Airbnb Lexington-Fayette, Kentucky: Market Data, Laws & Investor Guide

Are you looking for a lucrative opportunity to start a short-term rental business? Look no further than Lexington-Fayette, Kentucky! This charming city, nestled in the heart of the Bluegrass State, offers a unique blend of Southern hospitality, rich history, and modern amenities that make it an ideal destination for Airbnb hosts.

In recent years, Lexington-Fayette has experienced a surge in tourism, with visitors flocking to the city for its world-renowned horse racing events, vibrant culinary scene, and picturesque landscapes. In fact, the city welcomed over 3.5 million visitors in 2023, generating a staggering $2.3 billion in tourism revenue. This growing demand for accommodations presents a golden opportunity for savvy entrepreneurs to capitalize on the Airbnb market.

Moreover, Lexington-Fayette's strategic location makes it easily accessible from major cities like Louisville, Cincinnati, and Nashville, further expanding your potential guest pool. With the city's ongoing development projects, such as the expansion of the Lexington Convention Center and the revitalization of the downtown area, the future looks bright for Airbnb hosts in Lexington-Fayette.

As the travel industry continues to rebound in the post-pandemic era, short-term rentals have emerged as a preferred choice for travelers seeking more space, privacy, and flexibility. By starting your Airbnb business in Lexington-Fayette, Kentucky, you can tap into this growing market and create a profitable venture that showcases the best of what this delightful city has to offer.

Lexington-Fayette Short-Term Rental Market Analysis

Lexington-Fayette, Kentucky has seen significant growth in its short-term rental market over the past two years. According to data from AirDNA, the city has experienced the following trends:

• Occupancy Rate: In 2023, the average occupancy rate for short-term rentals in Lexington-Fayette was 58%, a slight increase from 56% in 2022.
• Average Daily Rate: The average daily rate for Airbnb listings in Lexington-Fayette was $140 in 2023, up from $135 in 2022.
• Seasonality: Lexington-Fayette experiences peak Airbnb demand during the spring and fall months, particularly during major events like the Kentucky Derby and the Keeneland Race Meets.

Comparing data from Mashvisor, we can see the following growth in Lexington-Fayette's short-term rental market:

1. In 2024, the average monthly Airbnb rental income in Lexington-Fayette is $2,574, a 5.2% increase from $2,646 in 2023.
2. The average Airbnb daily rate in 2024 is $145, up from $140 in 2023.
3. The average Airbnb occupancy rate in 2024 is 60%, a slight increase from 58% in 2023.

Lexington-Fayette's tourism industry has experienced steady growth over the past two years. In 2023, the city welcomed over 3.5 million visitors, generating a staggering $2.3 billion in tourism revenue, a 9.3% increase from 2022. The city's strategic location, coupled with ongoing development projects like the expansion of the Lexington Convention Center, has contributed to this growth.

Key events and festivals that boost tourism in Lexington-Fayette include:

1. Kentucky Derby (May)
2. Keeneland Race Meets (April and October)
3. Festival of the Bluegrass (June)
4. Railbird Music Festival (August)
5. Lexington Barbecue Festival (September)

According to Airbnb host forums, the average booking duration in Lexington-Fayette is 2-3 nights, with longer stays common during major events. The mid-term rental market, particularly monthly rentals, has shown strength in the city, with many travelers seeking extended stays for work or leisure.

Best Neighborhoods in Lexington-Fayette for an Airbnb Business

When searching for the ideal location to start an Airbnb business in Lexington-Fayette, hosts should consider factors such as proximity to popular attractions, up-and-coming areas, and tourist hotspots. By analyzing data from reputable sources like AirDNA and Mashvisor, we've identified the top 5 neighborhoods that offer the best potential for a successful Airbnb venture.

1. Downtown Lexington

As the heart of the city, Downtown Lexington is a prime location for Airbnb hosts. With its vibrant atmosphere, diverse dining options, and popular attractions like Rupp Arena and the Lexington Opera House, this neighborhood attracts a steady stream of tourists and business travelers.

