Thinking about buying in Montauk and renting for the summer to offset carrying costs? The opportunity is real, but so are the rules, seasonality swings, and line items that make or break your returns. You want a clear plan that balances lifestyle value with investment discipline. This playbook gives you a step-by-step path to model ROI, choose the right property, price the high season, and run operations with confidence. Let’s dive in.
Why Montauk rents so well
Montauk sits at the eastern tip of Long Island within the Town of East Hampton. It draws beachgoers, surfers, anglers, and second‑home visitors from NYC and the Northeast. The summer season is the anchor, with July and August driving the highest rates and longest weekly stays.
- Peak season: Memorial Day through Labor Day, with July and August at the top.
- Shoulders: May, early June, and late September, led by long weekends and events.
- Off season: Winter sees lower demand, but you can attract weekenders and occasional monthly stays.
- Guest profiles: Families and groups in summer, couples and weekenders in shoulders, surfers and anglers throughout the year.
The bottom line: Montauk has strong peak pricing power. Your results depend on choosing the right home, setting a realistic calendar, and managing expenses.
Start with rules and risk
Before you run numbers, confirm you can legally operate and insure the property.
- Town rules: Montauk follows Town of East Hampton code. Verify short‑term rental registration or permits, any minimum stays, and enforcement. Municipal rules can change, so get current guidance from the town.
- Taxes: Short‑term rentals can trigger New York State sales tax and local occupancy or transient taxes. Understand registration, collection, and remittance. Some platforms collect part of these taxes, but not always all of them.
- Zoning: Confirm the property type allows seasonal rental and check any HOA or condo restrictions.
- Safety and capacity: Fire and life safety, maximum occupancy, pool and hot tub rules, and septic system capacity all matter on the East End.
- Parking, noise, nuisance: Expect local standards, fines for violations, and possible on‑site contact requirements.
- Insurance and coastal risk: Many coastal homes need flood insurance and wind coverage. Premiums and terms can shift. Confirm insurability and quotes early.
Bold reminder: Confirm current Town of East Hampton regulations, Suffolk County tax rules, and platform collection practices before purchasing. Consult a local attorney and a New York CPA experienced in short‑term rentals.
Build a realistic ROI model
Anchor your model in month‑by‑month assumptions. Use recent data from the past 12 to 24 months and plan low, base, and high cases.
Key metrics and formulas:
- Gross rental revenue = ADR × occupied nights
- Net Operating Income (NOI) = gross revenue − operating expenses (excludes mortgage)
- Cap rate = NOI ÷ purchase price
- Cash‑on‑cash return = annual pre‑tax cash flow ÷ total cash invested
- Break‑even occupancy = (fixed annual expenses + debt service) ÷ [ADR × 365 × (1 − variable expense rate)]
Include these expense categories:
- Property taxes and insurance, including flood and wind where applicable
- Utilities: electric, water, gas, internet
- Repairs and maintenance, plus an annual capex reserve
- Property management (commonly 20 to 30 percent for full service in seasonal markets)
- Cleaning and turnovers, often 150 to 400 dollars per clean for 2 to 4 bedrooms, higher for larger homes
- Platform fees and marketing
- Supplies, linens, and replacements
- HOA or condo fees if applicable
Hypothetical Montauk model
The numbers below are for illustration only. Replace them with current quotes and your property details.
Assumptions (base case):
- Purchase price: 1,800,000 dollars
- Down payment: 30 percent (540,000 dollars)
- Closing and initial setup: 65,000 dollars
- Loan: 1,260,000 dollars, 30‑year fixed, illustrative 7 percent rate
- Management: 25 percent of gross revenue
- Cleaning: 300 dollars per turnover, 30 turnovers
- Taxes and insurance: 25,000 dollars
- Utilities: 6,000 dollars
- Maintenance and reserve: 10 percent of revenue
- Platform and marketing fees: 3 percent of revenue + 1,500 dollars
- Supplies: 2,500 dollars
Illustrative ADR and occupancy by month:
| Month | ADR | Occupancy |
|---|---|---|
| May | $650 | 45% |
| June | $900 | 65% |
| July | $1,500 | 92% |
| August | $1,600 | 92% |
| September | $1,000 | 60% |
| October | $550 | 25% |
| November | $500 | 20% |
| December | $550 | 20% |
| January | $450 | 15% |
| February | $450 | 15% |
| March | $450 | 18% |
| April | $500 | 25% |
Estimated annual gross revenue with the above: about 154,000 dollars.
Illustrative annual expenses:
- Management: about 38,500 dollars
- Cleaning: about 9,000 dollars
- Taxes and insurance: 25,000 dollars
- Utilities: 6,000 dollars
- Maintenance and reserve: about 15,400 dollars
- Platform fees: about 4,600 dollars
- Supplies and marketing: about 4,000 dollars
Illustrative NOI: about 51,000 dollars. Cap rate: about 2.9 percent. With the example loan, annual debt service is about 100,500 dollars, which produces negative cash flow in this base case.
How to improve the model:
- Self‑manage or hybrid manage: Reducing management to 10 to 15 percent can swing 15,000 to 25,000 dollars or more.
- Raise ADR with premium positioning: High‑quality photos, staging, and top amenities can add 5 to 15 percent to ADR in peak months.
- Extend shoulder season: Target May, June, and late September weekends with 3‑night minimums and event‑led pricing.
