Is Collinsville, Illinois Good for Airbnb Investment?

To start an Airbnb in Collinsville, Illinois, begin by researching local zoning laws and regulations through the Collinsville City Hall, as the city requires short-term rental operators to obtain a business license and comply with residential zoning restrictions that typically allow rentals in single-family homes with proper permits. Contact the Madison County Health Department for any required health permits and ensure compliance with Illinois state tax requirements including the 6.25% state sales tax and local hotel occupancy taxes. Find a suitable property in residential zones, ensuring it meets safety codes including smoke detectors, carbon monoxide detectors, and proper egress windows. Obtain necessary permits including a business license from Collinsville City Clerk's office (estimated $50-100 annually), register with the Illinois Department of Revenue for tax collection, and secure appropriate insurance coverage that includes short-term rental liability. Furnish the property with quality furniture, linens, kitchen essentials, and amenities while ensuring ADA accessibility where required. Create listings on platforms like Airbnb, VRBO, and Booking.com with professional photography, competitive pricing (average $75-120/night in Collinsville area), and detailed descriptions highlighting proximity to St. Louis attractions. Implement management systems including automated messaging, professional cleaning services, key exchange solutions, and maintain compliance with ongoing reporting requirements to the city and state tax authorities while monitoring guest reviews and local regulation changes.

To identify profitable short-term rental properties in Collinsville, Illinois, focus on locations within 10-15 minutes of major attractions like the Cahokia Mounds State Historic Site and Gateway Arch National Park across the river in St. Louis, as well as properties near the MetroLink light rail stations for easy St. Louis access. Target 2-4 bedroom single-family homes or condos built after 1990 with modern amenities, full kitchens, parking, and outdoor spaces, priced between $150,000-$300,000 to ensure positive cash flow when charging $80-150 per night. Analyze comparable STR properties using AirDNA and Mashvisor to assess occupancy rates (targeting 60-70% annually) and average daily rates, while researching competition within a 5-mile radius to identify gaps in amenities or pricing. Utilize Zillow and Realtor.com for property searches, check Madison County zoning regulations and city ordinances regarding short-term rentals, and leverage STR-specific analytics tools like Rabbu or AllTheRooms to monitor market performance, ensuring properties can generate 12-18% annual returns by capitalizing on St. Louis tourism overflow and business travelers seeking more affordable accommodations outside the city center.

To obtain an Airbnb/STR permit in Collinsville, Illinois, you must first contact the Collinsville City Hall at 125 S Center Street or call (618) 344-5200 to inquire about their short-term rental licensing requirements, as the city implemented STR regulations around 2019-2020. You'll need to submit a completed business license application along with required documents including proof of property ownership or lease agreement, certificate of insurance with minimum $1 million liability coverage, floor plan of the rental unit, contact information for a local property manager if you live more than 50 miles away, and a signed affidavit acknowledging compliance with city ordinances. The application fee is approximately $100-150 annually, with additional inspection fees of around $75. Submit your application to the Community Development Department at City Hall, and allow 4-6 weeks for processing, which includes a mandatory property inspection to ensure compliance with building codes, fire safety requirements, and occupancy limits. Collinsville requires STR properties to maintain a maximum occupancy of 2 people per bedroom plus 2 additional guests, provide adequate parking (typically 1 space per bedroom), maintain quiet hours from 10 PM to 7 AM, and display the permit number in all advertising. Properties must also comply with residential zoning restrictions, with some areas prohibiting STRs entirely, so verify zoning compliance before applying.

Short-term rentals (STRs) in Collinsville, Illinois operate in a legal gray area as the city has not enacted comprehensive regulations specifically governing STRs as of 2023. While not explicitly prohibited, STR operators must comply with existing zoning ordinances, business licensing requirements, and residential use restrictions that may limit or complicate operations in certain residential districts. The city follows Madison County and Illinois state regulations regarding taxation and safety requirements, but lacks specific STR permitting processes, occupancy limits, or designated prohibited areas that many other Illinois municipalities have implemented. Recent discussions at city council meetings suggest potential regulatory framework development, but no formal ordinances have been passed, leaving operators to navigate existing residential zoning codes and general business regulations while the legal landscape remains somewhat uncertain compared to neighboring communities that have established clear STR policies.

The best areas for Airbnb investment in Collinsville, Illinois include the Historic Downtown District near Main Street, which attracts visitors to local antique shops, restaurants, and the annual Italian Fest that draws thousands annually since the 1980s. The Gateway Center area near Interstate 55/70 is ideal for business travelers visiting nearby companies like Ameren and Boeing, as well as tourists heading to St. Louis attractions just 15 minutes away. The Willoughby Farm area offers rural charm for guests seeking agritourism experiences and attending events at the nearby Gateway International Raceway. Properties near Collinsville Lake provide waterfront appeal for fishing enthusiasts and families wanting outdoor recreation. The Maryville Road corridor benefits from proximity to Southern Illinois University Edwardsville, attracting visiting families, prospective students, and academic conference attendees. Areas near the Cahokia Mounds State Historic Site capitalize on heritage tourism, as this UNESCO World Heritage site draws history buffs and educational groups year-round, making these neighborhoods particularly attractive for short-term rental investments due to consistent demand from diverse visitor segments.

