Is Westerly, Rhode Island Good for Airbnb Investment?

To start an Airbnb in Westerly, Rhode Island, begin by researching local zoning laws and regulations through the Westerly Planning Department, as the town requires short-term rental operators to obtain a business license and comply with specific occupancy limits and safety requirements. Contact the Rhode Island Department of Health for lodging establishment permits if operating more than 5 rooms, and ensure compliance with state tax registration through the Rhode Island Division of Taxation for collecting and remitting the 7% state sales tax plus 1% local hotel tax. Find a suitable property in residential zones that allow short-term rentals, focusing on areas near Westerly's beaches like Watch Hill or downtown attractions, with properties typically ranging from $300,000-$800,000 depending on proximity to water. Furnish the space with coastal-themed decor, essential amenities including WiFi, air conditioning, and beach equipment, budgeting approximately $15,000-$25,000 for a complete setup. Create listings on Airbnb, VRBO, and Booking.com with professional photography highlighting ocean views or historic charm, setting competitive rates of $150-$400 per night depending on season and location. Implement management systems including automated messaging, professional cleaning services costing $75-$125 per turnover, and consider hiring local property management companies like Vacasa or RedAwning if managing remotely, while maintaining compliance with noise ordinances and parking restrictions that are strictly enforced in Westerly's residential neighborhoods.

To identify profitable STR properties in Westerly, Rhode Island, focus on locations within 0.5-1 mile of Westerly State Beach, Watch Hill, or downtown Westerly's historic district, as these areas command premium nightly rates of $200-400 during peak summer months (June-September). Target 3-4 bedroom single-family homes or beach cottages built after 1950 with parking for 2+ cars, outdoor spaces, and modern amenities like central air and updated kitchens, as these features are essential for competing with established vacation rentals. Conduct pricing analysis using AirDNA and Mashvisor to benchmark against similar properties, aiming for annual gross revenues of $40,000-80,000 with occupancy rates above 60% during peak season. Research competition by analyzing the top 20 STR listings within a 2-mile radius, noting their pricing strategies, amenities, and guest reviews to identify market gaps. Utilize Zillow, Realtor.com, and local MLS data through Mott & Chace Sotheby's or Residential Properties to identify properties under $600,000 that can generate 8-12% annual returns, while checking Westerly's zoning regulations and STR permit requirements through the town's planning department, as some residential zones have restrictions on short-term rentals.

To obtain an Airbnb/STR permit in Westerly, Rhode Island, you must first contact the Westerly Building and Zoning Department at Town Hall located at 45 Broad Street to determine if short-term rentals are permitted in your specific zoning district, as regulations vary by zone. Submit an application for a Special Use Permit or Conditional Use Permit (depending on your property type) along with required documents including a site plan, floor plan showing maximum occupancy, proof of property ownership, certificate of insurance with minimum $1 million liability coverage, septic system compliance certificate if applicable, and parking plan showing adequate off-street parking spaces. Pay the application fee of approximately $200-400 and attend a public hearing before the Zoning Board, which typically occurs within 30-45 days of application submission. Once approved, obtain a business license from the Town Clerk's office for approximately $50 annually, register with the Rhode Island Division of Taxation for state lodging taxes, and ensure compliance with fire safety codes including smoke detectors, carbon monoxide detectors, and emergency egress requirements. The entire process typically takes 60-90 days from initial application to final approval, and you must renew permits annually while maintaining compliance with occupancy limits (usually 2 people per bedroom plus 2 additional), noise ordinances, and parking requirements specific to Westerly's coastal community standards.

Short-term rentals (STRs) are legal in Westerly, Rhode Island, but subject to local regulations and state oversight. The town requires STR operators to obtain a business license and comply with zoning restrictions, with rentals generally permitted in residential areas but potentially limited in certain historic or environmentally sensitive zones. Properties must meet health and safety standards, including proper egress, smoke detectors, and occupancy limits, while operators are required to collect and remit state lodging taxes of 13% (8.5% state sales tax plus 4.5% hotel tax). Westerly has implemented noise ordinances and parking requirements to address neighborhood concerns, and like many Rhode Island coastal communities, the town has been monitoring the impact of STRs on housing availability and community character. Recent changes around 2022-2023 included enhanced enforcement mechanisms and clearer registration requirements, with the state also strengthening its oversight through the Division of Taxation's STR registration system to ensure compliance with tax obligations and safety standards.

The best areas for Airbnb investment in Westerly, Rhode Island are the Weekapaug and Watch Hill neighborhoods, which command premium rates due to their exclusive beachfront locations, historic charm, and proximity to luxury amenities that attract affluent summer visitors from New York and Boston. The downtown Westerly area near the Amtrak station offers year-round potential with business travelers and visitors to the historic Granite Theatre, while properties near Misquamicut State Beach provide strong summer rental demand from families seeking affordable beach access with amenities like water parks and restaurants. The Shelter Harbor area appeals to guests wanting a quieter coastal experience with access to championship golf courses and upscale dining, while neighborhoods near Napatree Point attract nature enthusiasts and bird watchers seeking pristine barrier beach experiences, making these areas collectively strong for seasonal rentals from May through October with potential for weekend bookings during shoulder seasons.

