Is Bloomington, Illinois Good for Airbnb Investment?

To start an Airbnb in Bloomington, Illinois, begin by researching local regulations as the city 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. Contact Bloomington's Community Development Department to verify specific zoning requirements for your property location and obtain necessary permits, which may include a business license ($50-100 annually) and potentially a special use permit depending on your zone. Find a suitable property by searching areas near Illinois State University or downtown Bloomington, considering factors like proximity to attractions, parking availability, and neighborhood safety, with average property prices ranging $150,000-300,000 for suitable rental homes. Furnish the space with essential amenities including comfortable bedding, kitchen supplies, WiFi, TV, and safety equipment like smoke detectors and fire extinguishers, budgeting approximately $5,000-15,000 for complete furnishing. Create your Airbnb listing with professional photos, competitive pricing (typically $75-150/night in Bloomington), and detailed descriptions highlighting proximity to ISU campus and local attractions like Miller Park Zoo. Manage your property by establishing check-in procedures, maintaining cleanliness standards, responding promptly to guest communications, and ensuring compliance with Illinois state tax requirements including collecting and remitting applicable lodging taxes, while considering property management services if you plan to scale or live remotely.

To identify profitable short-term rental properties in Bloomington, Illinois, focus on locations within 2-3 miles of Illinois State University and downtown areas, as these generate consistent demand from visiting families, business travelers, and university events. Target 2-4 bedroom properties built after 1980 with modern amenities, parking, and outdoor spaces, as these command higher nightly rates of $80-150 compared to basic units at $50-80. Analyze comparable STR properties using AirDNA and Mashvisor to assess occupancy rates (aim for 65%+ annually) and revenue potential, while researching seasonal patterns around ISU's academic calendar and local events like the Illinois Shakespeare Festival. Study competition by examining similar properties within a 5-mile radius, noting their pricing, amenities, and guest reviews to identify market gaps. Utilize Bloomington-Normal Area Convention and Visitors Bureau data for tourism trends, partner with local property management companies familiar with city regulations, and leverage tools like Rabbu and AllTheRooms for market analysis, while ensuring compliance with Bloomington's zoning laws and any STR licensing requirements that may apply to residential properties.

To obtain an Airbnb/STR permit in Bloomington, Illinois, you must first contact the City of Bloomington Planning Department at City Hall located at 109 E. Olive Street to determine if short-term rentals are permitted in your specific zoning district, as the city requires a conditional use permit for most STR operations. You'll need to submit an application including a completed conditional use permit form, site plan showing the property layout, proof of property ownership or lease agreement, certificate of insurance with minimum $1 million liability coverage, floor plan of the rental unit, parking plan demonstrating adequate off-street parking, and a management plan detailing how the property will be operated and maintained. The application fee is approximately $500-750 for the conditional use permit, plus additional fees for public notices estimated at $200-300. You must also obtain a business license from the City Clerk's office for around $50-100 annually and register with the Illinois Department of Revenue for state tax collection. The process typically takes 60-90 days as it requires review by planning staff, potential neighborhood notification, and approval by the Planning Commission or City Council. Bloomington specifically requires that STRs maintain the residential character of neighborhoods, provide adequate parking (typically 2 spaces per unit), have a local contact person available 24/7 within 30 minutes of the property, limit occupancy based on bedroom count plus two additional guests, and comply with all building and fire safety codes including smoke detectors in each bedroom and common areas.

Short-term rentals (STRs) are legal in Bloomington, Illinois, but operate under specific regulations established by the city. As of 2023, Bloomington requires STR operators to obtain a business license and comply with zoning restrictions that generally 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 operators must follow, along with safety standards including smoke detectors and emergency egress requirements. Recent changes have included stricter enforcement mechanisms and potential caps on the number of STR permits in certain areas, with the city council periodically reviewing regulations in response to neighborhood concerns about housing availability and community impact. Property owners must register their STRs annually, maintain local contact information for guests, and ensure compliance with all applicable building and fire codes, while violations can result in fines or permit revocation.

The best Airbnb investment areas in Bloomington, Illinois center around Illinois State University and downtown districts. The area near ISU campus, particularly neighborhoods within 1-2 miles of the university, offers strong rental demand from visiting parents during graduation, homecoming, and move-in periods, as well as academic conferences and sporting events at Redbird Arena. Downtown Bloomington, especially around the historic courthouse square and Cultural District, attracts business travelers visiting State Farm Insurance headquarters and other corporate offices, plus tourists attending events at the Bloomington Center for the Performing Arts. The Twin Cities area (Bloomington-Normal corridor) near Uptown Normal provides access to both ISU activities and the Children's Discovery Museum, drawing families year-round. Areas near Interstate 55 and Veterans Parkway offer convenience for business travelers and those attending events at the Pepsi Ice Center or visiting nearby attractions like Beer Nuts factory tours, with properties typically generating steady occupancy from corporate visitors to major employers like Country Financial and OSF HealthCare.

