Is Brookings, South Dakota Good for Airbnb Investment?

To start an Airbnb in Brookings, South Dakota, begin by researching local zoning laws and contacting the Brookings Planning Department to understand short-term rental regulations, as the city may require business licenses or special permits for properties rented less than 30 days. Obtain necessary permits including a business license from the City of Brookings (approximately $25-50 annually) and ensure compliance with fire safety codes and building inspections. Find a suitable property in residential zones that allow short-term rentals, considering proximity to South Dakota State University for student and visitor demand, with average property prices ranging $150,000-300,000 for single-family homes. Furnish the space with essential amenities including Wi-Fi, kitchen appliances, linens, and local touches highlighting Brookings' agricultural heritage and university connection, budgeting $5,000-15,000 for initial furnishing. Create your Airbnb listing with professional photos showcasing the property's proximity to SDSU campus, McCrory Gardens, and downtown attractions, setting competitive rates around $75-125 per night based on local market analysis. Manage the property by establishing cleaning protocols between guests, responding promptly to inquiries, coordinating key exchanges or installing smart locks, maintaining the property regularly, and ensuring compliance with South Dakota tax requirements including collecting and remitting state sales tax of 4.5% plus local taxes, while considering hiring local cleaning services and property management companies if needed for remote management.

To identify profitable STR properties in Brookings, South Dakota, focus on locations within 1-2 miles of South Dakota State University campus, near downtown areas along Main Street, and properties close to recreational attractions like McCrory Gardens or Lake Campbell. Target 2-4 bedroom single-family homes or duplexes built after 1980 with modern amenities, full kitchens, reliable Wi-Fi, and parking, as these appeal to visiting families, university guests, and business travelers. Conduct pricing analysis by researching comparable Airbnb and VRBO listings in the $80-150 per night range, accounting for seasonal fluctuations during university events, graduation, and summer months when demand peaks. Research competition using AirDNA, STR Helper, or manual searches on major platforms to identify gaps in the market, particularly focusing on properties that cater to university visitors and families attending sporting events. Utilize tools like Mashvisor, BiggerPockets calculators, and local MLS data through Realtor.com, while connecting with Brookings-area real estate agents familiar with rental regulations and zoning laws, and monitor the Brookings Chamber of Commerce calendar for major events that drive accommodation demand throughout the year.

To obtain an Airbnb/STR permit in Brookings, South Dakota, you must first contact the Brookings City Planning Department at City Hall located at 520 3rd Avenue to determine if short-term rentals are permitted in your specific zoning district, as the city implemented STR regulations around 2019-2020. Submit an application to the Planning Department including a completed short-term rental permit application form, proof of property ownership or lease agreement, floor plan of the rental unit, parking plan showing adequate off-street parking, contact information for a local property manager if you live more than 50 miles away, proof of liability insurance coverage of at least $1 million, and a good neighbor agreement outlining house rules and noise policies. Pay the required application fee of approximately $150-200 plus an annual renewal fee of around $100. The city requires STR properties to maintain residential character, provide adequate parking (typically 2 spaces), limit occupancy to 2 people per bedroom plus 2 additional guests, maintain quiet hours from 10 PM to 8 AM, and display the permit number in all advertisements. The approval process typically takes 4-6 weeks and includes a site inspection by city staff. Once approved, you must renew the permit annually and comply with all ongoing requirements including guest registration, complaint response procedures, and regular inspections.

Short-term rentals (STRs) are generally legal in Brookings, South Dakota, as the city does not have comprehensive regulations specifically prohibiting them as of 2023. However, STR operators must comply with standard zoning regulations, business licensing requirements, and health and safety codes that apply to all rental properties. The city requires STR operators to obtain proper business licenses and adhere to residential zoning restrictions, which may limit operations in certain residential neighborhoods depending on the specific zoning classification. South Dakota state law generally allows municipalities to regulate STRs through local ordinances, and Brookings has not implemented the strict restrictions seen in some larger cities, though operators must still comply with noise ordinances, occupancy limits, and parking requirements. Recent discussions at the city level have focused on potential registration requirements and safety inspections, but no major prohibitive legislation has been enacted, making Brookings relatively permissive compared to other jurisdictions that have implemented caps, permit systems, or outright bans in residential areas.