In Westerly, Rhode Island, Airbnb hosts are subject to the state's 7% hotel tax on gross receipts from short-term rental accommodations under 30 days, which is collected by the Rhode Island Division of Taxation and must be remitted monthly if collections exceed $100 or quarterly if less. Additionally, hosts must pay the state's 7% sales tax on rental income, also collected and remitted through the same system. Westerly imposes a local hotel/motel tax of 3% on short-term rentals, bringing the total occupancy tax burden to approximately 17% when combined with state taxes. Tax collection typically occurs through Airbnb's automated system for participating jurisdictions, though hosts may need to register directly with the Rhode Island Division of Taxation and obtain a sales tax permit. Exemptions generally apply to rentals exceeding 30 consecutive days, which are considered long-term leases rather than transient accommodations, and some exemptions may exist for certain non-profit or charitable organizations, though specific documentation and approval are required for such cases.

Starting an Airbnb in Westerly, Rhode Island requires a total investment of approximately $650,000-$750,000. Property purchase costs average $525,000 based on median home prices in the area as of 2023. Furnishing a 2-3 bedroom property runs $15,000-$25,000 including beds, linens, kitchen essentials, and living room furniture. Initial setup costs including professional photography, listing creation, and basic renovations total $3,000-$5,000. Permits and licensing fees in Westerly range from $500-$1,500 annually, including business registration and short-term rental permits. Insurance premiums for short-term rental coverage cost $2,000-$3,500 annually. Utility setup and deposits for electricity, water, gas, internet, and cable run $500-$800 initially. First six months of operating costs including utilities ($1,200/month), cleaning services ($150 per turnover), maintenance ($300/month), Airbnb fees (3% host fee), property management software ($50/month), and marketing expenses total approximately $8,000-$12,000, assuming 60% occupancy rates during the initial period.

Airbnb properties in Westerly, Rhode Island demonstrate strong seasonal profitability, with average annual revenues ranging from $35,000-$65,000 for typical 2-3 bedroom properties near beaches like Misquamicut State Beach. Properties within walking distance of Watch Hill or Weekapaug command premium rates of $300-$500 per night during peak summer months (June-September), while off-season rates drop to $150-$250. Operating expenses typically include 25-30% for cleaning and maintenance, 10-15% for property management, 8-12% for utilities, and 3% Airbnb service fees, resulting in net profit margins of 35-45% for well-managed properties. Success factors include proximity to beaches (properties within 0.5 miles of ocean access see 40% higher occupancy), professional photography showcasing coastal views, and amenities like outdoor showers, beach equipment, and parking. A case study of a renovated 1920s cottage near Napatree Point generated $58,000 in 2023 revenue with 78% occupancy rate, achieving 42% profit margin after $33,600 in total expenses including mortgage interest, taxes, insurance, and operational costs, demonstrating the market's potential for investors willing to maintain high property standards and guest experience.

Airbnb investments in Westerly, Rhode Island typically generate annual ROI of 8-12% with cash-on-cash returns ranging from 6-10%, driven by the town's proximity to popular beaches like Misquamicut and Watch Hill attracting summer tourists. Properties within walking distance of beaches command premium rates of $200-400 per night during peak season (June-September), while off-season rates drop to $80-150 per night. Initial investment recovery and profitability typically occurs within 3-5 years, assuming 60-70% annual occupancy rates and average property acquisition costs of $400,000-600,000 for suitable rental properties. The market benefits from consistent demand from New York and Boston metropolitan areas, with successful operators achieving gross rental yields of 10-15% annually, though investors should factor in seasonal fluctuations, property management costs of 15-25%, and local regulations that may impact short-term rental operations.

STRSearch is a leading national platform that specializes in identifying profitable short-term rental properties for investors looking in Westerly, Rhode Island. Local real estate agents like those at Lila Delman Real Estate and Residential Properties Ltd have extensive knowledge of the Westerly market and can identify properties with strong Airbnb potential near beaches like Misquamicut State Beach. National services include AirDNA which provides market analytics for short-term rentals, Mashvisor offering investment property analysis tools, and BiggerPockets connecting investors with local experts. RedAwning and Vacasa provide property management services that can help investors understand operational aspects before purchasing. Local agents at William Raveis Real Estate and Century 21 Access America have experience with vacation rental properties in the area. Additional national platforms like Roofstock, which recently expanded into short-term rental investments, and STR Helper provide market research and property identification services. Local property management companies such as Ocean House Management and Coastal Property Services can provide insights into which neighborhoods and property types perform best for Airbnb investments in Westerly's competitive vacation rental market.