Nantucket Rental Income Potential

Summer rental rates on Nantucket are among the highest in the Northeast. During peak season (July-August), weekly rates range from approximately $3,500-5,000 for modest two-bedroom cottages to $15,000-40,000+ for luxury waterfront estates. Properties in prime locations like Downtown, Brant Point, and beachfront areas command the highest rates.

June and September represent shoulder season, with rates typically 20-30% below peak summer prices. Memorial Day and Labor Day weekends command premium rates approaching peak season levels. The Daffodil Festival (April) and Christmas Stroll (December) also create short-term rental demand at elevated rates.

Monthly off-season rentals (October-May) appeal to longer-term tenants at significantly lower rates, often $3,000-8,000 monthly depending on the property. Some owners choose to keep properties vacant during off-season, while others generate additional income from winter rentals.

A well-located three-bedroom home in a desirable area can generate $80,000-150,000 in gross rental income annually, with peak season accounting for approximately 70% of that total. Luxury waterfront properties can exceed $200,000 in annual rental income.

Smaller properties (two bedrooms or less) typically generate $40,000-80,000 annually. While individual weekly rates are lower, these properties often achieve higher occupancy rates and appeal to a broader renter base seeking more affordable Nantucket options.

ROI calculations must account for high purchase prices on Nantucket. A property generating $100,000 in gross rental income on a $2 million purchase represents a 5% gross yield before expenses. Net yields after management, maintenance, taxes, and insurance typically range from 2-4%.

Nantucket regulates short-term rentals through the town's zoning bylaws and requires rental property registration. Properties rented for fewer than 30 consecutive days are considered short-term rentals and must comply with specific requirements.

All rental properties must register with the town and obtain appropriate certificates. The Massachusetts short-term rental law requires hosts to collect and remit state room occupancy tax and local room occupancy tax on rentals of 31 days or fewer.

Health and safety requirements apply to all rental properties, including smoke detectors, carbon monoxide detectors, and proper egress. The town periodically updates regulations, so property owners should verify current requirements with the town or a local property manager.

Several professional property management companies serve Nantucket rental owners. Full-service management typically costs 15-25% of gross rental income and includes marketing, booking, guest communication, check-in/out, cleaning coordination, and maintenance oversight.

Self-management is possible through platforms like VRBO, Airbnb, or direct booking, though distance from the island makes this challenging for off-island owners. Local caretakers can assist with guest services and maintenance, with costs ranging from per-visit fees to monthly retainers.

The choice between professional management and self-management depends on your proximity to the island, desired involvement level, and tolerance for the operational demands of vacation rental hosting. Many owners start with professional management and transition to self-management as they become familiar with the market.

Location significantly impacts rental potential. Properties within walking distance of downtown, beaches, or with water views command premium rates and higher occupancy. Investment in curb appeal, updated interiors, and quality amenities (air conditioning, outdoor living space, modern kitchens) directly affects rental rates.

Professional photography, compelling listing descriptions, and responsive communication improve booking rates. Many successful owners invest in the guest experience through welcome packages, local guidebooks, and high-quality linens and furnishings.

Repeat guests represent significant value. Building relationships with renters who return year after year provides predictable income and reduces marketing costs. Many successful Nantucket rentals book the following summer before current guests depart.

Rental income must be balanced against operating expenses. Property management (15-25%), cleaning (typically $200-500 per turnover), maintenance and repairs, landscaping, utilities, insurance, property taxes, and mortgage payments all affect net returns.

Tax implications for rental property include the ability to deduct operating expenses, depreciation, and mortgage interest, subject to IRS rules for rental property and passive activity limitations. Consult a tax professional familiar with vacation rental taxation.

The IRS 14-day rule allows homeowners who rent their property for 14 days or fewer annually to exclude that rental income from taxation. Some owners choose to limit rentals to maximize personal use while generating tax-free income for peak weeks.