New York is the hardest state in America to operate a short-term rental. That is not an exaggeration. When Local Law 18 went into effect in New York City, it wiped out roughly 30,000 listings overnight and turned the nation’s biggest tourism market into a regulatory minefield. But here is what most people miss: the same dynamics that crushed NYC operators created massive opportunity everywhere else in the state. From the Hudson Valley to the Finger Lakes, from the Catskills to the Adirondacks, smart operators are building six-figure STR portfolios in markets where regulations are manageable and demand is surging.
This guide breaks down exactly what you need to know about operating short-term rentals in New York — the real regulations, actual revenue numbers, tax obligations, and where the money is right now.
Why New York’s STR Market Demands a Different Strategy
New York is not one market. It is dozens of markets operating under a patchwork of state, county, and municipal regulations that change constantly. What works in the Catskills will get you fined in Manhattan. What is perfectly legal in the Finger Lakes may require three permits and an inspection in Ulster County.
The state now operates on a two-tier system. New York City runs its own registration regime under Local Law 18, enforced by the Mayor’s Office of Special Enforcement (OSE). Outside the city, a new statewide framework took effect in 2025 that imposes sales tax on all short-term rentals and gives counties the authority to create mandatory STR registries.
Here is the strategic reality: NYC is largely closed to rental arbitrage operators. The primary-residence requirement and two-guest cap make it nearly impossible to run a profitable arbitrage operation in the five boroughs. But the rest of the state? Wide open — if you understand the local rules and pick the right market.
Operators who treat New York as a single market fail. Those who treat it as a collection of micro-markets, each with its own regulatory profile and revenue potential, build real businesses. That distinction matters more here than in any other state. If you are new to the rental arbitrage model, start with our complete rental arbitrage guide to understand the fundamentals before diving into New York-specific strategy.
NYC Local Law 18 — What Every Host Needs to Know
Local Law 18 of 2022 is the most aggressive short-term rental regulation in the United States. It went into full enforcement in September 2023 when major platforms like Airbnb, VRBO, and Booking.com began blocking transactions for unregistered hosts. The results were immediate and devastating for non-compliant operators.
Before the law, New York City had approximately 40,000 active short-term rental listings. Today, fewer than 10,000 remain, and only about 3,000 hosts have been granted official registration. The Prohibited Buildings List contains over 21,000 properties where short-term rentals are permanently banned.
Registration Requirements
To legally operate a short-term rental (any stay under 30 days) in New York City, you must register with the Mayor’s Office of Special Enforcement (OSE). The requirements are strict:
- Primary residence only — The unit must be your primary residence, meaning you live there at least 183 days per year. You cannot register investment properties or arbitrage units.
- Host must be present — You must be physically present in the unit during the guest’s entire stay. No exceptions.
- Two-guest maximum — If you are renting out a room while present, no more than two paying guests are allowed at any time.
- Registration fee — A non-refundable $145 application fee is required.
- Building compliance — Your building cannot be on the Prohibited Buildings List, and you must provide proof that your lease or building bylaws allow short-term rentals.
- Safety standards — Working smoke detectors, carbon monoxide detectors, fire extinguishers, and clear egress routes are mandatory.
The OSE has streamlined the review process, and most applications are processed within one week. But approval rates remain low because of the building-level restrictions.
The Prohibited Buildings List
This is what kills most NYC STR dreams. The Prohibited Buildings List includes over 21,000 buildings where short-term rentals are permanently banned. A building lands on this list for any of these reasons:
- It contains rent-stabilized or rent-controlled units
- It is owned or managed by NYCHA (public housing)
- The building’s bylaws, co-op rules, or condo declarations prohibit short-term rentals
- The building owner has opted out by notifying the OSE
You can search the list through the OSE registration portal before signing any lease. Do this first. If the building is on the list, there is no workaround.
Enforcement and Penalties
New York City is not bluffing on enforcement. The OSE has actively pursued non-compliant operators since 2023. Here is what you face if you operate without registration:
- Platform delisting — Airbnb, VRBO, and Booking.com are legally required to block transactions for unregistered hosts. They verify registration numbers in real time.
- Fines — Penalties range from $1,000 to $5,000 per violation for hosts, and platforms face fines of $1,500 per transaction processed for unregistered listings.
- Lawsuits — In 2024, the city filed its first lawsuit under Local Law 18 against an operator running multiple illegal listings. The case sought to reclaim housing inventory and impose significant financial penalties.
