Is Alexandria, Minnesota Good for Airbnb Investment?

To start an Airbnb in Alexandria, Minnesota, begin by researching local zoning laws and regulations through the City of Alexandria Planning Department, as the city requires short-term rental operators to obtain a conditional use permit and business license, with properties needing to comply with residential zoning requirements and maintain owner occupancy or local management within 30 miles. Contact Douglas County for any additional county-level requirements and ensure compliance with Minnesota state tax obligations including sales tax registration. Find a suitable property in residential zones that allows short-term rentals, focusing on areas near Lake Agnes or downtown Alexandria for tourist appeal, then secure financing and purchase or lease agreements. Obtain necessary permits including the conditional use permit ($200-400), business license ($50-100), and ensure the property meets fire safety codes with proper smoke detectors, carbon monoxide detectors, and emergency exits as required by Minnesota building codes. Furnish the property with quality furniture, linens, kitchen essentials, and amenities like WiFi, focusing on lake-themed or Minnesota cabin aesthetics that appeal to visitors coming for fishing, boating, or exploring the Chain of Lakes region. Create compelling listings on Airbnb, VRBO, and Booking.com with professional photography highlighting lake views or proximity to attractions like Big Ole Viking statue, Arrowwood Resort, or Legacy Golf Club, pricing competitively at $80-150 per night depending on season and property size. Establish management systems including automated messaging, cleaning schedules with local cleaning services, key exchange methods, and 24/7 guest communication, while maintaining detailed records for tax purposes and regularly monitoring reviews to ensure high ratings and continued bookings throughout Alexandria's peak summer tourism season.

To identify profitable short-term rental properties in Alexandria, Minnesota, focus on locations within 1-2 miles of Lake Carlos, Lake Agnes, or downtown Alexandria for maximum guest appeal, as these areas attract tourists year-round for fishing, boating, and local events. Target 2-4 bedroom properties with lake views, docks, or easy lake access, modern amenities like updated kitchens and WiFi, and outdoor spaces for gatherings, as these features command premium rates of $150-300 per night during peak summer months. Analyze comparable STR properties using AirDNA and Mashvisor to benchmark pricing, with Alexandria's seasonal market typically seeing 60-70% occupancy rates in summer and 30-40% in winter, requiring annual revenue projections of $25,000-45,000 for smaller properties. Research competition by monitoring active Airbnb and VRBO listings within a 5-mile radius, noting their amenities, pricing strategies, and guest reviews to identify market gaps. Utilize tools like Rabbu, STR Helper, and local MLS data through Edina Realty or RE/MAX Results to analyze property values, rental potential, and Douglas County regulations, while connecting with Alexandria Lakes Area Chamber of Commerce for tourism data and seasonal trends that impact demand patterns throughout the year.

To obtain an Airbnb/STR permit in Alexandria, Minnesota, contact the Alexandria Planning and Zoning Department at City Hall located at 704 Broadway Street or call 320-763-6678 to begin the application process. You'll need to submit a completed short-term rental license application, provide proof of property ownership or lease agreement with landlord consent, submit a site plan showing the property layout, provide proof of liability insurance (typically $1 million minimum), pass a fire safety inspection conducted by the Alexandria Fire Department, and obtain a business license from the city clerk's office. Required documents include a valid driver's license, property deed or lease, insurance certificate, emergency contact information for guests, parking plan, and waste management plan. The application fee is approximately $150-200 with an annual renewal fee of $100-125, plus inspection fees of around $75-100. The timeline typically takes 4-6 weeks from application submission to approval, including scheduling and completing the required inspections. Alexandria-specific requirements include maintaining a maximum occupancy based on bedrooms (typically 2 people per bedroom plus 2 additional), providing adequate off-street parking (usually 1 space per bedroom), ensuring 24/7 local contact availability within 30 minutes response time, maintaining quiet hours from 10 PM to 8 AM, and adhering to the city's zoning restrictions which may limit STRs in certain residential areas.

Short-term rentals (STRs) are legal in Alexandria, Minnesota, but operate under specific regulations established by the city. Alexandria requires STR operators to obtain a business license and comply with zoning restrictions that primarily limit short-term rentals to commercial and mixed-use districts, while generally prohibiting them in residential neighborhoods to preserve community character. The city has implemented occupancy limits, parking requirements, and noise ordinances that STR properties must follow, along with safety standards including smoke detectors and emergency egress requirements. Recent changes around 2019-2021 saw Alexandria strengthen its regulatory framework by requiring annual license renewals, establishing clearer enforcement mechanisms, and implementing a complaint response system for neighbor concerns. Properties must maintain liability insurance and provide local contact information for guests, while the city reserves the right to revoke licenses for repeated violations of noise, parking, or occupancy rules.

The most promising Airbnb investment areas in Alexandria, Minnesota include the downtown waterfront district near Lake Agnes, which attracts tourists year-round for fishing, boating, and the annual Grape Stomp Festival, plus business travelers visiting the regional medical facilities and corporate offices. The Arrowwood Resort area on Lake Darling offers strong potential due to its proximity to the popular resort, conference center, and golf course that draws both leisure and corporate groups throughout the year. The historic downtown core near Broadway Street benefits from visitors attending events at the Andes Tower Hills ski area during winter months and those exploring the Central Lakes Trail system. The residential neighborhoods surrounding Carlos Creek Winery capture wine tourism traffic and couples seeking romantic getaways, while areas near the Douglas County Fairgrounds see increased demand during the annual county fair and other large events. Properties within walking distance of Lake Le Homme Dieu are particularly attractive for summer rentals due to the lake's popularity for water sports, fishing tournaments, and family vacations, with many guests preferring private accommodations over traditional hotels when staying for extended fishing trips or family reunions.

