Airbnb in Granada: is it really profitable?

Authored by the expert who managed and guided the team behind the Nicaragua Property Pack

Yes, the analysis of Granada's property market is included in our pack

Who is the author of this content?

THE LATINVESTOR

A team specialized in real estate investing in LATAM countries

We are a team of financial experts, legal professionals, developers, and local real estate specialists dedicated to helping people like you avoid mistakes when investing in real estate in a foreign place, particularly in Granada (Nicaragua). If you'd like to learn more about us, you can check our presentation page.

How this content was created 🔎📝

At The LatInvestor, we explore the Nicaraguan real estate market every day. Our team doesn't just analyze data from a distance—we're actively engaging with local realtors, investors, and property managers in cities like Granada, León, and Managua. This hands-on approach allows us to gain a deep understanding of the market from the inside out.

These observations are originally based on what we've learned through these conversations and our observations. But it was not enough. To back them up, we also needed to rely on trusted resources

We prioritize accuracy and authority. Trends lacking solid data or expert validation were excluded.

Trustworthiness is central to our work. Every source and citation is clearly listed, ensuring transparency. A writing AI-powered tool was used solely to refine readability and engagement.

To make the information accessible, our team designed custom infographics that clarify key points. We hope you will like them! All illustrations and media were created in-house and added manually.

What are the most profitable neighborhoods in Granada for Airbnb rentals?

Centro Histórico stands out as the most profitable area for Airbnb in Granada, generating annual revenues between $18,000 and $22,000 for well-managed properties.

The area around the Cathedral and Parque Central commands the highest nightly rates, typically $55-65 per night, due to its proximity to major attractions and restaurants. Properties within a 3-block radius of the central park achieve occupancy rates of 70-75% during peak season (December through April).

The Calle La Calzada district also performs exceptionally well, with colonial-style homes and boutique accommodations attracting tourists seeking authentic experiences. This pedestrian-friendly street lined with restaurants and bars generates consistent bookings year-round, with properties averaging $45-55 per night.

Neighborhoods near Lake Nicaragua, particularly areas with lake views, command premium rates but have slightly lower occupancy due to distance from the historic center. These properties typically earn $40-50 per night but may achieve only 60-65% occupancy during peak periods.

Residential areas further from the center, while offering lower property acquisition costs, generate significantly less revenue, typically $25-35 per night with occupancy rates below 55%.

What types of properties in Granada perform best on Airbnb in terms of occupancy and nightly rate?

Colonial-style houses with 2-3 bedrooms consistently achieve the highest performance, combining strong occupancy rates with premium nightly rates.

Entire homes with traditional architectural features like high ceilings, interior courtyards, and tile work attract tourists seeking authentic Nicaraguan experiences. These properties typically command $50-70 per night and achieve 65-75% occupancy during peak season.

One-bedroom apartments in historic buildings perform well for couples and solo travelers, averaging $40-50 per night with occupancy rates around 70%. The compact size makes them easier to maintain while still capturing the colonial charm that tourists seek.

Properties with outdoor spaces like terraces, courtyards, or gardens significantly outperform those without, often commanding 15-20% higher rates. Air conditioning is essential given Granada's tropical climate and can justify rate premiums of $5-10 per night.

Private rooms in shared spaces underperform compared to entire properties, typically earning only $20-30 per night with lower occupancy rates around 50-60%, as most international tourists prefer privacy and complete control of their accommodation.

What is the average nightly rate for similar listings in the area I'm considering?

Property Type	Centro Histórico	Near Cathedral	Calle La Calzada	Lake Area	Residential
1-bedroom apartment	$45-55	$40-50	$40-48	$35-45	$25-35
2-bedroom house	$60-75	$55-65	$50-60	$45-55	$35-45
3-bedroom colonial	$80-100	$70-85	$65-80	$55-70	$45-60
Studio/efficiency	$35-45	$30-40	$30-38	$25-35	$20-30
Private room	$25-35	$20-30	$20-28	$18-25	$15-22

What is the typical occupancy rate for comparable properties throughout the year?

Granada's Airbnb market shows distinct seasonal patterns, with peak season (December through April) achieving occupancy rates of 65-75% for well-located properties.

During the dry season peak months of January through March, top-performing properties in Centro Histórico maintain occupancy rates of 75-80%. February typically represents the strongest month, with some properties achieving 85% occupancy due to favorable weather and international visitor influx.

The shoulder seasons of November-December and April-May see occupancy rates drop to 55-65% as tourist volumes decline. Properties must adjust pricing strategies during these periods to maintain competitiveness.