1. Average Occupancy Rate (2024): 65%
2. Average Daily Rate (2024): $150
3. Estimated Annual Revenue (2024): $35,600
4. Average Single-Family Home Price (2024): $450,000
5. Best Performing Bedroom Count: 2-bedroom units

2. Chevy Chase

Chevy Chase is an upscale neighborhood known for its charming boutiques, trendy restaurants, and proximity to the University of Kentucky. This area appeals to both tourists and visiting families of college students.

1. Average Occupancy Rate (2024): 62%
2. Average Daily Rate (2024): $130
3. Estimated Annual Revenue (2024): $29,400
4. Average Single-Family Home Price (2024): $380,000
5. Best Performing Bedroom Count: 1-bedroom units

3. Beaumont

Beaumont is an up-and-coming neighborhood that offers a quieter, more residential feel while still being close to popular attractions like the Kentucky Horse Park and Keeneland Race Course. This area is perfect for guests seeking a peaceful retreat.

1. Average Occupancy Rate (2024): 58%
2. Average Daily Rate (2024): $110
3. Estimated Annual Revenue (2024): $23,300
4. Average Single-Family Home Price (2024): $320,000
5. Best Performing Bedroom Count: 3-bedroom units

4. Ashland Park

Ashland Park is a historic neighborhood known for its stunning architecture and tree-lined streets. Located near the Henry Clay Estate and the Lexington Cemetery, this area attracts history buffs and those seeking a unique, charming experience.

1. Average Occupancy Rate (2024): 60%
2. Average Daily Rate (2024): $120
3. Estimated Annual Revenue (2024): $26,300
4. Average Single-Family Home Price (2024): $400,000
5. Best Performing Bedroom Count: 2-bedroom units

5. Gardenside

Gardenside is a family-friendly neighborhood that offers easy access to the Hamburg Pavilion shopping center and the Legacy Trail, a popular hiking and biking path. This area is ideal for guests seeking a balance of outdoor activities and convenient amenities.

1. Average Occupancy Rate (2024): 56%
2. Average Daily Rate (2024): $100
3. Estimated Annual Revenue (2024): $20,400
4. Average Single-Family Home Price (2024): $280,000
5. Best Performing Bedroom Count: 2-bedroom units

By focusing on these top-performing neighborhoods and considering factors like housing prices and the best-performing bedroom counts, Airbnb hosts can maximize their chances of success in the Lexington-Fayette market.

Maximizing Your Revenue Through In-Demand Amenities and Properties in Lexington-Fayette

To set competitive prices for your Airbnb listing in Lexington-Fayette, consider factors such as seasonality, local events, and the amenities offered by your property. During peak seasons like the Kentucky Derby and Keeneland Race Meets, you can charge higher rates due to increased demand. Monitor your competitors' pricing and adjust your rates accordingly to remain competitive while maximizing your revenue.

Based on an analysis of the top-performing Airbnb listings in Lexington-Fayette, the following amenities and features are highly sought-after by guests:

1. Fully equipped kitchen with modern appliances
2. High-speed Wi-Fi and smart TVs with streaming services
3. Outdoor spaces such as patios, decks, or balconies
4. Unique decor that showcases local art or Lexington's equestrian heritage
5. Complimentary breakfast items or locally sourced snacks
6. Flexible check-in options, such as keyless entry or lockboxes
7. Pet-friendly accommodations with amenities like dog beds and bowls
8. Workspace or dedicated office area for remote workers or business travelers

Incorporating these amenities and features into your Airbnb listing can help you attract more guests and command higher nightly rates.

According to data from AirDNA, the most popular property types in Lexington-Fayette are single-family homes, apartments, and condos. Here's a breakdown of average property prices and potential revenue as a short-term rental for each type, based on bedroom count:

Single-Family Homes:

• 1-bedroom: Average price $250,000; Potential annual revenue $25,000
• 2-bedroom: Average price $350,000; Potential annual revenue $35,000
• 3-bedroom: Average price $450,000; Potential annual revenue $45,000
• 4-bedroom: Average price $550,000; Potential annual revenue $55,000

Apartments:

• Studio: Average price $150,000; Potential annual revenue $18,000
• 1-bedroom: Average price $200,000; Potential annual revenue $24,000
• 2-bedroom: Average price $250,000; Potential annual revenue $30,000

Condos:

• 1-bedroom: Average price $180,000; Potential annual revenue $22,000
• 2-bedroom: Average price $230,000; Potential annual revenue $28,000
• 3-bedroom: Average price $280,000; Potential annual revenue $34,000

Over the past few years, there has been a growing trend towards larger properties with more bedrooms, as travelers seek accommodations that can comfortably house families or groups. Additionally, properties with unique features like historic charm or modern amenities have performed well in the Lexington-Fayette market.