- Registration revocation — As of mid-2025, the OSE estimated that about 20% of registered listings were found offering illegal occupancy. Warning notices and revocation proceedings have begun for persistent noncompliance.
The bottom line: NYC rental arbitrage under Local Law 18 is effectively dead. The primary-residence requirement, two-guest cap, and mandatory host presence make it mathematically impossible to run a profitable arbitrage operation. A well-located Manhattan listing might still generate $5,000 to $10,000 per month for a homeowner renting a spare room, but that is not arbitrage — that is a side hustle. We cover the step-by-step process to generate Airbnb income without property in detail.
STR Regulations Outside New York City
This is where the opportunity lives. Outside the five boroughs, New York’s STR regulations are a patchwork of county and municipal rules that range from almost nonexistent to moderately strict. The key regulatory change for 2025 is the new statewide framework that took effect on March 1, 2025.
Under this framework, all short-term rentals statewide must now collect and remit New York’s 4% state sales tax plus applicable local sales taxes. Beginning September 22, 2025, counties can establish mandatory STR registries, and booking platforms must verify registration status before processing bookings. Counties that opt into the registry system can also collect occupancy taxes.
What this means for operators: the days of flying under the radar in upstate New York are ending. Get compliant now, because platforms will begin verifying county registration status by late 2025. That said, compliance is straightforward — nothing remotely close to the NYC nightmare. Make sure you understand the legal landscape for rental arbitrage before launching in any market.
Hudson Valley (Ulster County, Dutchess County)
The Hudson Valley is one of the hottest STR markets in the Northeast. Two hours north of Manhattan, it draws weekenders, remote workers, and tourists year-round. Ulster County is the epicenter of STR activity — and regulation.
Ulster County requirements:
- All STRs must register with the Ulster County Department of Finance
- All short-term rentals are classified as hotels/motels for tax purposes
- Quarterly remittance of the county hotel and motel occupancy tax is required
- Individual towns within Ulster County have their own permit requirements, safety inspections, and many require a local property manager within 30 minutes of the property
- Popular towns like Woodstock and Kingston have reached their permit caps and require owner-occupancy
Revenue potential: Premium Hudson Valley properties command $300 to $500 per night, with well-designed properties near popular towns pulling even higher during peak fall foliage and summer weekends. The challenge here is not demand — it is supply constraints from tightening regulations.
Dutchess County is less regulated than Ulster and offers opportunities in towns like Rhinebeck, Beacon, and Red Hook. If Ulster County feels too restricted, Dutchess often provides similar demand with fewer hoops.
Catskills and Sullivan County
The Catskills experienced an unprecedented STR boom during COVID and has not slowed down. Sullivan County is the primary jurisdiction, and it has been building out its regulatory framework in response to rapid growth.
Sullivan County requirements:
- 5% occupancy tax applies to all short-term rentals
- County registry participation required under the 2025 state framework
- Individual towns are implementing their own permit requirements, with many now requiring safety inspections and designated local contacts
- Town-level regulations change frequently — always verify with the local town clerk before committing to a lease
Revenue potential: Catskill properties average a daily rate of $158 to $317 depending on the specific area and property quality, with median occupancy around 51%. A typical host earns approximately $32,000 to $35,000 annually, though premium properties with hot tubs, mountain views, and modern design significantly outperform these averages. Seasonal demand peaks in summer and fall, with ski-season providing a solid third revenue window.
The Catskills remain one of the best markets in New York for rental arbitrage because lease costs are relatively low compared to revenue potential. A three-bedroom cabin with a hot tub might lease for $1,800 to $2,500 per month and gross $3,500 to $5,000 per month on Airbnb during peak seasons.
Finger Lakes Region
Wine country tourism drives the Finger Lakes STR market. The region attracts visitors to its wineries, breweries, gorges, and state parks, with peak season running May through October. Ithaca — home to Cornell University — provides year-round demand driven by academic events, parents’ weekends, and graduation.
Regulatory landscape:
- Tompkins County launched its STR registration system under the 2025 state framework, with all operators required to register by February 28, 2026
- Registration fee of $125 per unit, with a Certificate of Authority valid for two years
- Mandatory $300,000 liability insurance requirement
- 5% county room tax applies
- Safety inspections required: fire extinguishers, evacuation information, and emergency contacts must be posted
- Several municipalities (City of Ithaca, Town of Dryden, Town of Ithaca, Village of Cayuga Heights) have their own additional STR ordinances
- Seneca and Yates Counties have their own registration requirements, typically including property registration and nominal fees with safety standard inspections
The Finger Lakes is one of the more approachable New York markets for new operators. Regulations exist but are not overly burdensome, and the tourism infrastructure is strong. Properties near Seneca Lake and Keuka Lake perform particularly well.
