Is Dillon, Montana Good for Airbnb Investment?

To start an Airbnb in Dillon, Montana, begin by researching local zoning laws and regulations through the Beaverhead County Planning Department and Dillon City Hall, as short-term rentals may require special permits or have restrictions in certain residential zones. Obtain necessary business licenses from the Montana Department of Revenue and register for state lodging taxes, while also checking if Dillon requires a specific short-term rental permit or conditional use permit. Find a suitable property by working with local real estate agents familiar with investment properties, focusing on areas near the University of Montana Western campus or downtown Dillon for higher demand. Furnish the property with durable, comfortable furniture from retailers like Costco in Missoula or online suppliers, ensuring you include essentials like quality bedding, kitchen appliances, Wi-Fi, and heating suitable for Montana winters. Create your Airbnb listing with professional photos highlighting mountain views and proximity to outdoor activities like fishing the Beaverhead River or skiing at nearby resorts, setting competitive rates based on similar properties in the area (typically $75-150 per night in 2024). Manage the property by establishing relationships with local cleaning services, maintenance contractors, and consider using property management companies like Vacasa or RedAwning if you're not local, while maintaining responsive communication with guests and keeping the property stocked with amenities that appeal to outdoor enthusiasts and university visitors.

To identify profitable short-term rental properties in Dillon, Montana, focus on locations within 2-3 miles of the University of Montana Western campus and properties near Beaverhead River access points for fishing enthusiasts, as these drive consistent demand from visiting families, university guests, and outdoor recreation tourists. Target 2-4 bedroom single-family homes or cabins built after 1980 with mountain or river views, full kitchens, outdoor spaces, and parking for multiple vehicles, as these features command premium rates of $120-200 per night during peak seasons (May-September and university events). Analyze comparable properties using AirDNA and Mashvisor to identify the $150,000-350,000 price range that typically yields 12-18% annual returns, while researching competition through Airbnb and VRBO searches within 10-mile radius to ensure market isn't oversaturated. Utilize STR Helper and Rabbu for market analysis specific to Beaverhead County, monitor University of Montana Western's academic calendar and local events like the annual Jaycee Rodeo to understand seasonal demand patterns, and consider properties near Bannack State Park or within 30 minutes of Big Hole River for expanded guest appeal, ensuring compliance with Dillon's zoning regulations and any HOA restrictions before purchase.

To obtain an Airbnb/STR permit in Dillon, Montana, you must first contact the Beaverhead County Planning Department at 2 South Pacific Street, Dillon, MT 59725, as the city operates under county jurisdiction for zoning matters. Required documents typically include a completed short-term rental application, proof of property ownership or lease agreement, floor plan of the rental unit, proof of liability insurance (minimum $1 million coverage), fire safety inspection certificate from the local fire department, and a business license from the Montana Department of Revenue. The application fee is approximately $150-200 with an annual renewal fee of $100-125, plus additional costs for inspections ($75-100) and business license ($15-30). The approval timeline ranges from 4-8 weeks depending on inspection scheduling and application completeness. Specific Dillon requirements include maintaining a local contact person available 24/7 within 60 miles of the property, limiting occupancy to 2 people per bedroom plus 2 additional guests, providing adequate parking (typically 1 space per bedroom), ensuring compliance with residential zoning restrictions, posting the permit number in all advertisements, maintaining a guest registry, and adhering to noise ordinances with quiet hours typically from 10 PM to 7 AM.

Short-term rentals (STRs) are generally legal in Dillon, Montana, as the city does not have specific municipal ordinances prohibiting them as of 2024. However, STR operators must comply with Montana state regulations and local zoning requirements, which typically allow vacation rentals in residential areas with proper business licensing through the Montana Department of Revenue. Dillon follows Beaverhead County zoning regulations for areas outside city limits, and most residential properties can operate as STRs provided they meet safety standards, obtain necessary permits, and comply with tax collection requirements including the 3% state lodging tax. There are no specific prohibited areas within Dillon city limits, though properties must adhere to standard residential use guidelines and noise ordinances. Recent changes at the state level in 2023 have streamlined licensing processes and clarified tax obligations for STR operators, while local enforcement focuses primarily on ensuring compliance with existing business licensing and safety codes rather than implementing restrictive zoning limitations.

The best areas for Airbnb investment in Dillon, Montana include the Historic Downtown District near Main Street, which attracts visitors exploring the town's western heritage and offers proximity to local restaurants and shops, and neighborhoods near the University of Montana Western campus, which provide steady demand from visiting families, prospective students, and academic conference attendees. The areas around Beaverhead County Museum and near Bannack State Park access points are attractive due to tourism related to Montana's gold rush history and outdoor recreation. Properties near the Beaverhead River corridor appeal to fishing enthusiasts and outdoor tourists, while neighborhoods with easy access to Highway 91 and Interstate 15 capture business travelers and those using Dillon as a base for exploring southwestern Montana's ranching country, historic sites, and outdoor activities including hunting, fishing, and winter sports in nearby mountains.

