Charlestown, Indiana

Charlestown, Indiana, located just north of the Ohio River and within close proximity to Louisville, Kentucky, is a small but evolving market for short-term rentals (STRs). It combines small-town charm with access to urban amenities, making it an attractive option for travelers seeking affordable, local accommodations. The growth of the STR market in Charlestown has seen an uptick due to its strategic location, with visitors often drawn to nearby attractions, such as the Charlestown State Park, historical sites, and the vibrant arts scene of Louisville.

Understanding the key performance indicators (KPIs) is critical for investors considering the STR market in Charlestown. Currently, the Average Daily Rate (ADR) for short-term rentals is $118.15, indicative of competitive pricing relative to similar markets. Other essential KPIs include:

• Occupancy Rate: The average occupancy rate in Charlestown hovers around 65%, showing steady demand for short-term accommodations.
• Revenue per Available Room (RevPAR): RevPAR stands at approximately $76.73, a crucial measure of rental income performance.
• Length of Stay: Most guests tend to book for 2-4 nights, indicating a mix of both leisure travelers and some proximity-based business trips.
• Market Growth Rate: The STR market in Charlestown has grown 15% annually over the past three years, influenced by tourism and local developments.

Over the past decade, Charlestown has seen a shift from an established residential community to a more diversified market with increased tourism and demand for rental properties. While it has traditionally been a quieter area, enhancements in local infrastructure, and increased promotion of outdoor activities have attracted a wider demographic.

• Population Growth: In the last ten years, population growth has been moderate; however, the surrounding areas have experienced significant growth, influencing the demand for accommodations.
• Real Estate Investment: Popularity of STRs has risen, particularly in local hotspots, with more investors entering the market, focusing on renovations and refurbishments to attract visitors.
• Diverse Demand: Guests range from those visiting family to outdoor enthusiasts and business travelers attending nearby conferences, all contributing to the steady demand.

Investors looking at Charlestown can expect an overarching positive return on investment (ROI), particularly when considering property acquisition costs, which remain relatively low compared to larger metropolitan areas.

• Entry Costs: Average property prices in Charlestown are around $220,000, making it accessible for both first-time and seasoned investors.
• Projected Cash Flow: Utilizing current ADR and occupancy rates, investors can project an annual rental income of over $25,000 before expenses.
• Expenses: Operating expenses, such as maintenance, marketing, and property management, typically account for roughly 30% of rental income, further assuring a healthy profit margin.
• Long-Term Projections: Considering the upward trajectory of the local and regional tourism market, the STR investment potential looks promising. Projections indicate an average ROI of 8-10% for investors over the next five years, assuming market conditions remain steady.

Seasonality is a vital consideration within the Charlestown STR market. Historical patterns show notable fluctuations in demand throughout the year:

• Peak Season: The late spring to summer months (May-August) constitutes the peak season, driven by family vacations, outdoor activities at Charlestown State Park, and events in nearby Louisville.
• Shoulder Season: September and April see moderate amounts of bookings, particularly for special events in the region, including local fairs and festivals.
• Off-Peak Season: Winter months generally experience lower occupancy rates with cold weather leading to fewer travelers. However, holiday events during December can provide spikes in bookings.

Most STR investors should plan strategies for off-peak times, including discounts or promoting unique winter experiences.

Different property types show varying performance metrics in Charlestown:

• Single-Family Homes: These dominate the market, with an average occupancy rate of 67%. They cater primarily to families and larger groups.
• Condos and Townhomes: These properties typically attract young professionals and couples, showing a lower occupancy rate of 60% but higher nightly rates due to their proximity to urban amenities.
• Unique Stays (Cabins, A-frames): Unique and thematic properties have seen an emerging popularity, particularly among younger travelers. These have an exceptional ROI potential when aligned with local tourist activities.

Based on the property type analysis, single-family homes provide the most stability while unique stays might offer higher returns with targeted marketing.

With detailed insights into guest preferences, STR owners can tailor their offerings:

• Key Amenities: Guests increasingly prioritize high-speed internet, kitchen facilities, outdoor spaces, and laundry options.
• Experience-Based Stays: Tourists show a growing preference for experiences, leading to a demand for properties that provide information about local attraction packages or guided experiences.
• Pet-Friendly Options: As travel becomes more family-oriented, having pet-friendly accommodations can attract a larger segment of the market.

Ensuring that listings include detailed descriptions of amenities and highlight local experiences will capture guest interest effectively.

Investors must navigate the evolving regulatory landscape concerning STRs in Charlestown:

• Licensing Requirements: Currently, STR owners must obtain a business license and follow local zoning laws. It’s essential to familiarize oneself with local ordinances as they can vary widely.
• Taxation: STRs are subject to local taxes on rental income. This requires careful accounting to ensure compliance.
• Neighborhood Restrictions: Some neighborhoods may have stricter rules about short-term rentals, so potential investors should conduct due diligence before purchasing properties.

Staying informed about local regulations and engaging with local policymakers can foster a favorable environment for STR operations.

Charlestown consists of several neighborhoods with distinctive characteristics:

• Historic Downtown: Known for its charm and proximity to dining options. It attracts guests seeking a quaint atmosphere and local experiences.
• Charlestown State Park: More suited for outdoor enthusiasts, this area sees a high volume of STR bookings, particularly in the summer months.
• Residential Suburbs: These areas cater to families and longer-stay guests. They provide quiet, spacious accommodations that appeal to visitors looking for comfort.

Investors should consider the unique characteristics of each neighborhood and how these align with their investment strategies.

The outlook for the STR market in Charlestown remains optimistic, with several trends shaping its future:

• Sustainable Travel: A growing interest in sustainable and green travel options may prompt investments in eco-friendly properties.
• Remote Work: With more individuals choosing remote work, there may be an increase in mid-term rentals as guests opt for longer stays in quiet, comfortable settings.
• Local Attractions Development: Continued investment in local tourism infrastructure could drive additional visitors to the area, further supporting demand for STRs.

Overall, a calculated focus on market trends can significantly enhance investor success in Charlestown's STR market.