Is Tacoma, Washington Good for Airbnb Investment?

To start an Airbnb in Tacoma, Washington, begin by researching the city's short term rental regulations, which require hosts to obtain a business license from the City of Tacoma and comply with zoning restrictions that typically allow short term rentals in residential areas with certain limitations on the number of days per year (usually around 90 to 120 days for non hosted rentals).

Launch checklist

• Next, secure the necessary permits including a Tacoma business license ($25 to 50 annually), ensure your property meets fire safety codes, and verify compliance with Pierce County health department requirements if applicable.
• Find a suitable property in neighborhoods like North End, Stadium District, or Proctor District that are popular with visitors, ensuring it's zoned for short term rentals and considering proximity to attractions like Point Defiance Park, the Museum District.
• Furnish the space with quality basics including comfortable bedding, kitchen essentials, WiFi, and local guidebooks, while ensuring all safety equipment like smoke detectors and fire extinguishers are installed and up to code.
• Create your Airbnb listing with professional photos, competitive pricing (typically $80 to 150/night depending on size and location), and highlight Tacoma's attractions like the Chihuly Bridge of Glass, waterfront views.
• Finally, manage your property by establishing check in procedures, maintaining cleanliness standards, responding promptly to guests, coordinating cleaning between stays.

To identify profitable short term rental properties in Tacoma, Washington, focus on locations within 2 to 3 miles of major attractions like Point Defiance Park, the Museum District, and downtown waterfront areas, as well as properties near University of Puget Sound and Tacoma Community College for consistent demand.

What to prioritize

• Target 2 to 4 bedroom single family homes or condos built after 1990 with parking, outdoor spaces, and modern amenities, particularly in neighborhoods like North End, Stadium District, and Proctor District where property values range from $400,000 to $800,000.
• Conduct pricing analysis using AirDNA and Mashvisor to identify properties where potential STR revenue exceeds long term rental income by at least 40 to 60%, with average daily rates in Tacoma ranging from $80 to $150 depending on size and location.
• Research competition by analyzing existing Airbnb and VRBO listings within a 1 mile radius, noting occupancy rates typically range from 60 to 75% annually, and identify gaps in amenities or property types.
• Utilize tools like Rabbu, STR Helper, and local MLS data through Redfin or Zillow, while consulting Tacoma's municipal code 13.06A for STR regulations and obtaining necessary business licenses.

To obtain an Airbnb/STR permit in Tacoma, Washington, you must apply through the City of Tacoma's Planning and Development Services Department either online via their permit portal or in person at 747 Market Street.

Documents and approvals

• Required documents include a completed short term rental business license application, proof of property ownership or lease agreement with landlord consent, floor plan showing maximum occupancy, parking plan demonstrating adequate off street parking.
• The application fee is approximately $200 to 300 for the business license plus additional fees for inspections totaling around $400 to 500.
• You must also comply with Tacoma's specific requirements including maximum occupancy of 2 people per bedroom plus 2 additional guests, mandatory smoke and carbon monoxide detectors, fire extinguisher on each floor, emergency contact information posted inside the unit.
• The approval timeline typically takes 4 to 8 weeks depending on inspection scheduling and any required corrections.
• Properties in certain residential zones may face additional restrictions, and you must renew the license annually while maintaining compliance with all safety and zoning requirements throughout operation.

Short term rentals (STRs) are legal in Tacoma, Washington, but operate under a comprehensive regulatory framework established in 2019 and refined through 2023.

Core operating requirements

• The city requires STR operators to obtain a business license and comply with zoning restrictions that limit STRs primarily to commercial and mixed use zones.
• Properties must meet safety requirements including smoke and carbon monoxide detectors, fire extinguishers, and emergency egress standards, while operators must collect and remit city taxes and maintain liability insurance.
• Recent changes in 2022 to 2023 have strengthened enforcement mechanisms and increased penalties for non compliance, with the city actively monitoring platforms like Airbnb and Vrbo for unlicensed operations.
• Tacoma's approach balances allowing the STR industry while protecting neighborhood character and housing stock, with ongoing discussions about potential further restrictions in response to housing affordability concerns.

The best Airbnb investment areas in Tacoma, Washington include the Stadium District, which attracts visitors to the Tacoma Dome for concerts and events, plus offers walkability to restaurants and nightlife; Point Defiance area near the zoo, aquarium, and park draws families and tourists year round. The Stadium District and Downtown typically generate the highest occupancy rates due to event driven demand and business travel, while Point Defiance offers consistent family tourism throughout the year, making these three areas the most lucrative for Airbnb investments in Tacoma.

