Is Ames, Iowa Good for Airbnb Investment?

To start an Airbnb in Ames, Iowa, begin by researching local regulations as Ames requires short-term rental operators to obtain a business license and comply with zoning ordinances that typically allow rentals in residential areas with certain restrictions on occupancy and parking. Contact the Ames Planning and Housing Department to obtain necessary permits, which may include a rental housing license if operating for more than 3 days, and ensure compliance with fire safety codes and building inspections. Find a suitable property by purchasing or leasing in neighborhoods near Iowa State University or downtown Ames, considering proximity to campus, Cy-Ride bus routes, and local attractions like Reiman Gardens or Ada Hayden Heritage Park. Furnish the space with essential amenities including Wi-Fi, kitchen supplies, linens, and Iowa State University-themed decor to appeal to visiting families and prospective students, while ensuring all furniture meets safety standards. List your property on Airbnb and other platforms like VRBO, setting competitive rates based on local market analysis (typically $75-150 per night depending on size and location), and create compelling descriptions highlighting proximity to ISU campus and local amenities. Manage your property by establishing cleaning protocols between guests, maintaining responsive communication, coordinating key exchanges or installing smart locks, and keeping detailed records for tax purposes while staying current with any changes to Ames municipal codes regarding short-term rentals.

To identify profitable short-term rental properties in Ames, Iowa, focus on locations within 1-2 miles of Iowa State University campus, particularly near Campustown, downtown Ames, and residential areas like Somerset and Northridge Heights where visiting parents, prospective students, and university staff frequently stay. Target 3-4 bedroom single-family homes or 2-bedroom condos built after 1990 with modern amenities, full kitchens, parking, and fast internet, as these appeal to families during ISU events like graduation, football games, and orientation weeks. Analyze pricing using AirDNA and Mashvisor to benchmark against existing STRs, aiming for properties under $200,000 that can generate $100-150 per night during peak university periods (August-May) and $75-100 during summer months. Research competition by studying existing Airbnb and VRBO listings within 3 miles of campus, noting their occupancy rates, pricing strategies, and guest reviews to identify market gaps. Utilize tools like BiggerPockets for investment analysis, the Ames Convention and Visitors Bureau website for event calendars, ISU's academic calendar for demand forecasting, and local MLS data through Realtor.com to identify undervalued properties near campus that can capitalize on consistent university-driven demand throughout the academic year.

To obtain an Airbnb/STR permit in Ames, Iowa, you must first contact the City of Ames Planning and Housing Department at City Hall located at 515 Clark Avenue to determine if short-term rentals are permitted in your specific zoning district, as Ames has restrictive regulations on STRs. You'll need to submit an application for a Conditional Use Permit through the Planning Division, which requires a completed application form, site plan showing the property layout, proof of property ownership or authorization from owner, detailed operational plan describing guest capacity and management procedures, and payment of application fees typically ranging from $200-400. Additionally, you must obtain a business license from the City Clerk's office for approximately $25-50 annually, provide proof of liability insurance coverage, and ensure compliance with building and fire safety codes which may require inspections. The property must meet all residential building codes, have adequate parking spaces, and comply with occupancy limits based on square footage and bedroom count. The conditional use permit process involves public notification to neighboring properties, review by planning staff, and potential hearing before the Planning and Zoning Commission, with the entire timeline typically taking 6-8 weeks from application submission to final approval, though this can extend longer if additional documentation or modifications are required.

Short-term rentals (STRs) are legal in Ames, Iowa, but operate under specific regulations established by the city. As of 2023, Ames requires STR operators to obtain a business license and comply with zoning restrictions that primarily limit STRs to certain residential districts while prohibiting them in some neighborhoods to preserve residential character. The city has implemented occupancy limits, parking requirements, and noise ordinances that STR properties must follow. Property owners must also meet safety standards including smoke detectors and emergency egress requirements. Recent changes around 2022-2023 have included stricter enforcement mechanisms and clearer definitions of what constitutes a short-term rental versus traditional lodging. The regulations generally allow STRs in single-family homes and some multi-family properties, but with density restrictions to prevent over-concentration in particular areas, and the city maintains the right to revoke licenses for repeated violations of noise, parking, or occupancy rules.

The best areas for Airbnb investment in Ames, Iowa are the Campustown district near Iowa State University, which attracts parents visiting students, prospective families during campus tours, and business travelers attending university events and conferences throughout the year. The Somerset neighborhood offers upscale housing that appeals to visiting professors, corporate executives, and families seeking comfortable accommodations during graduation ceremonies and football weekends. Downtown Ames provides excellent potential due to its proximity to restaurants, cultural events, and the Ames Intermodal Facility, attracting business travelers and visitors attending Main Street events and festivals. The areas near Reiman Gardens and the Iowa State Center are particularly attractive during major events like VEISHEA celebrations, athletic competitions, and academic conferences, while neighborhoods close to the Iowa State Research Park draw business travelers and consultants working with technology companies and startups in the area.