The rainy season from June through October presents the biggest challenge, with occupancy rates falling to 35-50% even for prime properties. Many successful operators pivot to longer-term stays or target digital nomads during this period to maintain revenue flow.

Annual average occupancy rates for well-managed properties in prime locations typically range from 60-65%, while properties in less desirable areas average 45-55% annually.

What would be the projected annual gross rental income for my chosen property type and location?

A 2-bedroom colonial house in Centro Histórico can generate $18,000-22,000 in annual gross rental income under optimal management.

Properties averaging $60 per night with 65% annual occupancy generate approximately $14,200 yearly. Premium properties commanding $75 per night with 70% occupancy can reach $19,200 annually. The top 10% of properties with superior locations and amenities achieve $22,000+ through dynamic pricing and exceptional guest service.

One-bedroom apartments in prime areas typically generate $12,000-16,000 annually, with average nightly rates of $45 and occupancy rates around 65%. These properties offer easier management and lower operational costs while still capturing significant tourism demand.

Properties in secondary locations like residential neighborhoods typically generate $8,000-12,000 annually due to lower nightly rates and reduced occupancy. However, these properties also require lower initial investment, potentially offering better return ratios.

Seasonal optimization can increase revenues by 15-25% through strategic pricing during peak periods and targeted marketing to specific traveler segments during slower months.

What are the estimated running costs, including cleaning, utilities, Airbnb fees, maintenance, and local taxes?

Total operating expenses for Granada Airbnb properties typically range from $4,000-7,000 annually, representing 25-35% of gross rental income.

Cleaning costs average $8-12 per turnover, totaling $1,200-2,000 annually for properties with regular bookings. Professional cleaning services in Granada charge lower rates than major international destinations while maintaining quality standards that meet guest expectations.

Utilities including electricity, water, and internet typically cost $150-250 monthly ($1,800-3,000 annually), with air conditioning being the largest expense during hot months. High-speed internet is essential and costs $30-50 monthly for reliable service that supports remote workers and digital nomads.

Airbnb service fees amount to approximately 3% of gross bookings, while payment processing adds another 3-4%. For a property generating $18,000 annually, platform fees total roughly $1,100-1,300.

Property taxes in Granada are relatively low, typically $200-500 annually for residential properties valued under $150,000. Insurance costs range from $300-600 yearly depending on coverage levels and property value.

Maintenance and repairs average $800-1,500 annually, including regular upkeep, minor repairs, and periodic deep cleaning or painting to maintain property standards and guest satisfaction.

After expenses, what would be the gross yield and the net yield for the property?

Net yields for well-located Airbnb properties in Granada typically range from 8-14%, significantly higher than long-term rental yields of 5-8%.

A $120,000 colonial property in Centro Histórico generating $18,000 gross annual income achieves a 15% gross yield. After operating expenses of $5,500, the net yield reaches 10.4%, demonstrating strong investment performance compared to regional alternatives.

Properties in the $80,000-100,000 price range near the cathedral can achieve net yields of 12-16% when generating $14,000-16,000 annually with operating expenses of $4,000-5,000. These mid-tier properties often provide the best risk-adjusted returns for international investors.

Premium properties over $150,000 typically achieve net yields of 8-12% due to higher acquisition costs, though they often provide more stable income and appreciation potential. These properties attract higher-end travelers willing to pay premium rates for luxury amenities.

It's something we develop in our Nicaragua property pack.

How does the expected net yield from short-term rentals compare with a long-term rental strategy?

Short-term rentals in Granada significantly outperform long-term rental yields, typically generating 40-60% higher net returns despite increased operational complexity.

Long-term rentals in Granada's prime areas generate $400-600 monthly ($4,800-7,200 annually), resulting in net yields of 5-8% after expenses. These rentals provide stable, predictable income with minimal management requirements and lower operational costs.

Airbnb properties in the same areas generate $12,000-20,000 annually, achieving net yields of 8-14% despite higher operating expenses. The premium reflects tourists' willingness to pay significantly more for short-term accommodations compared to local long-term rental rates.

Short-term rentals require active management, regular maintenance, and guest services, adding complexity that long-term rentals avoid. However, the income differential often justifies the additional effort, particularly for investors comfortable with hospitality operations.

Long-term rentals offer better protection against tourism fluctuations and regulatory changes, while short-term rentals provide higher income potential and greater pricing flexibility during peak demand periods.

What local regulations or restrictions apply to short-term rentals in Granada, and how might they affect profitability?

