Is Des Moines, Iowa Good for Airbnb Investment?

To start an Airbnb in Des Moines, Iowa, begin by researching local zoning laws and regulations through the City of Des Moines Planning Department, as short-term rentals are subject to specific zoning restrictions and may require conditional use permits in residential areas. Contact the City Clerk's office to obtain necessary business licenses and permits, including a general business license and potentially a special use permit depending on your property's zoning classification. Find a suitable property by searching neighborhoods like East Village, Sherman Hill, or Beaverdale that are popular with visitors and allow short-term rentals, considering proximity to downtown attractions, Drake University, and the Iowa State Fairgrounds. Purchase or lease the property ensuring it meets Iowa's habitability standards and Des Moines building codes, then furnish it with quality furniture, linens, kitchen essentials, and amenities like WiFi, smart TV, and local guidebooks while ensuring compliance with fire safety requirements including smoke detectors and carbon monoxide alarms. Create your Airbnb listing with professional photos highlighting Des Moines attractions nearby, set competitive pricing based on local market rates (typically $75-150 per night in 2024), and write detailed descriptions mentioning proximity to Principal Park, Science Center of Iowa, and local restaurants. Manage your property by establishing check-in procedures, maintaining cleanliness standards, responding promptly to guest inquiries, coordinating cleaning between stays, and keeping detailed records for tax purposes while collecting and remitting Iowa state sales tax (currently 6%) and any applicable local lodging taxes to the Iowa Department of Revenue.

To identify profitable short-term rental properties in Des Moines, Iowa, focus on locations within 2-3 miles of downtown, near Drake University, the State Capitol, or major event venues like Wells Fargo Arena and Iowa Events Center, as these areas generate consistent demand from business travelers, university visitors, and event attendees. Target 2-4 bedroom properties built after 1950 with modern amenities, parking, and outdoor spaces, as Des Moines guests often travel in groups and prefer home-like accommodations. Analyze pricing by researching comparable Airbnb listings in your target neighborhoods, aiming for properties that can generate $100-200 per night with 60-70% occupancy rates to ensure positive cash flow after mortgage, utilities, and management costs. Conduct competition research using AirDNA or Mashvisor to identify market saturation levels, with ideal areas having fewer than 10 active STRs within a 1-mile radius while maintaining strong booking rates. Utilize local resources including the Greater Des Moines Partnership for market insights, Des Moines Register for development news, Polk County Assessor records for property values, and connect with local real estate agents specializing in investment properties who understand Des Moines' seasonal demand patterns driven by state government sessions, insurance industry conferences, and Drake University events.

To obtain an Airbnb/STR permit in Des Moines, Iowa, you must first register your property as a short-term rental with the City of Des Moines Community Development Department located at 602 Robert D. Ray Drive. Begin by completing the Short-Term Rental Registration application available on the city's website or in person, then gather required documents including proof of property ownership or lease agreement with landlord consent, certificate of occupancy, proof of liability insurance (minimum $500,000), fire safety inspection certificate, and a site plan showing parking arrangements. Submit the completed application with a $150 registration fee plus $75 annual renewal fee to the Community Development Department. Schedule required inspections including fire safety, building code compliance, and zoning verification which typically take 2-3 weeks to complete. Des Moines requires STRs to maintain minimum parking spaces (one per bedroom), install smoke and carbon monoxide detectors in all sleeping areas, provide emergency contact information to neighbors within 150 feet, limit occupancy to 2 people per bedroom plus 2 additional guests, and maintain quiet hours from 10 PM to 7 AM. Once inspections pass and all requirements are met, the permit is typically issued within 4-6 weeks of initial application, and you must display the registration number in all online listings and maintain current registration annually.

Short-term rentals (STRs) are legal in Des Moines, Iowa, but operate under specific regulations implemented by the city. As of 2023, Des Moines requires STR operators to obtain a business license and comply with zoning restrictions that generally allow STRs in most residential areas, though some neighborhoods may have additional limitations. The city has implemented safety requirements including smoke detectors, carbon monoxide detectors, and fire extinguishers, along with occupancy limits based on property size. STR operators must also collect and remit local hotel/motel taxes, and properties are subject to noise ordinances and parking requirements. Recent changes in 2022-2023 included stricter enforcement of existing regulations and enhanced complaint procedures for neighbors, though the city has generally maintained a permissive approach compared to other Iowa municipalities. Des Moines does not prohibit STRs in specific zones outright but requires compliance with residential zoning standards and may restrict operations in certain historic districts or areas with homeowner association restrictions.

The best Airbnb investment areas in Des Moines, Iowa include the East Village downtown district, which attracts business travelers due to its proximity to major corporations like Principal Financial Group and Wells Fargo, plus tourists visiting the Des Moines Art Center and Science Center of Iowa. The Court Avenue Entertainment District offers strong rental potential from visitors attending events at Wells Fargo Arena and Iowa Events Center, particularly during Iowa Wild hockey games and concerts. The Sherman Hill Historic District appeals to tourists seeking authentic Victorian architecture experiences and is walking distance to the State Capitol building. The Ingersoll Park/Grand Avenue corridor attracts both business travelers working with insurance companies like Allied Insurance and leisure guests visiting the Historic East Village farmers market and local breweries. The Gray's Lake area provides scenic waterfront appeal for weekend getaway guests and those attending summer festivals, while the Beaverdale neighborhood offers a quieter residential feel that attracts families visiting Drake University or attending graduation ceremonies, with these areas typically seeing peak demand during Iowa State Fair season in August and Drake Relays in April.