In Tacoma, Washington, Airbnb hosts must collect and remit a 14.1% lodging tax, which consists of the state sales tax (6.5%), Pierce County tax (0.4%), and Tacoma's lodging tax (7.2%).

Taxes and filing responsibilities

• The tax applies to stays of less than 30 consecutive days and is collected from guests at the time of booking through Airbnb's automatic tax collection system for most properties.
• Hosts must register with the Washington State Department of Revenue and obtain a business license, then file monthly returns by the 25th of the following month, remitting taxes collected.
• Additionally, there's a $2 per night Tourism Promotion Area (TPA) assessment that applies to certain areas within Tacoma.
• Exemptions include stays of 30 days or longer, which are considered residential rentals in preference to transient accommodations.
• Hosts operating without proper registration face penalties, and the city requires short term rental operators to obtain permits and comply with zoning regulations, with fees typically ranging from $200 to 400 annually for permit renewals.

To start an Airbnb in Tacoma, Washington, the total estimated costs would be approximately $485,000 to $535,000.

Cost breakdown

• Property purchase costs around $425,000 based on Tacoma's median home price as of 2023.
• Furnishing a typical 2 to 3 bedroom property ranges from $15,000 to $25,000 including furniture, appliances, linens, and décor from retailers like IKEA, Wayfair, and local stores.
• Initial setup costs including professional photography, listing creation, and basic renovations total approximately $3,000 to $5,000.
• Permits and fees vary but typically include a business license ($25), short term rental permit ($200 to $500), and potential HOA approvals.
• Insurance specifically for short term rentals costs around $1,200 to $2,000 annually through companies like Proper Insurance or CBIZ.
• Utility setup and deposits for electricity, water, gas, internet, and cable total roughly $500 to $800.
• First six months of operating costs including utilities ($200/month), cleaning services ($75 per turnover), property management software like Airbnb or VRBO fees (3% of bookings), maintenance reserves.

Airbnb properties in Tacoma, Washington demonstrate moderate profitability with average annual revenues ranging from $18,000 to $35,000 for typical 2 to 3 bedroom homes, while expenses including mortgage, utilities, cleaning, maintenance, and Airbnb fees typically consume 60 to 75% of gross revenue. Properties near the waterfront, University of Puget Sound, and downtown areas command premium rates of $80 to 150 per night compared to $50 to 90 for suburban locations.

Profitability indicators

• Success factors include proximity to Point Defiance Park, the Museum District, and easy access to Seattle (45 minutes), with properties featuring modern amenities, professional photography, and consistent 4.8+ star ratings achieving occupancy rates of 65 to 80%.
• A case study of a renovated 1920s craftsman near Wright Park generated $28,000 in 2023 revenue with $19,000 in expenses, yielding a 32% profit margin.

Airbnb investments in Tacoma, Washington typically generate annual ROI of 8 to 12% with cash on cash returns ranging from 6 to 10% depending on property type and location within the city.

Return planning figures

• Properties in downtown Tacoma near the waterfront and University of Puget Sound area tend to perform better, achieving the higher end of these ranges, while suburban properties may see returns closer to 6 to 8%.
• Initial profitability usually occurs within 12 to 18 months after accounting for startup costs including furnishing, permits, and initial marketing expenses.
• The Tacoma market benefits from proximity to Seattle tourism overflow, military personnel from Joint Base Lewis McChord seeking temporary housing, and business travelers, with average daily rates ranging from $85 to 140 depending on property size and amenities.
• Occupancy rates typically average 65 to 75% annually, with peak seasons during summer months and university events driving higher demand and pricing.

STRSearch is a national platform that specializes in identifying profitable short term rental properties for investors in Tacoma, Washington.

Companies and resources

• Local real estate agents like Windermere Real Estate and John L.
• Scott have agents experienced in investment properties and short term rental markets in the Tacoma area.
• Mashvisor, a national real estate analytics platform founded around 2014, provides Airbnb investment analysis tools for Tacoma properties.
• BiggerPockets, established in 2004, offers networking and resources for real estate investors including those focused on short term rentals in Washington markets.
• Local property management companies like RedAwning and Vacasa (founded in 2009) help investors manage Airbnb properties in Tacoma while also assisting with property acquisition.
• AirDNA, launched in 2015, provides market data and analytics specifically for short term rental investments in the Tacoma market.
• Roofstock, a national platform founded in 2015, occasionally features turnkey rental properties suitable for Airbnb conversion in the Tacoma area.
• Local investment groups and meetups through platforms like BiggerPockets connect Tacoma area investors with agents and services specializing in short term rental properties.