Long Island (Suffolk County, Nassau County)
Long Island is two very different markets. The Hamptons and East End represent ultra-premium summer rental territory, while the rest of Long Island is a mix of suburban communities with varying STR attitudes.
Suffolk County requirements:
- Rental Permit Application required from the county
- Must provide current deed, floor plan, smoke/CO detector affidavit, and Certificate of Occupancy
- Registration with the Suffolk County Treasurer’s Office for the 3% hotel and motel tax
- 5.5% occupancy tax on per-diem rental rate for stays under 30 days (effective June 2023)
- $100 fee for Certificate of Authority
- Individual towns (Southold, East Hampton, Southampton) have their own overlay regulations, including minimum stay requirements and seasonal restrictions
Revenue potential: The Hamptons is in a league of its own. Hampton Bays properties average $791 per night with 45% occupancy during peak season, translating to roughly $39,800 in monthly summer revenue. Premium properties in East Hampton and Southampton can command $1,000+ per night, with full-home weekly rentals reaching $25,000 during July and August.
Nassau County is generally more restrictive and suburban, making it less attractive for STR operators. Focus on Suffolk County and the East End if you are targeting Long Island.
Adirondacks
The Adirondacks offer a dual-season market centered on Lake Placid and the surrounding towns. Summer tourism (hiking, lakes, camping) and winter sports (skiing, ice climbing, snowshoeing) create two strong revenue windows.
Regulatory landscape:
- Lake Placid and the town of North Elba passed regulations in January 2023 that prohibit new unhosted STRs in most residential neighborhoods
- Existing permit holders are grandfathered in, but permits do not transfer to new owners upon sale
- County-level registry requirements under the 2025 state framework will apply
- Regulations outside Lake Placid village vary by town and are generally less restrictive
Revenue potential: Lake Placid averages $321 per night with 49% occupancy, generating approximately $59,000 in annual revenue per listing. There are roughly 400 active Airbnb listings in the Lake Placid area. The limited inventory creates strong pricing power for operators who secure permits.
The Adirondacks play is about scarcity. Limited supply plus strong dual-season demand equals pricing power. If you can secure a grandfathered permit or find a property in a less restricted town nearby, the numbers work well.
Tax Obligations for New York STR Hosts
New York’s tax landscape for STR operators got significantly more complicated in 2025. Here is what you owe, depending on where you operate.
Statewide Taxes (Effective March 1, 2025)
- State sales tax — 4% on all short-term rental occupancy where the rate exceeds $2.00 per unit per day
- Local sales tax — Varies by county, typically 3% to 4.5% additional
- Booking platforms (Airbnb, VRBO) are required to collect and remit both state and local sales taxes on behalf of hosts
NYC-Specific Taxes
- Hotel room occupancy tax — 5.875% on the rental amount
- Unit fee — $1.50 per unit per day on every short-term rental occupancy within New York City
- State and local sales tax — In addition to the above
- Total effective tax burden in NYC can exceed 14% of the nightly rate
County-Level Taxes (Outside NYC)
| County | Occupancy Tax | Notes |
|---|---|---|
| Ulster County | Hotel/motel occupancy tax (quarterly) | STRs classified as hotels |
| Sullivan County | 5% | Applied to all STR bookings |
| Suffolk County | 3% + 5.5% | Hotel tax plus occupancy tax |
| Tompkins County | 5% room tax | Some platforms collect automatically |
| Warren County (Adirondacks) | Varies | Sales tax remittance required |
Critical compliance step: Register with the New York State Department of Taxation and Finance to obtain a sales tax Certificate of Authority. Even if platforms collect tax on your behalf, you are ultimately responsible for ensuring proper remittance. Factor these taxes into your pricing — they can eat 8% to 15% of gross revenue depending on your location.
Make sure your insurance coverage accounts for the full scope of your STR operation, as standard policies rarely cover short-term rental activity and the liability exposure in New York is significant.
