Is Bloomington, Minnesota Good for Airbnb Investment?

To start an Airbnb in Bloomington, Minnesota, begin by researching the city's short-term rental regulations, as Bloomington requires a rental license and compliance with zoning ordinances that typically allow short-term rentals in residential areas with specific restrictions on occupancy and parking. Contact the Bloomington Community Development Department to obtain the necessary permits, including a business license and short-term rental permit, which may cost around $100-300 annually and require property inspections for safety compliance. Find a suitable property by purchasing or leasing a home, condo, or apartment in neighborhoods like Old Bloomington, East Bloomington, or near the Mall of America, with properties ranging from $200,000-500,000 for purchase or $1,200-2,500 monthly for rental. Furnish the space with quality furniture, linens, kitchen essentials, and amenities like WiFi, smart TV, and local guidebooks, budgeting approximately $5,000-15,000 for a complete setup. Create your Airbnb listing with professional photos, competitive pricing ($80-200 per night depending on size and location), and detailed descriptions highlighting proximity to attractions like Mall of America, Minneapolis-St. Paul Airport, and downtown Minneapolis. Manage your property by establishing check-in procedures, maintaining cleanliness standards, responding promptly to guest inquiries, coordinating cleaning services between stays, and ensuring compliance with Bloomington's noise ordinances and occupancy limits while monitoring local tax requirements including Minnesota state sales tax and any applicable Bloomington lodging taxes.

To identify profitable short-term rental properties in Bloomington, Minnesota, focus on locations within 10-15 minutes of Minneapolis-St. Paul International Airport, near Mall of America, or close to the Minnesota River valley for recreational appeal, as these areas attract business travelers and tourists year-round. Target 2-4 bedroom single-family homes or condos built after 1990 with modern amenities, parking, and outdoor spaces, as winter weather makes covered parking essential and properties near light rail stations perform exceptionally well. Conduct pricing analysis using AirDNA and Mashvisor to identify properties where potential STR revenue exceeds long-term rental income by 40-60%, typically finding sweet spots in the $200,000-400,000 range in neighborhoods like East Bloomington or near Hyland Lake Park Reserve. Research competition by analyzing existing Airbnb and VRBO listings within a 2-mile radius, identifying gaps in amenities or pricing, and noting that corporate housing demand from companies like Toro Company and Donaldson Company creates consistent mid-week bookings. Utilize tools like Rabbu for Bloomington-specific rental regulations compliance, STR Helper for market analysis, and connect with local real estate agents familiar with the city's short-term rental ordinances, which require permits and have specific zoning restrictions that vary by neighborhood, making due diligence critical for long-term profitability.

To obtain an Airbnb/STR permit in Bloomington, Minnesota, you must first contact the City of Bloomington Community Development Department at 1800 West Old Shakopee Road or call 952-563-8920 to begin the application process. Required documents typically include a completed short-term rental license application, proof of property ownership or lease agreement with landlord consent, certificate of insurance with minimum $1 million liability coverage, floor plan of the rental unit, contact information for a local responsible party available 24/7, and payment of applicable fees. The application fee is approximately $200-300 with annual renewal fees around $150-200, though you should verify current rates with the city. Submit your complete application package to the Community Development Department either in person or by mail, and schedule any required property inspections for safety and zoning compliance. The approval timeline is typically 4-6 weeks from submission of a complete application, depending on inspection scheduling and any required corrections. Bloomington requires STR operators to maintain the property in compliance with residential building codes, limit occupancy based on bedroom count plus two additional guests, provide adequate parking, maintain quiet hours typically from 10 PM to 7 AM, and ensure the local contact person can respond to complaints within 30 minutes. Once approved, you must display your license number in all rental advertisements and renew annually by submitting updated documentation and paying renewal fees.

Short-term rentals (STRs) are legal in Bloomington, Minnesota, but operate under specific regulations established by the city. As of 2023, Bloomington requires STR operators to obtain a rental license and comply with zoning restrictions that generally limit short-term rentals to certain residential areas while prohibiting them in some neighborhoods. The city has implemented occupancy limits, parking requirements, and noise ordinances that STR operators must follow. Properties must meet safety standards including smoke and carbon monoxide detectors, and operators are required to provide emergency contact information to neighbors and the city. Bloomington has also established complaint procedures and enforcement mechanisms, with violations potentially resulting in license revocation. The city periodically reviews its STR ordinances, with recent discussions focusing on balancing tourism benefits with neighborhood preservation concerns, particularly in areas near the Mall of America and Minneapolis-St. Paul International Airport where STR demand is higher.

The best areas for Airbnb investment in Bloomington, Minnesota include the Mall of America district, which attracts millions of tourists annually and hosts major events at the adjacent Xcel Energy Center and Target Center, making it ideal for both leisure and business travelers. The Minneapolis-St. Paul International Airport vicinity offers strong potential due to consistent demand from airline crews, business travelers, and passengers with early flights or layovers. The Old Shakopee Road corridor near major corporate headquarters like Toro Company and Donaldson Company generates steady business travel demand. The France Avenue and American Boulevard intersection area benefits from proximity to both the mall and numerous hotels, indicating proven hospitality demand, while also serving the Bloomington Central Station transit hub. The West Bloomington residential areas near Normandale Community College and the Minnesota River bluffs appeal to visitors seeking quieter accommodations while remaining close to major attractions, and the Penn Avenue corridor offers good access to both Minneapolis and the airport while maintaining lower property acquisition costs than downtown Minneapolis.

