Investing In Short‑Term Rentals In Isle of Wight

Thinking about buying a place in Isle of Wight and turning it into a short‑term rental? You are not alone. With Smithfield’s historic charm and easy access to Hampton Roads, demand can be solid if you buy and operate smart. In this guide, you’ll learn the local rules, taxes, revenue drivers, and a practical checklist so you can invest with confidence. Let’s dive in.

Why Isle of Wight fits STRs

Isle of Wight County sits in the Hampton Roads region, with Smithfield as its historic centerpiece and primary cluster for short stays. You are about 20 to 40 minutes from Newport News and Norfolk, which brings business, military, and event traffic alongside leisure visitors to the area’s riverfront and downtown attractions (regional context).

Tourism across Virginia has been strong. The Commonwealth reported a record 35.1 billion dollars in visitor spending in 2024, with more overnight trips, which supports demand in nearby towns like Smithfield (state tourism update). Local draws include the Smithfield Historic District, Windsor Castle Park, the Isle of Wight County Museum, and seasonal food and riverfront activities (Smithfield highlights).

Know the rules first

Unincorporated Isle of Wight County

The county uses a registration process for short‑term rentals and mails notices to nearby neighbors when you apply. If any neighbor objects within the notice window, you may need a conditional‑use permit, which involves public hearings and can add time and cost. Local reporting noted an annual registration fee of 35 dollars and penalties for unregistered advertising up to 500 dollars per day (county process overview).

Town of Smithfield

Inside town limits, Smithfield allows owner‑hosted or owner‑registered short‑term rentals up to 104 nights per year by right. If you plan to operate year‑round as a whole‑house rental, you will likely need a special‑use approval. Start with the town’s Short‑Term Rental Affidavit and zoning application materials to confirm the path for your address (Smithfield application page).

State framework to keep in mind

Virginia enables localities to levy transient occupancy taxes and to set up STR registries. Local rules can differ between the town and the county, so always confirm which jurisdiction your property is in before you make an offer.

Taxes and registrations

• Local lodging tax: Isle of Wight County lists a 5 percent lodging tax. Confirm registration and filing steps with the local commissioner before you launch (county tax overview).
• State and local sales tax: Virginia lodging is typically subject to state sales tax, commonly cited near 5.3 percent, plus any local add‑ons. Marketplaces may collect and remit some taxes for you, but you are responsible for any taxes not covered and for any direct bookings you take (marketplace tax basics).
• Business license: If your gross receipts exceed local thresholds, you may need a business license. Check the county’s business license and tax details for deadlines and filing requirements (business license info).

Practical tip: Verify which taxes your platform collects for your specific listing, then register for any remaining accounts you still need to file.

Estimate revenue wisely

Start with data, not guesses. Use STR tools to pull comparable listings, Average Daily Rate (ADR), occupancy, RevPAR, booking lead times, and month‑by‑month seasonality. AirDNA explains how it calculates revenue and occupancy, which helps you build conservative and realistic scenarios (ADR and occupancy method).

What tends to drive performance locally:

• Historic downtown and riverfront locations often command a premium.
• Proximity to parks and water access, like Windsor Castle Park, can help with leisure demand.
• Weekday demand can come from Hampton Roads business and visitors to area installations. Expect clear seasonality, with stronger summers and event weekends.

Model three cases and include full operating costs. Revisit assumptions quarterly based on booked nights and guest feedback.

Costs, financing, insurance

• Financing: Investment loans usually require larger down payments and higher rates than owner‑occupied loans. If you plan to use the property for short stays, talk to your lender early so underwriting matches your intended use.
• Insurance: Standard homeowner policies often exclude business use like STRs. Get a landlord or vacation‑rental endorsement or a dedicated STR policy, and do not rely only on platform protections (insurance overview).
• Management and operations: Professional STR management can range from roughly 10 to 15 percent for partial service to 20 to 30 percent for full service, plus cleaning, linens, supplies, utilities, and maintenance. Review contracts for add‑on fees and cancellation terms (management fee ranges).
• HOA and neighbors: Some HOAs restrict short‑term rentals. In the county, neighbor objections can trigger a conditional‑use permit process, which can extend timelines (county process overview).

Due diligence checklist

• Confirm jurisdiction and zoning. Is the address inside Smithfield or in unincorporated Isle of Wight County? Rules differ by location.
• Review the STR pathway for the address. For Smithfield, study the Short‑Term Rental Affidavit and the 104‑night by‑right limit. For the county, confirm registration steps, neighbor‑notice timing, and any conditional‑use triggers.
• Clarify tax collection. Ask your platform which state and local taxes it remits for your listing, then register for any remaining lodging or sales tax filings.
• Build a pro forma. Pull ADR, occupancy, and seasonality by month. Include platform fees, cleaning, utilities, maintenance, management, insurance, permitting, lodging tax, and property tax.
• Verify financing fit. Make sure your loan type allows short‑term rental use and that you have reserves for furnishings and slow seasons.
• Line up insurance and safety. Quote STR‑appropriate coverage and confirm smoke/CO detectors and exit/safety requirements.
• Check HOA documents. Get written confirmation on rental rules and guest policies if the property is in an HOA.
• Design your operations plan. Decide on self‑management or a local manager, set minimum stays, and plan professional photos and guest messaging.
• Set up compliance and bookkeeping. Track permits, taxes, receipts, and communications so filings are on time and documentation is complete.

Ready to explore STR‑friendly properties and run the numbers with local context? Get a consult that blends market insight with practical guidance on permits, taxes, and property condition. Reach out to Jason Dunaway to get started.

FAQs

What are the main differences between Smithfield and county STR rules?

• Smithfield allows up to 104 nights per year by right with a special‑use path for full‑time whole‑house rentals, while the county uses registration with neighbor notice that can trigger a conditional‑use permit if objections are filed.

What taxes apply to short‑term rentals in Isle of Wight County?

• Expect the county’s 5 percent lodging tax plus Virginia sales tax on lodging, and confirm whether your platform collects and remits some or all taxes for your listing.

How strong is seasonality for Smithfield short‑term rentals?

• Summer and event weekends typically run stronger due to riverfront recreation and historic‑district tourism, while midweek demand can vary with business and visitor traffic from Hampton Roads.

Do I need special insurance for a Virginia short‑term rental?

• Yes, most homeowner policies exclude business activity; secure a landlord or dedicated STR policy that covers liability, property damage, and loss of income, and treat platform protections as supplemental.

How does Isle of Wight’s location help occupancy?

• You are within a 20 to 40 minute drive of Newport News and Norfolk, which supports weekend leisure stays and some weekday demand tied to business and area visitors.