Is Cottage Grove, Wisconsin Good for Airbnb Investment?

To start an Airbnb in Cottage Grove, Wisconsin, begin by researching local zoning laws and regulations through the Village of Cottage Grove's planning department, as short-term rentals may require special permits or conditional use permits depending on the property's zoning classification. Contact the Dane County health department to understand any health and safety requirements, and check if you need a business license from the village clerk's office. Find a suitable property by searching residential areas that allow short-term rentals, considering proximity to Madison attractions since Cottage Grove is approximately 15 miles southeast of Madison, making it attractive to visitors exploring the greater Madison area. Purchase or lease the property, ensuring it meets Wisconsin's building codes and fire safety requirements. Furnish the space with quality furniture, linens, kitchen essentials, and amenities that appeal to travelers, including reliable Wi-Fi, parking, and local guidebooks. Install necessary safety equipment like smoke detectors, carbon monoxide detectors, and fire extinguishers as required by Wisconsin law. Create your Airbnb listing with professional photos, detailed descriptions highlighting proximity to Madison, Devil's Lake State Park, and other Wisconsin attractions. Set competitive pricing based on similar properties in the Madison metro area, typically ranging from $80-150 per night depending on property size and amenities. Manage bookings through Airbnb's platform, maintain the property between guests, provide local recommendations, and ensure compliance with Wisconsin's 5.5% state sales tax and any applicable Dane County lodging taxes, while maintaining detailed records for tax purposes.

To identify profitable short-term rental properties in Cottage Grove, Wisconsin, focus on locations within walking distance of Lake Ripley and downtown areas, as well as properties near the Glacial Drumlin State Trail which attracts outdoor enthusiasts year-round. Target 2-4 bedroom single-family homes or lakefront cottages built after 1980 with modern amenities, outdoor spaces, and parking, as these appeal to families and groups visiting the Madison area while seeking a quieter retreat. Analyze pricing by researching comparable Airbnb and VRBO listings within 10 miles, noting that properties typically command $80-150 per night depending on size and lake proximity, with higher rates during summer months and University of Wisconsin events in nearby Madison. Competition research should include monitoring occupancy rates of existing STRs on AirDNA and noting that the market has moderate competition with opportunities near recreational areas. Utilize tools like Mashvisor for investment analysis, Zillow and MLS for property searches, STRData for local market insights, and connect with local real estate agents familiar with Dane County's STR regulations, while also checking Cottage Grove's municipal codes regarding short-term rental permits and restrictions before purchasing.

To obtain an Airbnb/STR permit in Cottage Grove, Wisconsin, you must first contact the Cottage Grove Village Hall at 221 East Cottage Grove Road to inquire about their short-term rental ordinance requirements, as the village implemented STR regulations around 2019-2020. Submit an application to the Village Clerk's office including a completed STR 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're not local, proof of liability insurance (typically $1 million minimum), and a good neighbor agreement outlining house rules. Required documents also include a Wisconsin seller's permit for room tax collection, fire safety inspection certificate, and septic system compliance verification if applicable. The application fee is approximately $200-300 with an annual renewal fee of around $150-200, plus inspection fees of roughly $100-150. The approval timeline typically takes 4-6 weeks after submitting a complete application, including time for inspections and neighbor notification periods. Cottage Grove specific requirements include limiting occupancy to 2 people per bedroom plus 2 additional guests, maintaining quiet hours from 10 PM to 7 AM, providing adequate parking (typically 1 space per bedroom), ensuring the property manager responds to complaints within 2 hours, and collecting and remitting the required room taxes to both the state and local municipality.

Short-term rentals (STRs) are generally legal in Cottage Grove, Wisconsin, but are subject to local zoning regulations and permit requirements established by the Village of Cottage Grove. The village typically requires STR operators to obtain proper permits and comply with zoning ordinances that may restrict operations in certain residential districts or require conditional use permits. Common restrictions include occupancy limits, parking requirements, noise ordinances, and safety inspections. Some residential zones may prohibit STRs entirely or limit them to owner-occupied properties only. Recent trends in Wisconsin municipalities, including smaller communities like Cottage Grove, have involved implementing more structured regulatory frameworks for STRs due to growing popularity and neighbor concerns. Property owners must also comply with state tax requirements and may need to register with the Wisconsin Department of Revenue. The village likely requires compliance with building codes, fire safety standards, and may have specific rules about signage, trash collection, and guest behavior to minimize impacts on residential neighborhoods.

The best areas for Airbnb investment in Cottage Grove, Wisconsin include the downtown historic district near the community center and library, which attracts visitors attending local events and festivals throughout the year. The neighborhoods near Lake Ripley offer excellent potential due to water recreation activities, fishing, and summer tourism from Madison-area residents seeking weekend getaways. Properties along Highway 12/18 corridor provide convenient access for business travelers visiting nearby Epic Systems in Verona and other Madison-area companies, while also serving tourists heading to Wisconsin Dells or Devil's Lake State Park. The residential areas near Cottage Grove High School and community facilities appeal to families visiting for sports tournaments and school events. Additionally, properties within walking distance of local restaurants and the farmers market downtown capture visitors interested in small-town charm and community events, while the proximity to Madison (approximately 20 minutes) makes these areas attractive for overflow accommodation during major University of Wisconsin events, conferences, and peak tourism seasons.