In Alexandria, Minnesota, Airbnb hosts are subject to both state and local lodging taxes. The Minnesota state lodging tax is 3% on gross receipts from lodging rentals, which applies to short-term rentals under 30 days. Douglas County imposes an additional lodging tax of approximately 3%, and the City of Alexandria levies a local lodging tax of around 3%, bringing the total combined rate to approximately 9%. These taxes are typically collected from guests at the time of booking through Airbnb's automated tax collection system for participating jurisdictions, though hosts may need to register directly with the Minnesota Department of Revenue and local authorities if automatic collection is not available. Remittance is generally required monthly or quarterly depending on volume, with returns due by the 20th of the following month. Hosts must obtain the necessary permits and licenses from both state and local authorities. Exemptions typically include stays of 30 days or longer, certain government employees on official business, and some nonprofit organization stays, though specific exemption criteria should be verified with local tax authorities as regulations can change.

To start an Airbnb in Alexandria, Minnesota, expect total costs around $285,000-$315,000. Property purchase represents the largest expense at approximately $250,000 based on median home prices in the Alexandria area as of 2023. Furnishing costs typically range $15,000-$25,000 for a complete 2-3 bedroom property including furniture, bedding, kitchenware, and décor to create an attractive rental space. Initial setup costs including professional photography, listing creation, and basic marketing materials run about $1,500-$2,500. Permits and fees vary but budget $500-$1,200 for business licenses, short-term rental permits, and any required inspections depending on local Alexandria regulations. Insurance costs increase significantly for short-term rentals, adding approximately $2,000-$3,500 annually above standard homeowner's insurance. Utilities including electricity, gas, water, internet, and cable average $300-$450 monthly in Minnesota. First six months operating costs encompass utilities ($1,800-$2,700), cleaning services between guests ($150-$200 per turnover), supplies and maintenance ($1,000-$1,500), platform fees to Airbnb typically 3% of bookings, and marketing expenses ($500-$1,000), totaling approximately $8,000-$12,000 for the initial six-month period assuming moderate occupancy rates.

Airbnb properties in Alexandria, Minnesota typically generate annual revenues between $15,000-$35,000 for well-positioned lakefront or downtown properties, with average daily rates ranging from $80-$150 during peak summer months and $50-$90 in off-season periods. Operating expenses generally consume 40-60% of gross revenue, including cleaning fees ($30-$50 per turnover), property management (15-25% of revenue), utilities ($150-$300 monthly), insurance ($1,200-$2,000 annually), and maintenance costs averaging $2,000-$4,000 yearly. Properties near Lake Agnes or Carlos Creek typically achieve 60-70% occupancy rates during summer months (May-September) but drop to 25-40% in winter, resulting in net profit margins of 15-25% for successful operators. Success factors include proximity to lakes, fishing access, snowmobile trails, and downtown Alexandria amenities, with properties featuring modern amenities, hot tubs, and boat access commanding premium rates. A typical 3-bedroom lakefront cabin generating $28,000 in annual revenue might incur $16,000 in expenses, yielding approximately $12,000 in net profit, representing a 43% profit margin, though seasonal fluctuations and Minnesota's short tourism season present challenges for year-round profitability compared to more temperate markets.

Airbnb investments in Alexandria, Minnesota typically generate annual ROI of 8-12% with cash-on-cash returns ranging from 6-10%, primarily driven by the city's proximity to Lake Carlos and Lake Agnes which attract summer tourists and fishing enthusiasts. Properties near the lakefront or downtown area generally achieve occupancy rates of 60-75% during peak season (May-September) with average daily rates of $120-180, while off-season rates drop to $80-120 with 30-45% occupancy. Initial investment recovery typically occurs within 7-10 years for properties purchased at $200,000-350,000, with annual gross rental income averaging $18,000-28,000 before expenses. The market benefits from consistent demand from visitors to the Central Lakes region and business travelers, though investors should expect seasonal fluctuations with strongest performance during summer months and hunting season, making timeframe to profitability approximately 18-24 months after accounting for initial setup costs, furnishing, and marketing expenses.

STRSearch is a national platform that helps investors identify profitable short-term rental properties in Alexandria, Minnesota, providing market analysis and investment metrics. Local real estate agents like those at Keller Williams Realty Premier Partners and RE/MAX Results have experience with investment properties in the Alexandria area and understand the vacation rental market around the lakes region. Century 21 Atwood and Coldwell Banker King also serve the Alexandria market with agents knowledgeable about rental property investments. National services include AirDNA for market data and analytics, Mashvisor for investment property analysis, and BiggerPockets for networking with other investors. Vacasa and RedAwning offer property management services for short-term rentals in the area. Local property management companies like Alexandria Property Management and Lakes Area Property Services can assist with ongoing operations. Real estate investment firms such as Roofstock and Fundrise, while primarily focused on traditional rentals, occasionally have short-term rental opportunities. Local mortgage brokers and lenders familiar with investment properties include Bremer Bank and American Bank & Trust, which have branches in Alexandria and understand the local market dynamics for vacation rental financing.