- Optimize turnovers: Encourage weekly bookings in summer to reduce cleaning frequency and increase occupancy.
- Adjust leverage: A larger down payment or different loan product lowers debt service and break‑even.
What to buy in Montauk
Focus on features that command premiums and reduce headaches.
High‑value location factors:
- Easy beach access, water views, or a short walk to the shore
- Proximity to downtown Montauk, Ditch Plains surf, Montauk Point, and marinas
- Reliable on‑site parking and simple access
Layouts that rent well:
- 3 to 5 bedrooms that sleep 6 to 12 guests
- Flexible sleeping options such as bunks or convertible beds
- Multiple bathrooms for groups
Amenities that lift income:
- Outdoor living: deck or patio, grill, and an outdoor shower
- Air conditioning for summer comfort
- Fast, reliable Wi‑Fi
- Hot tub or pool where permitted, or a private dock if applicable
- Pet‑friendly setups with clear rules and fees
- Quality coastal furnishings and professional photography
- Storage for surfboards, kayaks, and bikes
Operational essentials:
- Durable, easy‑to‑clean finishes and on‑site washer and dryer
- Straightforward HVAC and plumbing for fewer callouts
- Clear parking and simple check‑in
Red flags to investigate:
- High‑risk flood zones without mitigation
- Limited septic capacity or outdated systems
- Code violations or unclear rental permissions
- Severe parking limits or seasonal access issues
Pricing and calendar tactics
Set your calendar to mirror demand and reduce dead space.
- Summer strategy: Weekly minimums in July and August, often Saturday to Saturday, with strict changeover rules.
- Shoulder weekends: 3‑night minimums in May, June, and late September.
- Holidays and events: Price at a premium for the 4th of July and major local events.
- Off season: Offer discounted monthly stays for winter to stabilize income and cover utilities.
- Dynamic pricing: Use tools or a local manager to adjust based on occupancy, competition, and lead time.
Operations and management
Choose a management model that fits your time and margin goals.
- Self‑manage: Save fees, but plan for guest communications, vendor scheduling, and 24/7 issues.
- Full‑service manager: Turnkey marketing, compliance support, and vendor coverage, commonly at 20 to 30 percent of revenue in seasonal markets.
- Hybrid: You handle bookings and guest messaging, a local team handles cleaning and repairs.
Guest experience pays off over time. Fast responses, accurate listings, clear house rules, and spotless turnovers drive better reviews, higher occupancy, and stronger ADR.
Due diligence checklist
Regulatory and legal:
- Confirm short‑term rental legality for the property and any registration or permit requirements
- Check HOA or condo rules and minimum stays
- Review parking, noise, and nuisance rules
Physical and environmental:
- Verify flood zone status and elevation, and price insurance accordingly
- Inspect septic capacity and system condition, plus local upgrade requirements
- Assess structure, roof, HVAC, electric, and coastal wear from salt air
- Confirm parking capacity and any street or seasonal rules
Market and financial:
- Pull comparable short‑term performance by property type and month
- Get written ADR and occupancy estimates from local managers
- Obtain quotes for property, liability, flood, and wind insurance
- Stress test: low bookings, weather events, and higher operating costs
Title and insurance:
- Confirm clean title and any easements that affect rental use
- Verify insurability and whether prior claims impact premiums
Risk and exit planning
- Regulatory shifts: Build conservative models and be ready to adjust minimum stays or convert to longer terms.
- Weather and coastal hazards: Maintain appropriate coverage, emergency plans, and mitigation.
- Seasonality and vacancy: Diversify across platforms, market shoulder seasons, and craft attractive monthly off‑season rates.
- Rising costs: Keep reserves and update pricing annually.
- Exit strategies: Shift to long‑term rental, reposition as a second home, or sell with a documented rental history to support value.
Your next step
A strong Montauk seasonal rental starts with a clear plan. If you want help tailoring the numbers to your goals, evaluating properties by revenue potential, and building a compliant operations plan, request a consult. You will get straight answers, practical options, and a step‑by‑step path to move forward confidently.
Connect with Michael Petersohn to Request a Personal Market Consultation.
FAQs
What months drive most Montauk rental income?
- July and August are the peak months, with Memorial Day through Labor Day as the primary season. May, early June, and late September act as shoulders with strong weekends.
How do permits and taxes work for Montauk short‑term rentals?
- Montauk follows Town of East Hampton rules, and short‑term rentals can be subject to New York State sales tax and local occupancy taxes. Verify registration, collection, and remittance with the town and a New York CPA.
What management fee should I expect in a seasonal market?
- Full‑service short‑term management commonly ranges from 20 to 30 percent of rental revenue, with possible variations for off‑season or owner‑sourced bookings.
Which amenities increase ADR the most in Montauk?
- Beach‑proximate locations, outdoor living spaces, air conditioning, fast Wi‑Fi, pools or hot tubs where permitted, and pet‑friendly setups often command higher rates.
How should I price weekends versus weekly stays?
- Use weekly minimums in July and August, then 3‑night minimums for shoulder weekends. Price holidays and major events at a premium and offer discounts for off‑season monthly stays.
Do I need flood insurance for a Montauk rental?
- Many coastal properties require flood insurance and specialized wind coverage. Confirm the home’s flood zone, elevation, and insurability with your insurance broker early in the process.