In Bloomington, Illinois, Airbnb hosts are subject to multiple lodging taxes including the state Hotel Operators' Occupation Tax of 6%, McLean County's hotel/motel tax of 5%, and the City of Bloomington's hotel/motel tax of 8%, resulting in a combined rate of approximately 19% on short-term rental stays. These taxes are typically collected by Airbnb directly from guests at the time of booking and remitted to the appropriate tax authorities on behalf of hosts, though hosts should verify their registration status with the Illinois Department of Revenue and local tax collectors. The state tax applies to gross rental receipts and must be remitted monthly if collections exceed $200, while county and city taxes follow similar collection schedules with quarterly or monthly remittance depending on volume. Stays of 30 days or longer are generally exempt from these occupancy taxes, and some jurisdictions may provide exemptions for certain types of accommodations or guests, such as government employees on official business, though hosts should confirm current exemption criteria with McLean County and the City of Bloomington tax offices as rates and procedures can change annually.

To start an Airbnb in Bloomington, Illinois, the total initial costs would be approximately $185,000-$220,000. Property purchase represents the largest expense at $140,000-$160,000 based on median home prices in the area. Furnishing costs typically range $8,000-$12,000 for a complete 2-3 bedroom property including furniture, bedding, kitchenware, and electronics. Initial setup costs including professional photography, listing creation, and basic renovations average $2,000-$4,000. Permits and fees vary but expect $300-$800 for business licenses, short-term rental permits, and city registration requirements. Insurance costs approximately $1,200-$2,000 annually for landlord and short-term rental coverage. Utility setup and deposits total around $500-$800 for electricity, gas, water, internet, and cable services. First six months of operating costs including utilities ($600-$900 monthly), cleaning services ($75-$100 per turnover), maintenance reserves ($200-$400 monthly), and platform fees (3% of bookings) would total approximately $6,000-$10,000 depending on occupancy rates and property size.

Airbnb properties in Bloomington, Illinois typically generate annual revenues of $15,000-$35,000 depending on property type and location, with 2-bedroom units near Illinois State University averaging $2,100-$2,800 monthly during peak academic periods and $1,200-$1,800 during summer months. Operating expenses generally range from 40-60% of gross revenue, including cleaning fees ($75-$125 per turnover), property management (15-25%), utilities ($150-$300 monthly), insurance ($1,200-$2,000 annually), and maintenance costs averaging $2,500-$4,000 yearly. Properties within walking distance of ISU campus or downtown Bloomington command premium rates and achieve 65-80% occupancy rates, resulting in net profit margins of 25-35% for well-managed properties. Success factors include strategic location near university facilities, professional photography, competitive pricing during football weekends and graduation periods, and maintaining high cleanliness standards. A case study from 2023 showed a 3-bedroom house near ISU generating $28,500 in annual revenue with $17,100 in expenses, yielding a 40% profit margin, while properties in residential areas farther from campus typically see 15-25% margins due to lower occupancy rates and pricing power.

Airbnb investments in Bloomington, Illinois typically generate annual ROI of 8-12% with cash-on-cash returns ranging from 6-10%, primarily driven by the presence of Illinois State University which creates consistent demand from visiting families, prospective students, and university events. Properties within 2-3 miles of campus command premium rates of $80-120 per night during peak periods (graduation, homecoming, move-in weekends) and $50-80 during regular academic periods, with occupancy rates averaging 65-75% annually. Initial profitability typically occurs within 18-24 months for properties purchased with 20-25% down payments, assuming average acquisition costs of $120,000-180,000 for suitable 2-3 bedroom properties. The market benefits from limited hotel inventory and strong seasonal demand patterns, though investors should account for summer vacancy periods when university activity decreases, requiring diversification into business travelers and regional visitors to maintain consistent revenue streams throughout the year.

STRSearch leads the national market for Airbnb investment property analysis and market research, providing comprehensive data on short-term rental performance in Bloomington, Illinois. Local real estate agents specializing in investment properties include Coldwell Banker Honig-Bell (established 1950s), RE/MAX Traders Unlimited, and Berkshire Hathaway HomeServices Snyder Real Estate, with agents like those at Realty Executives and Century 21 Affiliated often working with investors seeking rental properties in the Normal-Bloomington area. National services include Mashvisor for property analysis, AirDNA for market data, Awning for full-service Airbnb investment management, Roofstock for turnkey rental properties, and BiggerPockets for investor networking and education. Local property management companies such as Heartland Property Management and University Property Management cater to the student rental market given Illinois State University and Illinois Wesleyan University's presence, while services like RedAwning and Vacasa provide short-term rental management. Investment-focused mortgage brokers and lenders in the area include First Mid Bank & Trust and Busey Bank, both established regional institutions familiar with investment property financing in McLean County.