INVESTMENT OPPORTUNITY
Nantucket real estate represents a unique investment opportunity: a strictly limited supply of land, consistent demand from affluent buyers and renters, and a track record of strong long-term appreciation.
This guide provides the data-driven insights you need to evaluate Nantucket as an investment market. We cover rental income potential, ROI expectations, regulatory requirements, and strategies for different investor profiles.
Understanding the numbers behind Nantucket investment helps you make informed decisions that align with your financial goals.
KEY METRICS
PROPERTY ANALYSIS
$1.5M - $3M
Advantages
Considerations
Best Areas:
Surfside, Tom Nevers, Madaket
$3M - $6M
Advantages
Considerations
Best Areas:
Surfside, Miacomet, Siasconset
$6M - $15M+
Advantages
Considerations
Best Areas:
Brant Point, Wauwinet, Cliff Road, Downtown
RETURN ANALYSIS
Nantucket real estate investment requires a long-term perspective. While rental income can offset carrying costs, the primary return typically comes through appreciation. Here's what realistic returns look like.
Summer rentals generate the majority of income, typically 8-14 weeks per year. Shoulder season adds 2-4 additional weeks at lower rates. Expect gross rental income of 3-6% of property value annually for well-positioned properties.
Property taxes, insurance, maintenance, utilities, and management typically consume 40-60% of gross rental income. Island costs are significantly higher than mainland equivalents. Budget conservatively.
After expenses, most Nantucket investment properties generate modest positive cash flow or break even. Properties with mortgages often operate at a cash flow deficit, offset by principal paydown and appreciation.
Historically, Nantucket has appreciated 5-8% annually over the long term, though year-to-year variation exists. Limited land, restricted development, and persistent demand drive values. This is typically the largest return component.
COMPLIANCE
Nantucket regulates short-term rentals to preserve community character. Understanding these regulations is essential for investment planning.
All properties rented for periods less than 30 days must register with the Town of Nantucket. Annual registration and fee required.
Rental properties must meet health department standards including septic system certification, smoke detectors, and occupancy limits.
Short-term rentals are subject to Massachusetts room occupancy excise tax (currently 5.7% state + 6% local = 11.7% total).
Some areas have restrictions on rental use. Verify zoning compliance before purchasing a property intended for rental investment.
Condominium and subdivision associations may have their own rental restrictions. Review HOA documents carefully before purchase.
Rental regulations and restrictions can significantly impact investment returns. Always verify a property's rental eligibility, including HOA restrictions and zoning compliance, before purchasing for investment purposes.
CHOOSE YOUR APPROACH
Maximize rental income by choosing high-demand locations, optimizing pricing, and managing efficiently. Best for investors seeking cash flow.
Investors prioritizing current income over appreciation
Key Considerations
Select premium locations and properties with strong long-term value potential. Rental income is secondary to capital gains.
Investors with longer time horizons and capital reserves
Key Considerations
Balance rental income potential with appreciation prospects. Most common strategy for Nantucket investors.
Most vacation-home investors seeking both income and growth
Key Considerations
WHERE TO INVEST
BEFORE YOU BUY
FREQUENTLY ASKED QUESTIONS
Realistic total returns typically range from 6-12% annually when combining rental income (2-5% net yield) with appreciation (5-8% historical average). Pure cash-on-cash returns are often modest (1-3%) after expenses. The primary return driver is usually appreciation rather than income. Properties with mortgages may operate at cash flow deficits that are offset by principal paydown and appreciation.
Nantucket offers a unique investment profile: lower current yields than many markets but strong appreciation potential and limited supply. It's best suited for investors with long time horizons who value asset quality and can accept lower current income. It's not ideal for income-focused investors seeking immediate cash flow.
Nantucket requires rental registration, health certifications, and room tax collection (11.7%). These add administrative burden and cost but are manageable with proper planning. More significantly, some properties have restrictions from HOAs or zoning that limit rental potential. Always verify rental eligibility before purchase.
For most off-island investors, professional management is recommended. Managers charge 20-35% of rental income but handle bookings, guest services, maintenance, and emergencies. Self-management requires significant time investment and local contractor relationships. The math often favors professional management for peace of mind.
Mid-range family homes ($3-6M) often offer the best balance of rental demand, manageable costs, and appreciation potential. They appeal to the largest renter pool (families seeking summer weeks) and generate meaningful income. Entry-level cottages have lower costs but limited income ceiling, while luxury properties have excellent appreciation but smaller rental markets.
Nantucket has a relatively liquid real estate market compared to other resort destinations, though selling timelines vary by season and pricing. Well-priced properties typically sell within 60-180 days. However, you should plan for a multi-year hold to capture appreciation and avoid selling during unfavorable market conditions.
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Whether you're buying, selling, or exploring Nantucket real estate opportunities, we're here to help.