In Des Moines, Iowa, Airbnb hosts are subject to both state and local lodging taxes that must be collected from guests and remitted to tax authorities. The Iowa state hotel and motel tax is 7% on gross receipts from lodging rentals, which applies to short-term rentals under 31 days, and this tax is collected by the Iowa Department of Revenue with monthly remittance required for properties generating over $200 in monthly tax liability. Additionally, Des Moines imposes a local hotel/motel tax of 7% on top of the state tax, bringing the total lodging tax rate to approximately 14% for Airbnb stays, with the local portion collected by the City of Des Moines Finance Department and typically remitted monthly or quarterly depending on volume. Polk County may also impose an additional transient guest tax of around 5%, which would bring total taxes to roughly 19% on short-term rental stays. Hosts must register with both state and local tax authorities, collect these taxes from guests at the time of booking or check-in, maintain detailed records of all transactions, and file regular returns even if no tax is owed during a reporting period. Exemptions generally apply to stays of 31 days or longer, rentals to permanent residents, and in some cases government employees on official business, though hosts should verify current exemption criteria with the Iowa Department of Revenue and Des Moines city offices as rates and regulations can change annually.

Starting an Airbnb in Des Moines, Iowa requires approximately $180,000-220,000 in total initial investment. Property purchase costs average $165,000 based on median home prices in Des Moines as of 2023. Furnishing a 2-3 bedroom property typically runs $8,000-12,000 including furniture, appliances, linens, and décor from retailers like IKEA, Wayfair, and local stores. Initial setup costs including professional photography, listing creation, and basic renovations total around $2,000-3,000. Permits and fees in Des Moines include business license ($50), short-term rental permit ($100-200), and potential zoning compliance costs totaling approximately $500-1,000. Insurance premiums for short-term rental coverage average $1,200-1,800 annually, with first-year payment required upfront. Utility deposits and connections for electricity, gas, water, internet, and cable typically cost $800-1,200 initially. First six months of operating costs including utilities ($150/month), cleaning services ($75 per turnover), property management software ($30/month), maintenance reserves ($200/month), and marketing expenses total approximately $3,500-4,500, assuming 60-70% occupancy rates during the initial period.

Airbnb properties in Des Moines, Iowa typically generate average monthly revenues of $1,800-$3,200 for entire homes and $800-$1,400 for private rooms, with occupancy rates ranging from 45-65% depending on location and property quality. Operating expenses generally include mortgage payments ($800-$1,500), utilities ($150-$250), cleaning fees ($40-$80 per turnover), insurance ($100-$200), and platform fees (3% host fee plus 14-16% guest service fee), resulting in total monthly expenses of $1,200-$2,200 for most properties. Profit margins typically range from 15-35%, with higher-end properties near downtown Des Moines, Drake University, or the East Village achieving margins closer to 30-40% due to premium pricing of $120-$180 per night. Success factors include proximity to Iowa Events Center, Wells Fargo Arena, Principal Park, and business districts, with properties within 3 miles of downtown consistently outperforming suburban listings by 25-40% in both occupancy and nightly rates. Case studies from 2022-2023 show that investors purchasing $150,000-$200,000 properties in neighborhoods like Sherman Hill or Ingersoll Park and investing $15,000-$25,000 in renovations typically achieve 12-18% annual returns, while budget properties under $100,000 often struggle with margins below 10% due to lower nightly rates of $60-$85 and higher maintenance costs relative to revenue.

Airbnb investments in Des Moines, Iowa typically generate annual ROI of 8-12% with cash-on-cash returns ranging from 6-10% depending on property location and management efficiency. Properties in downtown Des Moines near the East Village and Court Avenue entertainment district tend to perform better, achieving occupancy rates of 65-75% annually with average daily rates of $85-120. Initial profitability usually occurs within 12-18 months after accounting for startup costs, furnishing, and marketing expenses. The Des Moines market benefits from steady demand from business travelers visiting major employers like Principal Financial Group and Wells Fargo, plus leisure travelers attending events at Wells Fargo Arena and the Iowa State Fair. Properties requiring minimal renovation in established neighborhoods like Sherman Hill or Beaverdale typically see break-even points around 14-16 months, while extensively renovated properties may require 20-24 months to reach consistent profitability, with total returns stabilizing at 10-14% annually once fully operational.

STRSearch is a national platform that specializes in identifying profitable short-term rental properties for investors in Des Moines, Iowa. Local real estate agents like those at RE/MAX Concepts and Coldwell Banker Mid-America Group have experience helping investors find Airbnb-suitable properties in Des Moines neighborhoods like East Village and Sherman Hill. BiggerPockets, founded in 2004, offers investment property analysis tools and connects investors with local Des Moines agents specializing in rental properties. Awning provides nationwide Airbnb investment services including market analysis for Des Moines properties since 2017. Local companies like Iowa Realty and Berkshire Hathaway HomeServices Iowa Properties have agents experienced in investment properties suitable for short-term rentals. Mashvisor offers data-driven property analysis for Des Moines Airbnb investments, while Roofstock focuses on turnkey rental properties that can be converted to short-term rentals. Des Moines-based property management companies like Real Property Management Des Moines and Meridian Property Management can assist with ongoing Airbnb operations after purchase.