Revenue Benchmarks by Market
These numbers represent realistic benchmarks based on 2024-2025 market data. Premium properties with professional photography, high-end furnishings, and optimized listings consistently outperform these averages by 30% to 50%.
| Market | Avg Daily Rate | Occupancy | Annual Revenue (Typical) | Peak Season |
|---|---|---|---|---|
| NYC (registered host) | $200-$400 | 70-85% | $60,000-$120,000 | Year-round |
| Hamptons / East End | $791+ | 45% (seasonal) | $80,000-$150,000+ | May-September |
| Hudson Valley (premium) | $300-$500 | 50-65% | $55,000-$90,000 | May-October |
| Catskills | $158-$317 | 46-51% | $32,000-$55,000 | Jun-Oct, Dec-Feb |
| Lake Placid / Adirondacks | $321 | 49% | $59,000 | Jun-Sep, Dec-Mar |
| Finger Lakes | $150-$275 | 40-55% | $25,000-$50,000 | May-October |
Keep in mind these are gross revenue figures. After accounting for rent or mortgage, utilities, cleaning, supplies, platform fees (typically 3% for Airbnb hosts), insurance, and taxes, your net profit margins in New York typically land between 25% and 40% depending on your market and operational efficiency.
Startup Costs for New York Rental Arbitrage
New York is not the cheapest state to launch a rental arbitrage operation, but it is not the most expensive either — unless you are trying to operate in NYC. Here is a realistic cost breakdown by market.
| Expense | NYC (if eligible) | Hudson Valley / Catskills | Finger Lakes / Adirondacks |
|---|---|---|---|
| First month’s rent | $2,500-$4,500 | $1,800-$3,000 | $1,200-$2,200 |
| Security deposit | $2,500-$4,500 | $1,800-$3,000 | $1,200-$2,200 |
| Furnishing (full unit) | $5,000-$10,000 | $4,000-$8,000 | $3,500-$7,000 |
| Professional photography | $300-$500 | $200-$400 | $200-$350 |
| Registration / permits | $145 (OSE) | $100-$250 | $100-$200 |
| Insurance (annual) | $1,200-$2,000 | $1,000-$1,500 | $800-$1,200 |
| Supplies & essentials | $500-$1,000 | $400-$800 | $300-$600 |
| Total startup | $12,000-$23,000 | $9,300-$17,000 | $7,300-$13,750 |
For a detailed breakdown of what goes into each category, check our rental arbitrage startup costs guide. The key insight for New York: invest more upfront in design and furnishing. The markets here are competitive, and guests who are paying $200+ per night expect a polished experience. Cheap furniture and generic decor will tank your reviews and occupancy rate.
One cost-saving strategy that works particularly well in upstate New York: furnish properties with a mix of quality secondhand finds and new essentials. The Catskills and Hudson Valley aesthetic leans toward rustic-modern, and vintage furniture actually enhances the experience. Facebook Marketplace and estate sales are goldmines in these regions.
The Upstate Opportunity — Where Smart Operators Are Pivoting
Here is the pattern playing out across New York right now. Local Law 18 pushed thousands of experienced STR operators out of NYC. The smart ones did not quit — they pivoted upstate. They brought NYC-level hospitality standards, professional photography, dynamic pricing, and operational systems to markets that were historically run by casual hosts renting out spare cabins on weekends.
The result: a significant professionalization of upstate New York STR markets that is raising the bar for everyone. If you are entering these markets now, you need to operate at a professional level from day one.
What the best upstate operators are doing
- Design-forward properties — Not just clean and functional, but Instagram-worthy. Hot tubs, fire pits, outdoor living spaces, and cohesive interior design are table stakes in the Catskills and Hudson Valley.
- Multi-platform distribution — Listing on Airbnb, VRBO, Booking.com, and direct booking websites. Platform diversification reduces dependency on any single channel.
- Dynamic pricing tools — Using PriceLabs, Wheelhouse, or Beyond to optimize nightly rates based on demand patterns, local events, and seasonal trends.
- Automated operations — Smart locks, automated messaging, professional cleaning teams, and remote monitoring. Learn how to build systems with our hands-free Airbnb automation guide.
- Experience-based amenities — Game rooms, kayaks, fire pits, outdoor showers, EV chargers. Amenities that create experiences drive higher ADR and better reviews.
Markets to watch in 2026
The Northern Catskills (Greene County): Less saturated than Sullivan County, with lower lease costs and growing demand. Towns like Windham and Hunter benefit from ski resort traffic plus summer hikers.
