Is Baudette, Minnesota Good for Airbnb Investment?

To start an Airbnb in Baudette, Minnesota, begin by researching local regulations through Lake of the Woods County and the City of Baudette, as this small border town may have specific zoning requirements for short-term rentals, particularly given its proximity to Canada and seasonal tourism patterns. Contact the Lake of the Woods County Planning and Zoning Department to understand permitted zones for vacation rentals and obtain necessary permits, which typically include a conditional use permit and business license, with fees ranging from $100-500. Find a suitable property near Baudette's main attractions like Lake of the Woods, Zippel Bay State Park, or the Canadian border crossing, focusing on waterfront or cabin-style properties that appeal to fishing and outdoor enthusiasts visiting this remote area of approximately 100 residents. Furnish the property with rustic, comfortable amenities including fishing equipment storage, boat access if applicable, warm bedding for cold Minnesota winters, and reliable internet since cellular service can be limited in this remote location. Create your Airbnb listing emphasizing outdoor activities, fishing opportunities, northern lights viewing, and proximity to Canadian attractions, pricing competitively with other northern Minnesota lake properties at approximately $80-150 per night depending on season and amenities. Manage the property by establishing relationships with local cleaning services in nearby Baudette or Williams, coordinate with guests regarding winter access and heating systems, and consider partnering with local fishing guides or outfitters to enhance the guest experience in this outdoor recreation destination.

To identify profitable short-term rental properties in Baudette, Minnesota, focus on waterfront locations along Lake of the Woods or Rainy River, as this border town attracts fishing enthusiasts and Canadian visitors year-round. Target 2-4 bedroom cabins or homes with boat access, fish cleaning stations, and outdoor amenities like fire pits or decks, as properties within 0.5 miles of water typically command $150-250/night during peak fishing seasons (May-September) versus $80-120 for inland properties. Analyze pricing using AirDNA and Mashvisor to benchmark against the limited competition, as Baudette has fewer than 20 active STRs, creating opportunity for well-positioned properties. Research competitors through Airbnb and VRBO, noting that successful properties emphasize fishing guides, boat rentals, and proximity to Zippel Bay State Park or Four Mile Bay. Utilize tools like Rabbu for market analysis, STRData for performance metrics, and connect with local real estate agents familiar with seasonal rental regulations, while monitoring occupancy rates that typically peak at 75-85% during summer months and drop to 30-40% in winter, making properties under $200K with strong summer potential ideal investment targets.

To obtain an Airbnb/STR permit in Baudette, Minnesota, you must first contact the Lake of the Woods County Planning and Zoning Department at 206 8th Avenue SE, Baudette, MN 56623, as the city operates under county jurisdiction for zoning matters. Submit a conditional use permit application along with a detailed site plan, proof of property ownership or lease agreement, liability insurance certificate (minimum $1 million coverage), septic system compliance certificate, well water testing results, and a floor plan showing maximum occupancy limits. The application fee is approximately $350-500, with additional inspection fees of $150-200. Required documents also include a business license from the Minnesota Secretary of State ($135), sales tax permit from Minnesota Department of Revenue, and neighbor notification forms within 500 feet of the property. The approval process typically takes 45-60 days, including a public hearing before the county planning commission. Specific Baudette requirements include maintaining adequate parking (minimum 2 spaces per unit), ensuring compliance with septic capacity for proposed occupancy, meeting fire safety standards with smoke detectors and fire extinguishers, and adhering to quiet hours between 10 PM and 8 AM due to the residential nature of the area near Zippel Bay State Park.

Short-term rentals (STRs) in Baudette, Minnesota are generally legal but subject to state and local regulations. As a small unincorporated community in Lake of the Woods County, Baudette falls under county jurisdiction rather than having its own municipal STR ordinances. Minnesota state law allows STRs but requires hosts to register with the Minnesota Department of Revenue, collect and remit state sales tax and local lodging taxes, and comply with safety requirements including smoke and carbon monoxide detectors. Lake of the Woods County has not implemented specific STR restrictions as of recent years, though properties must still meet basic zoning requirements and health department standards. The area's proximity to Lake of the Woods and its popularity as a fishing destination makes STRs particularly common, with most operating without significant local restrictions beyond standard property maintenance and tax compliance requirements. Recent changes in Minnesota have focused primarily on tax collection enforcement rather than operational restrictions, and Baudette has not seen the type of restrictive STR regulations implemented in larger Minnesota cities like Minneapolis or Saint Paul.

The best areas for Airbnb investment in Baudette, Minnesota are primarily concentrated around the Lake of the Woods waterfront district and the areas near Zippel Bay State Park, approximately 10 miles northeast of town. The waterfront properties along Lake of the Woods offer prime positioning for fishing enthusiasts and ice fishing tourists, particularly during the winter walleye season from December through March when companies like Sportsman's Lodges and Border View Lodge see peak demand. The Zippel Bay area attracts summer visitors for its pristine beaches and camping facilities, creating strong seasonal rental demand from May through September. Properties near the Baudette Bay Marina and boat launch areas perform well due to fishing tournaments and recreational boating traffic. The residential areas along Highway 172 toward the Canadian border also present opportunities, as they serve cross-border travelers and hunters during deer and waterfowl seasons. Winter ice road access points to Lake of the Woods create unique demand for heated accommodations during the famous ice fishing season, when temporary ice cities emerge on the frozen lake, making properties with garage space and fish cleaning facilities particularly attractive to investors.