The best areas for Airbnb investment in Brookings, South Dakota are the neighborhoods near South Dakota State University campus, particularly the areas around Medary Avenue and 6th Street, which attract consistent demand from visiting families during graduation ceremonies, sporting events, and academic conferences throughout the year. The downtown historic district along Main Street offers appeal for visitors attending cultural events at the Prairie Repertory Theatre and those exploring the city's heritage attractions. The residential areas near Hillcrest Golf and Country Club provide upscale accommodations for business travelers and golf enthusiasts, while properties close to the Children's Museum of South Dakota and McCrory Gardens capture family tourism traffic. The neighborhoods surrounding the Swiftel Center benefit from convention and event attendees, making them prime locations for short-term rentals, especially during the annual Hobo Day festivities and SDSU Jackrabbits football games which draw thousands of visitors to the area.

Airbnb properties in Brookings, South Dakota are subject to the state sales tax of 4.2% and state tourism tax of 1.5%, totaling 5.7% in state-level taxes on lodging. The city of Brookings imposes an additional municipal lodging tax of approximately 2%, bringing the total occupancy tax rate to around 7.7%. These taxes are collected from guests at the time of booking through Airbnb's automated tax collection system for most bookings, with Airbnb remitting the collected taxes directly to the South Dakota Department of Revenue on a monthly basis. For properties not covered by Airbnb's automatic collection, hosts must register with the state, collect taxes from guests, and file monthly returns by the 23rd of the following month. Exemptions typically include stays exceeding 28 consecutive days, which are considered long-term rentals rather than transient lodging, and bookings by certain government employees on official business. The state requires all short-term rental operators to obtain a sales tax license and maintain detailed records of all transactions and tax collections.

The total cost to start an Airbnb in Brookings, South Dakota is approximately $185,000-$225,000. Property purchase represents the largest expense at $150,000-$180,000 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 in South Dakota are relatively minimal at $200-$500, covering business registration and any local short-term rental permits. Insurance costs approximately $1,200-$1,800 annually for 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 supplies, maintenance, property management software, and marketing expenses range $5,000-$8,000. Additional considerations include potential HOA fees, property taxes, and a recommended cash reserve of $3,000-$5,000 for unexpected repairs and vacancy periods.

Airbnb properties in Brookings, South Dakota typically generate modest returns due to the city's smaller market size and seasonal demand patterns driven by South Dakota State University. Average nightly rates range from $75-120, with annual occupancy rates around 45-55%, resulting in gross revenues of $12,000-25,000 per property annually. Operating expenses including mortgage payments, utilities, cleaning fees, maintenance, and Airbnb's 3% host fee typically consume 65-75% of gross revenue, leaving net profit margins between 25-35% or roughly $3,000-8,750 annually per property. Properties near SDSU campus and downtown areas perform better, with some hosts like those operating 2-3 bedroom homes near campus reporting $18,000-22,000 in annual revenue with 60% occupancy during the academic year. Success factors include competitive pricing during university events like graduation and football games, maintaining high cleanliness standards, and targeting the corporate traveler market visiting local businesses like Daktronics. Properties purchased below $150,000 with minimal renovation needs tend to achieve the best ROI, while luxury properties struggle due to limited high-end demand in the market.

Airbnb investments in Brookings, South Dakota typically generate annual ROI of 8-12% with cash-on-cash returns ranging from 6-10%, primarily driven by South Dakota State University student demand and regional business travelers. Properties near campus or downtown areas can achieve 65-75% occupancy rates with average daily rates of $85-120, leading to gross rental yields of 10-14% annually. Initial profitability usually occurs within 18-24 months, with full ROI recovery expected in 8-10 years depending on property acquisition costs averaging $150,000-250,000 for suitable investment properties. The market benefits from limited hotel inventory and consistent university-related demand, though seasonal fluctuations during summer months may reduce occupancy to 40-50%, making properties with strong local business traveler appeal more profitable with potential cash-on-cash returns reaching 12-15% for well-positioned investments.

STRSearch is a national platform that specializes in identifying profitable short-term rental properties for investors looking to enter the Airbnb market in Brookings, South Dakota. Local real estate agents like those at Brookings Realty and Century 21 Advantage have experience with investment properties in the area, while Coldwell Banker Lewis-Kirkeby-Hall serves the broader South Dakota market with vacation rental investment expertise. National services include Awning, which provides end-to-end Airbnb investment services including property identification and management, and Mashvisor, an analytics platform that helps investors evaluate rental property potential in smaller markets like Brookings. AirDNA offers market data and revenue projections for short-term rentals in South Dakota college towns, while BiggerPockets connects investors with local real estate professionals familiar with the Brookings rental market. RedAwning and Vacasa also provide property management services that can help investors identify suitable properties for Airbnb conversion in the Brookings area, particularly near South Dakota State University where demand for short-term accommodations remains consistent throughout the academic year.