Airbnb properties in Dillon, Montana are subject to Montana's statewide lodging facility use tax of 3% on gross receipts, which applies to all short-term rental accommodations under 30 days. Beaverhead County, where Dillon is located, does not impose an additional county lodging tax as of 2023. The City of Dillon imposes a local option tax of 3% on lodging facilities, bringing the total tax rate to approximately 6% for Airbnb stays. These taxes are typically collected by the host at the time of booking or check-in and must be remitted to the Montana Department of Revenue monthly if collections exceed $500 per month, or quarterly for smaller amounts. Airbnb may collect and remit these taxes directly on behalf of hosts through their platform in Montana. Exemptions generally include stays of 30 days or longer, which are considered long-term rentals rather than transient lodging, and accommodations provided to permanent residents. Hosts must register with the Montana Department of Revenue and obtain the necessary permits, and failure to collect and remit these taxes can result in penalties and interest charges.

To start an Airbnb in Dillon, Montana, expect total costs around $385,000-$425,000. Property purchase represents the largest expense at $320,000-$350,000 based on median home prices in rural Montana markets. Furnishing costs typically run $15,000-$25,000 for a complete 2-3 bedroom setup including beds, linens, kitchen essentials, and living room furniture from retailers like IKEA, Wayfair, and local stores. Initial setup costs including professional photography, listing creation, and basic renovations average $3,000-$5,000. Permits and fees in Montana generally total $500-$1,500 covering business licenses, short-term rental permits, and potential HOA approvals. Insurance premiums for short-term rental coverage run $2,000-$3,500 annually, with companies like Proper Insurance and CBIZ offering specialized Airbnb policies. Utility deposits and connections cost approximately $1,000-$2,000 for electricity, gas, water, internet, and cable services. First six months operating expenses including utilities ($1,200), cleaning supplies ($300), maintenance reserves ($1,000), marketing ($500), and platform fees average $4,000-$6,000, assuming moderate occupancy rates during the initial launch period in Dillon's seasonal tourism market.

Airbnb properties in Dillon, Montana typically generate annual revenues between $15,000-$35,000 for standard 2-3 bedroom homes, with peak summer months (June-August) accounting for 60-70% of bookings due to proximity to outdoor recreation areas like Bannack State Park and fishing on the Beaverhead River. Operating expenses generally run 40-50% of gross revenue, including cleaning fees ($75-100 per turnover), property management (15-25%), utilities ($200-300/month), insurance ($1,200-2,000 annually), and maintenance costs averaging $2,000-4,000 yearly. Net profit margins typically range from 15-25% after all expenses, with successful properties achieving occupancy rates of 45-65% annually. Key success factors include competitive pricing ($80-150/night depending on season and amenities), professional photography, responsive guest communication, and strategic location within 10 miles of University of Montana Western campus or near recreational access points. Properties with unique features like hot tubs, mountain views, or pet-friendly policies command 10-20% premium rates, while those offering longer-term stays during university sessions maintain steadier winter occupancy when tourism drops significantly.

Airbnb investments in Dillon, Montana typically generate annual ROI of 8-12% with cash-on-cash returns ranging from 6-10%, based on the town's proximity to Beaverhead-Deerlodge National Forest and University of Montana Western driving consistent demand from outdoor enthusiasts and visiting families. Properties averaging $250,000-350,000 can expect gross rental income of $25,000-35,000 annually, with occupancy rates of 60-70% during peak summer and hunting seasons, while winter months see reduced demand except for ice fishing and skiing activities. Most investors achieve profitability within 18-24 months after accounting for initial renovation costs, property management fees of 15-25%, and seasonal vacancy periods, with higher-end properties near Bannack State Park or with premium amenities like hot tubs commanding nightly rates of $120-180 compared to standard units at $80-120, making the market particularly attractive for investors seeking steady returns in Montana's growing short-term rental sector.

STRSearch is a national platform that specializes in identifying profitable short-term rental properties for investors looking in Dillon, Montana. Local real estate agents in the area include Berkshire Hathaway HomeServices Montana Properties, Century 21 Big Sky Real Estate, and Yellowstone Country Realty who have experience with investment properties in the Dillon market. National services that can assist include Mashvisor for market analysis and property identification, AirDNA for short-term rental data analytics, and Awning which provides end-to-end Airbnb investment services including property acquisition. RedAwning offers vacation rental investment opportunities and market insights for Montana markets, while Vacasa provides property management services that can help evaluate potential acquisitions. Local property management companies like Big Sky Vacation Rentals and Montana Vacation Rentals can provide market expertise and insights into profitable properties in the Dillon area. Additionally, real estate investment groups and local investors often network through the Beaverhead County economic development office and local real estate investment associations to share opportunities and market knowledge specific to the Dillon short-term rental market.