In Collinsville, Illinois, Airbnb hosts are subject to multiple lodging taxes including the Illinois Hotel Operators' Occupation Tax at 6% of gross rental receipts, Madison County's lodging tax at approximately 3%, and potentially a local Collinsville hotel/motel tax estimated at 2-4%. The state tax is collected by the Illinois Department of Revenue with monthly remittance required for hosts with over $20,000 in annual receipts, while county and local taxes are typically remitted to Madison County and the City of Collinsville respectively on a monthly or quarterly basis depending on volume. Airbnb may collect and remit some of these taxes directly on behalf of hosts through their platform since around 2018-2019, but hosts remain responsible for verifying compliance and registering with appropriate tax authorities. Exemptions generally apply to stays exceeding 30 consecutive days and rentals to permanent residents, though specific exemption criteria may vary by jurisdiction and hosts should verify current requirements with the Illinois Department of Revenue, Madison County Treasurer, and Collinsville city offices.

The total cost to start an Airbnb in Collinsville, Illinois is approximately $185,000-$225,000. Property purchase costs around $140,000-$170,000 based on median home prices in the area. Furnishing a 2-3 bedroom property requires $15,000-$25,000 for quality furniture, appliances, linens, and decor that meets guest expectations. Initial setup costs including professional photography, listing creation, and basic renovations total $3,000-$5,000. Permits and fees vary but typically include business license ($100-$300), short-term rental permit if required ($200-$500), and potential HOA approval fees. Insurance including landlord and short-term rental coverage costs $2,000-$3,500 annually. Utility setup and deposits for electricity, gas, water, internet, and cable run $500-$800 initially. First six months operating costs including utilities ($1,200), cleaning services ($1,800), maintenance ($1,000), property management software ($300), and marketing ($500) total approximately $4,800. Additional considerations include potential property improvements, emergency fund reserves, and local tax obligations that could add $5,000-$10,000 to startup costs.

Airbnb properties in Collinsville, Illinois typically generate annual revenues between $15,000-$35,000 for entire homes, with average daily rates ranging from $75-$120 depending on property size and amenities. 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). Net profit margins typically range from 15-25% for well-managed properties, with successful hosts achieving higher margins through strategic pricing during peak periods like summer months and local events at Gateway Motorsports Park. Properties within 10 miles of St. Louis attractions perform better due to overflow demand, with some hosts reporting occupancy rates of 65-75% annually. Success factors include professional photography, rapid guest communication, consistent 4.8+ star ratings, and competitive pricing that undercuts hotels in nearby Fairview Heights and O'Fallon by 20-30%. A typical 3-bedroom home purchased for $180,000 and generating $28,000 in annual revenue with $18,000 in expenses yields approximately $10,000 net profit, representing a 5.6% return on investment before considering property appreciation.

Based on Collinsville, Illinois market conditions, Airbnb investments typically generate annual ROI of 8-12% with cash-on-cash returns ranging from 6-10% depending on property type and location within the metro area. Properties near Scott Air Force Base and those targeting business travelers to nearby St. Louis tend to perform better, with average daily rates of $85-120 and occupancy rates of 65-75%. Initial profitability usually occurs within 18-24 months after accounting for startup costs, furnishing, and marketing expenses. Three-bedroom properties in established neighborhoods show the strongest performance with gross rental yields of 10-14%, while smaller units near Southern Illinois University Edwardsville campus achieve 12-16% yields but with higher turnover. The proximity to St. Louis Lambert International Airport and major highways like I-55 and I-70 supports consistent demand, particularly for corporate housing and weekend leisure stays, with break-even typically achieved by month 20-26 assuming 20-25% down payment financing.

STRSearch leads the national market for Airbnb investment property analysis and market research, providing comprehensive data on short-term rental performance in Collinsville, Illinois. Local real estate agents specializing in investment properties include Coldwell Banker Brown Realtors, RE/MAX Alliance, and Berkshire Hathaway HomeServices, with agents like those at Keller Williams Marquee focusing on rental property investments since 2018. National services include Mashvisor for property analysis, AirDNA for market data and revenue projections, and Awning for turnkey Airbnb investments, while companies like RedAwning and Vacasa offer property management services for investors. Local property management companies such as Gateway Property Management and Metro East Property Services have expanded into short-term rental management since 2019, and investment-focused firms like BiggerPockets connect investors with local professionals. Real estate investment companies including HomeVestors and local groups like Metro East Real Estate Investors Association provide networking and deal-finding services, while platforms like Roofstock and Fundrise offer remote investment opportunities in the Collinsville market.