We did some research and made this infographic to help you quickly compare rental yields of the major cities in Nicaragua versus those in neighboring countries. It provides a clear view of how this country positions itself as a real estate investment destination, which might interest you if you're planning to invest there.

Nicaragua currently has minimal regulations specifically targeting short-term rentals, creating a relatively permissive environment for Airbnb operations.

Property owners must register their business with INTUR (Instituto Nicaragüense de Turismo) and obtain a tourism license if operating as a formal accommodation business. This process typically costs $100-200 annually and requires basic safety and hygiene standards compliance.

Municipal permits from Granada's city government may be required for commercial accommodation activities, with fees ranging from $50-150 annually depending on property size and location. These permits are generally straightforward to obtain and renew.

Tax obligations include declaring rental income on annual tax returns, with rates of 10-15% on net income for non-residents and 10% for residents. However, enforcement remains limited, and many small operators face minimal scrutiny from tax authorities.

As of September 2025, no specific restrictions limit the number of short-term rental days per year or require neighbor approval, unlike many international destinations. This regulatory freedom currently supports profitability but could change as the market matures.

What seasonal trends or tourist patterns should I account for when estimating revenue?

1. **Peak Season (December-April)**: Highest demand driven by North American winter visitors and favorable weather conditions, with rates 30-50% above annual averages2. **Semana Santa (March-April)**: Domestic and regional tourism surge requiring advance booking strategies and premium pricing opportunities3. **Summer Months (June-August)**: European vacation period providing moderate demand despite rainy season challenges4. **Hurricane Season (September-November)**: Lowest occupancy period requiring significant rate reductions and potential closure considerations5. **Festival Periods**: Specific events like Poetry Festival or religious celebrations creating short-term demand spikes worth capturing

Successful operators implement dynamic pricing strategies that capitalize on these patterns while maintaining competitiveness during slower periods through extended-stay promotions and digital nomad targeting.

What level of competition exists in my target area, and how could it impact my occupancy and pricing?

Granada's Airbnb market shows moderate competition with approximately 200-300 active listings competing for tourist demand.

Centro Histórico has the highest concentration of short-term rentals, with roughly 80-100 properties within a 6-block radius of the central park. This density creates pricing pressure during low season but also indicates strong underlying demand that supports multiple operators.

Competition intensity varies significantly by property type, with unique colonial properties facing less direct competition than standard apartments. Properties offering distinctive features like rooftop terraces, interior courtyards, or lake views can command premiums and maintain higher occupancy despite competitive markets.

New supply continues entering the market as foreign investors recognize Granada's tourism potential, potentially increasing competition over the next 2-3 years. However, tourism growth has historically kept pace with accommodation supply increases.

It's something we develop in our Nicaragua property pack.

What potential risks or downsides could reduce profitability, and how can I mitigate them?

Political instability represents the primary risk for Nicaragua's tourism sector, with potential civil unrest or government changes affecting international visitor confidence.

Currency devaluation poses ongoing risk, as most property purchases occur in USD while some operating expenses accumulate in córdobas. Maintaining USD-denominated pricing helps protect against local currency weakness, though this may impact competitiveness with local operators.

Hurricane and natural disaster risks require comprehensive insurance coverage and emergency management planning. Properties should maintain adequate reserves for potential repair costs and revenue interruptions during severe weather events.

Regulatory changes could introduce new licensing requirements, taxation, or operational restrictions as the government recognizes short-term rental growth. Staying informed about proposed legislation and maintaining compliance with existing requirements provides protection against sudden regulatory shifts.

Market saturation risks increase as more properties enter the short-term rental market, potentially reducing occupancy rates and forcing rate competition. Differentiation through superior amenities, professional photography, and exceptional guest service helps maintain competitive advantages.

Property management challenges for international owners include finding reliable local operators, maintaining quality standards, and handling guest issues remotely. Establishing relationships with trusted local partners before investment helps mitigate operational risks.

Conclusion

This article is for informational purposes only and should not be considered financial advice. Readers are advised to consult with a qualified professional before making any investment decisions. We do not assume any liability for actions taken based on the information provided.

Sources

1. Airbnb Granada Nicaragua Listings
2. Instituto Nicaragüense de Turismo Regulations
3. Nicaragua Tax Authority Property Guidelines
4. AirDNA Granada Market Data
5. Booking.com Granada Accommodation Rates
6. Property Radar Nicaragua Market Analysis
7. CEPAL Nicaragua Tourism Statistics
8. The LatInvestor Nicaragua Property Market