meet safety requirements including smoke and carbon monoxide detectors, and operators must provide emergency contact information to neighbors and the city, while also adhering to noise ordinances and parking requirements specific to Salem's dense historic neighborhoods.

The most promising Airbnb investment areas in Salem, Massachusetts include the McIntire Historic District, which attracts year-round visitors due to its proximity to the Peabody Essex Museum and historic mansions, commanding premium rates especially during October's Halloween season. Downtown Salem near Federal Street and Washington Square offers excellent walkability to major attractions like the Salem Witch Museum, House of Seven Gables, and Salem Maritime National Historic Site, making it ideal for tourists who prefer not to drive. The Chestnut Street area, known as one of America's most beautiful streets with its Federal-style architecture, appeals to upscale travelers and history enthusiasts willing to pay higher nightly rates. The Waterfront/Derby Wharf district provides scenic harbor views and easy access to ferry services to Boston, attracting both leisure tourists and business travelers, while the Forest River Park neighborhood offers a quieter alternative still within walking distance of downtown attractions. These areas benefit from Salem's peak season running from September through November when rates can triple, plus steady spring and summer tourism, with the city receiving over 1 million visitors annually drawn by its witch trial history, maritime heritage, and numerous festivals throughout the year.

In Salem, Massachusetts, Airbnb hosts must collect and remit a 6.25% Massachusetts state sales tax on all rental transactions, plus a 6% state room occupancy excise tax, for a combined state tax rate of 12.25%. Additionally, Salem imposes a local room occupancy tax of 6%, bringing the total tax burden to 18.25% on short-term rental bookings. These taxes apply to rentals of 90 days or less and are collected from guests at the time of booking. Hosts must register with the Massachusetts Department of Revenue to obtain a sales tax permit and file monthly returns by the 20th of the following month, remitting all collected taxes. The local portion is remitted to the City of Salem through the same state filing system. Airbnb can collect and remit these taxes on behalf of hosts through their platform's automated tax collection service for participating jurisdictions, though hosts remain ultimately responsible for compliance. Exemptions are limited and typically apply only to stays exceeding 90 consecutive days or rentals to certain tax-exempt organizations, with proper documentation required.

The total cost to start an Airbnb in Salem, Massachusetts is approximately $650,000-$750,000. Property purchase represents the largest expense at $500,000-$600,000 based on Salem's median home prices in 2024. Furnishing costs range from $15,000-$25,000 for a complete 2-3 bedroom property including beds, linens, kitchen essentials, living room furniture, and decor. Initial setup costs including professional photography, listing creation, and basic renovations total $3,000-$5,000. Permits and fees include a short-term rental license ($200), business registration ($500), and potential zoning compliance costs ($1,000-$2,000). Insurance premiums for short-term rental coverage cost $2,000-$3,000 annually. Utility setup and deposits for electricity, gas, water, internet, and cable total $1,500-$2,500. First six months operating costs including utilities ($1,200), cleaning services ($3,600), maintenance ($1,500), platform fees ($2,400 assuming $8,000 monthly revenue), supplies and amenities ($1,800), marketing ($1,000), and property management software ($300) total approximately $12,000-$15,000.

Airbnb properties in Salem, Massachusetts demonstrate strong seasonal profitability driven by the city's tourism appeal, particularly during Halloween season and summer months. Properties typically generate $75-150 per night during peak seasons (September-October and June-August) and $45-80 during off-peak periods, with annual revenues ranging from $25,000-45,000 for well-positioned properties. Operating expenses generally include 25-30% for Airbnb fees and taxes, $3,000-6,000 annually for utilities, $2,000-4,000 for maintenance and cleaning, and $1,500-3,000 for insurance, resulting in net profit margins of 35-50% for successful properties. Success factors include proximity to Salem's historic attractions like the Witch Museum and waterfront, professional photography, responsive hosting, and strategic pricing during peak events. Properties within walking distance of downtown Salem command premium rates, with some hosts reporting $60,000+ annual revenues from 2-3 bedroom units, while suburban properties typically earn $20,000-35,000 annually. The market benefits from Salem's year-round appeal beyond Halloween, including summer beach tourism, fall foliage, and historical tourism, though hosts must navigate local regulations and seasonal demand fluctuations to maximize profitability.

Airbnb investments in Salem, Massachusetts typically generate annual ROI of 12-18% due to the city's strong tourism market driven by its witch trial history and Halloween attractions. Cash-on-cash returns generally range from 8-14% annually, with properties near downtown Salem and historic districts performing at the higher end of this range. Most investors achieve profitability within 18-24 months, particularly for properties purchased in the $400,000-$600,000 range that can command nightly rates of $150-$300 depending on seasonality. Peak earning months of September through November can generate 40-60% of annual revenue, while summer months provide steady occupancy rates of 70-85%. Properties within walking distance of Salem Witch Museum, House of Seven Gables, and downtown attractions typically see occupancy rates of 75-90% annually, with successful operators reporting gross rental yields of 15-22% before expenses.

STRSearch is a national platform that helps investors identify profitable short-term rental properties in Salem, Massachusetts, offering market analysis and property recommendations. Local real estate agents specializing in Airbnb investments in Salem include Coldwell Banker Realty agents who focus on investment properties, RE/MAX agents with vacation rental expertise, and Keller Williams agents specializing in short-term rental acquisitions. National services include Mashvisor, which provides Airbnb profitability analysis for Salem properties, BiggerPockets for investor networking and deal finding, Awning for short-term rental investment guidance, and RedfinNow for quick property acquisitions. Local property management companies like North Shore Property Management and Salem Vacation Rentals offer turnkey Airbnb setup services, while investment firms such as Roofstock and Arrived Homes provide opportunities to invest in Salem rental properties. Additional services include AirDNA for market data analysis, Rabbu for Airbnb investment consulting, and local mortgage brokers like Salem Five Bank who understand investment property financing in the Massachusetts market.