Saratoga Springs area: Horse racing season (July-September) creates massive demand spikes, but the area also draws visitors for SPAC concerts, Saratoga Performing Arts Center events, and year-round tourism. Less STR regulation than the Hudson Valley corridor.
The Thousand Islands: Northern New York along the St. Lawrence River. Low competition, strong summer tourism, and minimal regulation. ADR is lower than the Catskills or Hudson Valley, but so are operating costs.
Ithaca and Finger Lakes wine country: Cornell events alone create reliable demand spikes (graduation, Parents’ Weekend, homecoming). Layer in wine tourism, gorge hiking, and wedding season, and you have five to six months of strong bookings.
Setting Up Your New York STR Business
Get the legal foundation right from the start. New York is not a state where you want to operate casually.
- Form an LLC — Protects personal assets from liability. File with the New York Department of State (filing fee around $200, plus biennial statements). New York also requires LLC publication in two newspapers, which can cost $500 to $1,500 depending on the county.
- Obtain a sales tax Certificate of Authority — Required from the New York State Department of Taxation and Finance before collecting any rental income.
- Secure STR-specific insurance — Standard renters or homeowners policies exclude short-term rental activity. Get a dedicated policy with at least $300,000 in liability coverage (required in some counties like Tompkins).
- Open a dedicated business bank account — Separate personal and business finances completely. This simplifies tax reporting and strengthens your LLC protection.
- Register with your county — Check whether your county has opted into the state registry system. As of September 2025, many counties are rolling out mandatory registration.
- Negotiate your lease correctly — Get explicit written permission for short-term rental use in your lease agreement. A proper rental arbitrage contract is essential in New York, where landlords are increasingly aware of (and sometimes hostile to) STR activity.
Frequently Asked Questions
Can you do rental arbitrage in New York City?
Technically, you can operate an STR in NYC if you register with the Office of Special Enforcement, but the requirements make rental arbitrage impractical. You must be renting your primary residence, be physically present during every guest stay, and host no more than two guests. These restrictions eliminate the core arbitrage model of leasing a property solely to sublet on Airbnb. The real arbitrage opportunities in New York are upstate — the Hudson Valley, Catskills, Finger Lakes, and Adirondacks.
What taxes do I owe on short-term rental income in New York?
As of March 2025, all New York STR operators owe state sales tax (4%) plus local sales tax (varies by county, typically 3% to 4.5%). In NYC, you also owe the 5.875% hotel room occupancy tax and a $1.50 per-unit daily fee. Counties may impose additional occupancy taxes — Sullivan County charges 5%, Suffolk County charges 3% plus 5.5%, and Tompkins County charges 5%. Most major platforms now collect and remit these taxes automatically, but verify your specific obligations with the Department of Taxation and Finance.
What is the Prohibited Buildings List?
The Prohibited Buildings List is a database maintained by NYC’s Office of Special Enforcement containing over 21,000 buildings where short-term rentals are permanently banned. Buildings are added because they contain rent-stabilized units, are NYCHA properties, or their bylaws explicitly prohibit short-term rentals. You can search the list at the OSE registration portal. If your building is on the list, there is no path to STR registration.
Which New York market is best for rental arbitrage beginners?
The Catskills and Finger Lakes offer the best combination of manageable regulations, reasonable startup costs, and strong demand. Lease costs are lower than the Hudson Valley, regulations are less restrictive than Ulster County, and tourism demand is reliable. A three-bedroom property in Sullivan County or near Seneca Lake can be launched for $8,000 to $12,000 in total startup costs and generate positive cash flow within the first two to three months of operation.
Do I need a local property manager for my New York STR?
Several counties and towns in New York now require a designated local contact or property manager within 30 minutes of the rental property. This is particularly common in Ulster County and parts of the Catskills. Even where it is not legally required, having a reliable local contact for cleaning, maintenance, and guest emergencies is operationally essential — especially if you are managing remotely. Budget $75 to $150 per turnover for cleaning, and consider a co-hosting arrangement if you are not local.
New York’s short-term rental landscape is complex, but complexity creates opportunity for operators willing to do the work. While casual hosts get pushed out by regulations and taxes, professional operators who understand the rules, pick the right markets, and deliver exceptional guest experiences are building serious income. The 10XBNB community includes operators running profitable portfolios across upstate New York — see how the program works, hear from real program students, and learn from people who have already navigated these markets.