Airbnb properties in Baudette, Minnesota are subject to Minnesota state sales tax of 6.875% on lodging, which includes the base state sales tax plus local taxes. Lake of the Woods County, where Baudette is located, may impose an additional lodging tax of approximately 3-4%, bringing the total occupancy tax rate to around 9.875-10.875%. These taxes are typically collected by Airbnb directly from guests at the time of booking through their automated tax collection system, which began operating in Minnesota around 2018-2019. Airbnb remits these taxes directly to the Minnesota Department of Revenue and applicable local jurisdictions on behalf of hosts, though individual hosts should verify their registration requirements with local authorities. Properties rented for 30 days or longer are generally exempt from these occupancy taxes, and certain business travelers may qualify for exemptions with proper documentation. Hosts should maintain records of all bookings and tax collections, and while Airbnb handles most tax remittance, hosts remain ultimately responsible for ensuring compliance with all applicable local and state tax obligations in Lake of the Woods County.

The total cost to start an Airbnb in Baudette, Minnesota would be approximately $185,000-$220,000. Property purchase costs around $150,000 based on median home prices in rural northern Minnesota lake communities. Furnishing a 2-3 bedroom property with quality furniture, bedding, kitchen essentials, and décor runs $8,000-$12,000. Initial setup including professional photography, listing creation, welcome materials, and basic renovations costs $2,000-$3,000. Permits and fees including business license, short-term rental permit, and tax registrations total $500-$800. Insurance for short-term rental coverage adds $1,200-$1,800 annually. Utilities including electricity, water, sewer, internet, and seasonal heating average $300-$400 monthly. First six months operating costs including utilities ($2,100), cleaning supplies and services ($1,200), maintenance reserves ($1,000), marketing ($500), and miscellaneous expenses ($800) total approximately $5,600. Additional considerations include potential HOA fees, property management software subscriptions at $50-$100 monthly, and emergency repair funds of $2,000-$3,000 for this lake region property market.

Airbnb properties in Baudette, Minnesota show moderate profitability potential with average nightly rates ranging from $85-120 during peak fishing season (May-September) and $60-85 in off-season months. Properties typically achieve 40-60% occupancy rates annually, generating gross revenues of $18,000-35,000 for well-positioned lakefront cabins and $12,000-22,000 for standard properties. Operating expenses including cleaning fees ($40-60 per turnover), utilities ($150-250 monthly), property management (15-25% of revenue), insurance ($1,200-2,000 annually), and maintenance ($2,000-4,000 yearly) typically consume 45-65% of gross revenue. Net profit margins generally range from 25-40% for owner-operated properties, with successful hosts like those managing fishing cabins near Lake of the Woods achieving higher margins by targeting ice fishing enthusiasts in winter months. Success factors include proximity to fishing access points, modern amenities, reliable WiFi for remote workers, and partnerships with local fishing guides, with properties within 0.5 miles of boat launches commanding 20-30% premium rates during walleye and northern pike seasons.

Airbnb investments in Baudette, Minnesota typically generate annual ROI of 8-12% with cash-on-cash returns ranging from 6-10%, primarily driven by the town's proximity to Lake of the Woods and seasonal fishing tourism. Properties near the lake or with fishing access can achieve higher returns of 12-15% annually, while standard residential properties average 8-10%. The seasonal nature of tourism means strongest performance occurs May through September, with winter ice fishing providing additional but limited revenue. Initial profitability typically occurs within 18-24 months for well-positioned properties, though the small market size of approximately 100 residents limits inventory and guest volume. Average daily rates range from $80-150 depending on property amenities and lake access, with occupancy rates averaging 45-60% annually due to the concentrated tourist season. Properties purchased under $150,000 with minimal renovation needs show the strongest cash-on-cash returns, while higher-end lake properties may require 3-4 years to reach optimal profitability due to increased acquisition and maintenance costs.

STRSearch is a national platform that specializes in identifying profitable short-term rental properties for investors looking to enter the Airbnb market in Baudette, Minnesota. Local real estate agents like those at Keller Williams Realty in nearby International Falls and RE/MAX Lakes Region serve the Baudette area and have experience with vacation rental properties along Lake of the Woods. National services include Mashvisor, which provides Airbnb analytics and property search tools, AirDNA for market data and revenue projections, and BiggerPockets for investor networking and deal sourcing. RedAwning offers property management and investment services for short-term rentals, while local property management companies like Northwoods Property Management and Lake of the Woods Vacation Rentals can assist with ongoing operations. Real estate investment firms such as Roofstock and Awning focus on turnkey rental properties, and platforms like VRBO and HomeAway provide market insights for the northern Minnesota tourism market that drives demand in the Baudette fishing and outdoor recreation area.