By investing in a property that aligns with these trends and incorporating in-demand amenities, you can maximize your revenue potential as an Airbnb host in Lexington-Fayette.

Understanding Lexington-Fayette Short-Term Rental Regulations

Before launching your Airbnb business in Lexington-Fayette, it's crucial to familiarize yourself with the local short-term rental regulations. As of 2021, the city requires all short-term rental operators to obtain a permit and comply with specific zoning laws.

To legally operate a short-term rental in Lexington-Fayette, you must first determine if your property is located in a zone that allows for short-term rentals. The city has designated certain areas as "short-term rental overlay districts," which permit the operation of Airbnb properties. If your property falls outside these districts, you may need to apply for a special permit or variance.

Once you've confirmed that your property is eligible, you must apply for a short-term rental permit through the Lexington-Fayette Urban County Government. The application process involves submitting a completed application form, proof of ownership or lease agreement, a floor plan of the property, and payment of the applicable fees.

In addition to obtaining a permit, short-term rental operators must adhere to occupancy limits, safety requirements, and parking regulations. The city also requires hosts to maintain a local contact person who can respond to any issues or complaints within a specified timeframe.

Failure to comply with these regulations can result in fines, penalties, and the revocation of your short-term rental permit. It's essential to stay informed about any updates or changes to the city's short-term rental laws to ensure ongoing compliance.

By understanding and adhering to these regulations, you can operate your Airbnb business in Lexington-Fayette with confidence and avoid potential legal issues.

Read our full STR regulations guide for more detailed information about Lexington-Fayette short-term rental regulations, including insights from local hosts and a closer look at other policies.

Keys to Success as a Lexington-Fayette Airbnb Host

Starting an Airbnb business in Lexington-Fayette can be a rewarding venture, but it requires careful planning, dedication, and a deep understanding of the local market. By focusing on key aspects such as amenities, design, and customer attraction, you can set yourself up for success in this thriving short-term rental market. In this section, we'll explore the essential elements that can help you stand out as a top-performing Airbnb host in Lexington-Fayette.

Popular Amenities and Design Themes in Lexington-Fayette

To attract guests and command higher nightly rates, consider incorporating the following popular amenities and design themes into your Airbnb listing:

• Equestrian-inspired decor that showcases Lexington-Fayette's rich horse racing heritage
• Outdoor spaces like patios or balconies that offer views of the city or surrounding horse farms
• High-end kitchen appliances and cookware for guests who enjoy cooking or entertaining
• Luxurious bedding and linens that provide a hotel-like experience
• Smart home technology, such as voice-controlled lighting or thermostats
• Unique amenities like a bourbon tasting kit or a selection of local craft beers

How to Attract Lexington-Fayette Customers

To attract customers to your Airbnb listing in Lexington-Fayette, consider the following strategies:

• Highlight your property's proximity to popular attractions, such as Keeneland Race Course or the Kentucky Horse Park
• Offer special packages or discounts during major events like the Kentucky Derby or the Bluegrass Music Festival
• Partner with local businesses, such as restaurants or tour operators, to provide exclusive experiences for your guests
• Utilize social media platforms and targeted advertising to reach potential customers who are interested in visiting Lexington-Fayette
• Encourage satisfied guests to leave positive reviews on your listing, as this can help attract future bookings

Potential Challenges and Guidelines for Success

While operating an Airbnb in Lexington-Fayette can be lucrative, it's essential to be aware of potential challenges and follow guidelines for success. According to experienced hosts on forums like BiggerPockets and Airbnb's Community Center:

• Seasonality can impact occupancy rates and revenue, so it's crucial to plan for slower periods and adjust your pricing accordingly.
• Maintaining a high level of cleanliness and providing excellent customer service are key to receiving positive reviews and repeat bookings.
• Be prepared to handle unexpected issues, such as maintenance problems or difficult guests, and have a plan in place to address them promptly.
• Stay informed about changes to local short-term rental regulations and ensure ongoing compliance to avoid potential fines or legal issues.