In Ames, Iowa, Airbnb hosts are subject to Iowa state sales tax at 6% and local hotel/motel tax at 7%, totaling 13% on gross rental receipts. The state sales tax applies to all short-term rental accommodations under 31 days, while the local transient guest tax is collected by the City of Ames and applies to stays in lodging facilities. Airbnb typically collects and remits these taxes automatically for hosts through their platform as of 2018, but hosts should verify this arrangement and may need to register independently with the Iowa Department of Revenue for state sales tax permits and with the City of Ames for local tax collection if not covered by Airbnb's collection service. Monthly remittance is generally required by the 20th of the following month for state taxes, while local tax remittance follows the city's established schedule. Exemptions may apply for stays exceeding 31 consecutive days, which would be considered long-term rentals rather than transient accommodations, and certain government or charitable organization bookings may qualify for exemptions with proper documentation.

Starting an Airbnb in Ames, Iowa requires approximately $180,000-220,000 in total initial investment. Property purchase costs around $150,000-180,000 based on median home prices in Ames as of 2023. Furnishing a 2-3 bedroom property typically costs $8,000-12,000 including furniture, appliances, linens, and decor from retailers like IKEA, Wayfair, and local stores. Initial setup expenses including professional photography, listing creation, and basic renovations total $2,000-3,000. Permits and fees in Ames include business license ($50-100), short-term rental permit ($200-400), and potential zoning compliance costs ($500-1,000). Insurance premiums for short-term rental coverage through companies like Proper Insurance or CBIZ run $1,200-2,000 annually. Utility deposits and connections for electricity, gas, water, internet, and cable cost approximately $800-1,200. First six months operating costs including utilities ($600/month), cleaning services ($100-150 per turnover), supplies and maintenance ($200/month), platform fees to Airbnb and Vrbo (3% of bookings), and marketing expenses total approximately $4,000-6,000, assuming 60-70% occupancy rates typical for Ames market.

Airbnb properties in Ames, Iowa typically generate annual revenues between $15,000-$35,000 for well-positioned properties near Iowa State University, with average daily rates ranging from $65-$120 depending on proximity to campus and property quality. Operating expenses generally consume 40-60% of gross revenue, including cleaning fees ($25-40 per turnover), utilities ($150-250 monthly), property management (10-20% of revenue), insurance ($800-1,200 annually), and maintenance costs ($2,000-4,000 yearly). Properties within walking distance of ISU campus achieve the highest occupancy rates of 65-80% annually, particularly during football season and graduation periods when rates can surge to $200+ per night. A typical 3-bedroom home purchased for $180,000 and converted to short-term rental can yield net profit margins of 15-25% after all expenses, translating to $4,000-$8,000 annual profit. Success factors include strategic location within 2 miles of campus, modern amenities appealing to visiting parents and university guests, professional photography, competitive pricing during peak academic periods, and maintaining superhost status through consistent 4.8+ ratings. Properties targeting the corporate traveler market near downtown Ames or business districts tend to have more stable year-round occupancy but lower peak rates, while student-oriented properties experience significant seasonal fluctuations but command premium pricing during high-demand university events.

Airbnb investments in Ames, Iowa typically generate annual ROI of 8-12% due to consistent demand from Iowa State University students, faculty, and visitors attending university events. Cash-on-cash returns generally range from 6-10% annually, with properties near campus commanding higher rates during peak periods like graduation, football games, and move-in weeks. Most investors achieve profitability within 18-24 months, with average daily rates of $75-120 depending on property size and proximity to Iowa State University. The market benefits from year-round occupancy averaging 65-75%, driven by academic calendar demand, though summer months may see slightly lower occupancy rates. Properties within 2 miles of campus typically outperform those in outlying areas, with some investors reporting ROI as high as 15% for well-positioned, properly managed units that cater to the university community's specific needs.

STRSearch is a national platform that specializes in identifying profitable short-term rental investment properties across markets including Ames, Iowa. In the Ames market, local real estate agents like those at RE/MAX Real Estate Center, Coldwell Banker Hedges Realty, and Century 21 Signature Real Estate have experience with investment properties near Iowa State University. National services include Mashvisor, which provides Airbnb analytics and property recommendations, BiggerPockets for investor networking and deal sourcing, and Awning which offers short-term rental investment analysis. Local property management companies like Ames Property Management and University Property Management can provide insights into rental markets, while national firms such as RedAwning and Vacasa offer market analysis services. Real estate investment companies like Roofstock and Fundrise also provide market data and investment opportunities in college towns like Ames. Additionally, local mortgage brokers and real estate attorneys familiar with investment properties can facilitate purchases in this university-driven rental market.