In Bloomington, Minnesota, Airbnb hosts are subject to both state and local lodging taxes that must be collected from guests and remitted to tax authorities. The Minnesota state lodging tax is 3% on gross receipts, while Bloomington imposes an additional local lodging tax of approximately 3-4%, bringing the total lodging tax to around 6-7% of the rental amount. These taxes apply to stays of less than 30 consecutive days and are collected by the host at the time of booking or check-in. Hosts must register with the Minnesota Department of Revenue and obtain a lodging tax permit, then file monthly returns by the 20th of the following month along with tax payments. The City of Bloomington also requires separate registration and monthly remittance of local taxes, typically due by the 15th of the following month. Exemptions generally include stays of 30 days or longer (considered long-term rentals rather than transient lodging), rentals to government employees on official business, and certain nonprofit organization stays. Additionally, Minnesota sales tax of 6.875% may apply to the lodging portion of the rental, and hosts earning over $200,000 annually or conducting more than 200 transactions must collect and remit this as well.

Starting an Airbnb in Bloomington, Minnesota requires approximately $350,000-$400,000 in total initial investment. Property purchase costs average $320,000 based on median home prices in the area as of 2023. Furnishing a 2-3 bedroom property typically runs $15,000-$25,000 including furniture, appliances, linens, and décor to create an attractive rental space. Initial setup costs including professional photography, listing creation, and basic marketing materials total around $2,000-$3,000. Permits and fees in Bloomington include short-term rental licensing ($200-$500 annually), business registration ($50-$100), and potential HOA approval processes. Insurance costs increase by approximately $1,000-$2,000 annually for short-term rental coverage beyond standard homeowner's insurance. Utility setup and deposits for electricity, gas, water, internet, and cable services typically cost $500-$800 initially. First six months of operating costs including utilities ($1,200), cleaning services ($1,800), supplies and maintenance ($1,000), platform fees to Airbnb and VRBO ($2,400 assuming 15% occupancy revenue), and marketing expenses ($500) total approximately $6,900, bringing the complete startup investment to roughly $346,000-$398,000.

Airbnb properties in Bloomington, Minnesota typically generate annual revenues of $15,000-$35,000 for entire homes and $8,000-$18,000 for private rooms, with average daily rates ranging from $85-$150 depending on proximity to Mall of America and Minneapolis-St. Paul International Airport. Operating expenses generally consume 40-60% of gross revenue, including cleaning fees ($30-50 per turnover), property management (10-20% of revenue), utilities ($150-300 monthly), insurance ($800-1,500 annually), and maintenance costs ($2,000-4,000 yearly). Net profit margins typically range from 15-35% for well-managed properties, with higher margins achieved by hosts who self-manage and maintain high occupancy rates of 65-80%. Success factors include strategic location within 10 miles of major attractions like Mall of America, professional photography, competitive pricing using dynamic tools, consistent 4.8+ star ratings, and quick response times under 1 hour. Properties near the airport and mall command premium rates during peak travel seasons and major events at nearby venues, with some hosts reporting annual profits of $8,000-$15,000 per property after all expenses, making Bloomington a moderately profitable market for short-term rentals compared to downtown Minneapolis.

Airbnb investments in Bloomington, Minnesota typically generate annual ROI of 8-12% with cash-on-cash returns ranging from 6-10%, based on average property acquisition costs of $280,000-$350,000 and nightly rates of $85-$120 during peak seasons. Properties generally reach profitability within 18-24 months, with occupancy rates averaging 65-75% annually due to proximity to Minneapolis-St. Paul International Airport and Mall of America driving consistent business and leisure travel demand. The market benefits from strong rental regulations that favor short-term rentals, with investors typically seeing gross rental yields of 10-14% before expenses, while net returns after property management, cleaning, utilities, and maintenance costs settle around 7-9% annually for well-positioned properties near major attractions and transportation hubs.

STRSearch is a national platform that helps investors identify profitable short-term rental properties across markets including Bloomington, Minnesota. Local real estate agents specializing in Airbnb investments in the Bloomington area include Keller Williams Realty agents who focus on investment properties, RE/MAX Results agents with short-term rental expertise, and Coldwell Banker Realty professionals who understand the Minneapolis-St. Paul metro vacation rental market. National services include Awning (formerly RedAwning) which provides end-to-end Airbnb investment services, Mashvisor for property analysis and market data, AirDNA for short-term rental analytics, and Roofstock which occasionally features short-term rental properties. Local property management companies that also help with acquisitions include North Loop Property Management, Twin Cities Property Management, and Midwest Property Management Group. Additional national platforms serving the Bloomington market include BiggerPockets for networking with local investors, Vacasa for property management and acquisition guidance, and AvantStay for luxury short-term rental investments, all of which have been active in the Minnesota market since approximately 2015-2020.