By focusing on these key aspects and learning from the experiences of successful hosts, you can navigate the challenges and maximize your chances of success as an Airbnb host in Lexington-Fayette.

Using BNBCalc to Find Profitable Properties in Lexington-Fayette, Kentucky

Investing in a short-term rental property can be a daunting task, especially for aspiring business owners who are new to the industry. However, with the help of powerful tools like BNBCalc, you can streamline the process of finding and analyzing profitable properties in Lexington-Fayette, Kentucky. In this section, we'll walk you through the steps you can take to leverage BNBCalc's features and make informed decisions when starting your short-term rental business.

1. Analyze Properties Using BNBCalc

BNBCalc is a comprehensive tool that allows you to analyze the potential profitability of a short-term rental property. To use BNBCalc, simply enter the property address, and the tool will provide you with detailed insights on the property's estimated revenue, occupancy rates, and expenses. This information can help you determine whether a property is worth investing in and how much you can expect to earn from your short-term rental business.

2. Benchmark Comparable Rentals

One of the key features of BNBCalc is its ability to show you other nearby rentals within the area. By analyzing the performance of comparable properties, you can gain valuable insights into the local market and determine how to price your own rental to fetch top dollar. Look for properties with similar amenities, bedroom counts, and locations to get a more accurate comparison.

3. Determine the Right Price and Property Size

BNBCalc can also help you determine the optimal number of bedrooms, bathrooms, and purchase price to maximize your revenue potential. By inputting different scenarios and adjusting the variables, you can see how changes in property size and price affect your estimated earnings. This feature allows you to make data-driven decisions and find the sweet spot that balances your investment costs with your potential returns.

4. Make an Offer

Once you've found a property that meets your criteria and offers attractive returns, it's time to make an offer. BNBCalc has partnered with STR lenders to help you get prequalified for financing. Our team recommends working with Brian Bockholdt at Alliant Credit Union, who offers some of the lowest rates in the industry. With your financing in place, you can confidently make an offer on the property and take the first step towards becoming a successful short-term rental business owner.

5. Use Our Tax Calculator

In addition to helping you find and analyze properties, BNBCalc also offers a tax calculator that can help you determine potential tax deductions from bonus depreciation. By inputting your property details and investment costs, you can estimate your tax savings and factor them into your overall profitability analysis. This feature can be particularly valuable for investors who are looking to maximize their returns and minimize their tax liabilities.

6. Come Up With a Buy Box

When searching for profitable short-term rental properties in Lexington-Fayette, it's essential to have a clear idea of what qualities make for a worthwhile investment. While BNBCalc can provide you with valuable data and insights, it's up to you to define your own "buy box" – a set of criteria that a property must meet before you consider investing in it.

Some key factors to include in your buy box might be:

• Location: Look for properties in popular neighborhoods or near major attractions that are likely to attract guests year-round.
• Property Type: Consider the types of properties that are most in-demand in Lexington-Fayette, such as single-family homes, apartments, or condos.
• Amenities: Prioritize properties with amenities that are popular among short-term rental guests, such as fully equipped kitchens, outdoor spaces, and unique decor.
• Price Point: Determine a price range that aligns with your investment goals and offers attractive returns based on BNBCalc's projections.

By defining your buy box and using BNBCalc's powerful tools to analyze properties, you can streamline your search for profitable short-term rentals in Lexington-Fayette and set yourself up for success in this exciting industry.

Ready to start your Airbnb journey in Lexington-Fayette? Use BNBCalc to analyze potential properties and make informed investment decisions. Our powerful tool provides comprehensive data to help you maximize your profits. Check out this pre-analyzed Lexington-Fayette Airbnb opportunity and see how BNBCalc can help you succeed in the short-term rental market. Visit BNBCalc.com today and take the first step towards building your Airbnb business.