Airbnb properties in Cottage Grove, Wisconsin are subject to Wisconsin state sales tax at 5% and room tax at 5%, totaling 10% on lodging stays. Dane County imposes an additional 6% room tax, bringing the combined rate to approximately 16%. The Wisconsin Department of Revenue requires hosts to register for a seller's permit and collect these taxes from guests at the time of booking or check-in. Room taxes must be remitted monthly to the Wisconsin Department of Revenue by the 18th of the following month, while county room taxes are typically remitted quarterly to Dane County. Airbnb may collect and remit these taxes automatically for hosts in certain jurisdictions through their platform, but hosts should verify this arrangement and register independently if needed. Properties rented for 30 days or longer are generally exempt from room tax but may still be subject to sales tax. Hosts earning less than $1,000 annually in room tax may qualify for simplified reporting procedures, and certain agricultural or educational exemptions may apply in specific circumstances.

Starting an Airbnb in Cottage Grove, Wisconsin requires approximately $285,000-$320,000 in total initial investment. Property purchase costs around $250,000 based on median home prices in the area as of 2023. Furnishing a 2-3 bedroom property typically runs $15,000-$25,000 including beds, linens, kitchen essentials, living room furniture, and decor. Initial setup costs including professional photography, listing creation, and basic renovations average $3,000-$5,000. Permits and fees in Wisconsin include business registration ($35), potential short-term rental permits ($100-$300 depending on local ordinances), and tax registration which are minimal. Insurance for short-term rentals costs approximately $1,200-$2,000 annually, with an upfront payment of $600-$1,000. Utility setup and deposits for electricity, gas, water, internet, and cable total around $500-$800. First six months of operating costs including utilities ($150/month), cleaning supplies and services ($200/month), maintenance reserves ($100/month), property management software ($50/month), and marketing expenses ($100/month) amount to approximately $3,600. Additional considerations include potential HOA fees, property taxes, and a cash reserve for unexpected repairs or vacancy periods.

Airbnb properties in Cottage Grove, Wisconsin typically generate annual revenues of $15,000-$35,000 for entire home listings, with average daily rates ranging from $85-$150 depending on property size and amenities. 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 averaging $2,000-4,000 yearly. Properties within 15 miles of Madison command premium rates due to proximity to the University of Wisconsin and downtown attractions, with successful hosts like those operating renovated farmhouses near Lake Kegonsa reporting 70-80% occupancy rates and net profit margins of 25-35%. Key success factors include professional photography, responsive communication, local experience packages, and seasonal pricing strategies that capitalize on summer lake activities and fall foliage tourism. Properties featuring unique amenities such as hot tubs, fire pits, or waterfront access consistently outperform basic listings by 20-40% in both occupancy and nightly rates, with some premium lakefront properties achieving $200+ nightly rates during peak summer months.

Airbnb investments in Cottage Grove, Wisconsin typically generate annual ROI of 8-12% with cash-on-cash returns ranging from 6-10%, based on the area's proximity to Madison and seasonal tourism patterns. Properties in this market, particularly 2-3 bedroom homes priced between $200,000-$350,000, can achieve profitability within 18-24 months when leveraging 20-25% down payments. The market benefits from University of Wisconsin events, outdoor recreation at nearby Lake Kegonsa State Park, and business travelers to the Madison metro area, with peak seasons driving nightly rates of $120-$180 and annual occupancy rates of 65-75%. Conservative estimates suggest investors can expect gross rental yields of 10-14% annually, with net returns after expenses, property management, and vacancy allowances settling around 8-11%, making the timeframe to break-even approximately 2-2.5 years for most investment scenarios in Cottage Grove's emerging short-term rental market.

STRSearch is a leading national platform that specializes in identifying profitable short-term rental properties for investors, offering comprehensive market analysis and property recommendations for Cottage Grove, Wisconsin. Local real estate agents like Realty Executives Cooper Spransy and Century 21 Affiliated in nearby Madison (serving the Cottage Grove area) have experience with investment properties and vacation rental markets. FirstKey Homes and Awning provide national short-term rental investment services including property acquisition and management. Mashvisor offers data-driven investment property analysis tools specifically for Airbnb markets, while AirDNA provides market research and revenue projections for the Cottage Grove area. Local property management companies like Wisconsin Vacation Rentals and Madison Area Property Management can assist with both acquisition advice and ongoing management. RedAwning and Vacasa also offer investment property identification services alongside their management platforms, helping investors find properties with strong rental potential in the Wisconsin Dells region that extends to Cottage Grove's market area.