Is Eagan, Minnesota Good for Airbnb Investment?

To start an Airbnb in Eagan, Minnesota, begin by researching local regulations as Eagan requires short-term rental operators to obtain a business license and comply with zoning ordinances that typically allow rentals in residential areas with restrictions on occupancy and parking. Contact Eagan City Hall at 651-675-5000 to obtain the necessary permits including a business license ($50-100 annually) and ensure compliance with fire safety codes and health department requirements. Find a suitable property by purchasing or leasing in residential zones, ensuring it meets minimum square footage requirements and has adequate parking spaces as mandated by city ordinances. Furnish the property with quality furniture, linens, kitchen essentials, and safety equipment including smoke detectors, carbon monoxide detectors, and fire extinguishers as required by Minnesota state law and Eagan fire codes. Create your listing on Airbnb and other platforms like VRBO, including professional photos, detailed descriptions, and competitive pricing based on comparable properties in the Twin Cities metro area. Manage your property by establishing check-in procedures, maintaining cleanliness standards, responding promptly to guest inquiries, and keeping detailed records for tax purposes as Minnesota requires collection of state sales tax (6.875%) plus local lodging taxes, while ensuring compliance with Eagan's noise ordinances and occupancy limits typically set at 2 guests per bedroom plus 2 additional guests.

To identify profitable short-term rental properties in Eagan, Minnesota, focus on locations within 15-20 minutes of Minneapolis-St. Paul International Airport and downtown Minneapolis, particularly near major employers like Thomson Reuters, Blue Cross Blue Shield, and Ecolab headquarters. Target 3-4 bedroom single-family homes or townhomes built after 1990 with modern amenities, full kitchens, dedicated workspaces, and parking, as business travelers and families visiting the Twin Cities represent your primary market. Conduct pricing analysis using AirDNA and Mashvisor to benchmark against comparable properties in nearby Bloomington and Burnsville, aiming for properties that can generate $150-200 per night with 60-70% occupancy rates. Research competition by analyzing existing STR listings within a 5-mile radius, identifying gaps in amenities or pricing, and monitor seasonal demand patterns driven by corporate travel, Mayo Clinic visits, and summer lake activities. Utilize tools like Rabbu for Eagan-specific rental regulations compliance, STR Helper for performance tracking, and connect with local real estate agents familiar with Dakota County investment properties, while ensuring compliance with Eagan's short-term rental licensing requirements and zoning restrictions that may limit STRs in certain residential areas.

To obtain an Airbnb/STR permit in Eagan, Minnesota, you must first contact the City of Eagan Planning Department at City Hall located at 3830 Pilot Knob Road to determine if short-term rentals are permitted in your zoning district, as Eagan has specific zoning restrictions for STRs. You'll need to submit an application for a Conditional Use Permit (CUP) which requires a completed application form, property survey, site plan showing parking areas, proof of property ownership or lease agreement, and a $500-800 application fee. Additionally, you must obtain a business license from the City Clerk's office for approximately $50-100 annually, provide proof of liability insurance with minimum $1 million coverage, and ensure compliance with fire safety codes including smoke and carbon monoxide detectors in all sleeping areas. The property must meet all building and health codes, provide adequate off-street parking (typically 1-2 spaces per unit), and maintain quiet hours between 10 PM and 7 AM. The CUP application process typically takes 60-90 days and requires a public hearing before the Planning Commission, with notification to neighboring properties within 350 feet. Once approved, you must register with the Minnesota Department of Revenue for sales tax collection and remit the applicable lodging taxes to both the state and any local tourism bureaus, with annual permit renewals required thereafter.

Short-term rentals (STRs) are legal in Eagan, Minnesota, but operate under specific city regulations that were updated around 2019-2020. The city requires STR operators to obtain a business license and comply with zoning restrictions that primarily limit short-term rentals to single-family residential areas, while generally prohibiting them in multi-family housing complexes and certain residential zones. Eagan imposes occupancy limits based on property size, requires adequate parking provisions, and mandates that operators maintain liability insurance and follow noise ordinances to minimize neighborhood disruption. The city also requires registration with the state of Minnesota and collection of applicable taxes. Properties must meet safety standards including smoke and carbon monoxide detectors, and operators are subject to complaint-based enforcement procedures. Recent changes have included stricter enforcement mechanisms and clearer guidelines for permit applications, with the city taking a moderate approach that allows STRs while protecting residential neighborhood character through reasonable restrictions on density and operational standards.

The best areas for Airbnb investment in Eagan, Minnesota include the Central Eagan district near the Eagan Community Center and Central Park Commons, which attracts families visiting youth sports tournaments and events at the numerous athletic facilities. The area around Lebanon Hills Regional Park is highly desirable for outdoor enthusiasts and families seeking recreational activities, with consistent demand from visitors to the park's trails, beaches, and winter sports facilities. The Diffley Road corridor near major retail centers like Eagan Outlet Mall draws shopping tourists and business travelers attending corporate events. The neighborhoods near Eagan High School and athletic complexes see strong demand during school sporting events, graduations, and tournaments. The residential areas close to Highway 35E and I-494 interchange are attractive for business travelers due to easy airport access and proximity to major corporations like Thomson Reuters and Blue Cross Blue Shield headquarters. The Yankee Doodle Road area benefits from its central location and family-friendly amenities, making it popular with visitors attending events at nearby venues or exploring the Twin Cities metro area while staying in a quieter suburban setting.

In Eagan, Minnesota, Airbnb hosts are subject to multiple lodging taxes including the state lodging tax of 3.0% on gross receipts, Dakota County's lodging tax of 3.0%, and the city of Eagan's transient lodging tax of 3.0%, resulting in a combined rate of approximately 9.0% on short-term rental stays. These taxes are typically collected by Airbnb directly from guests at the time of booking and remitted to the appropriate tax authorities on behalf of hosts, though hosts should verify their registration status with each jurisdiction. The state requires lodging providers to register with the Minnesota Department of Revenue and file monthly returns by the 20th of the following month, while Dakota County and Eagan have similar registration and remittance requirements with monthly filing deadlines. Exemptions generally apply to stays exceeding 30 consecutive days, rentals to permanent residents, and certain government or charitable organization bookings, though hosts must maintain proper documentation to claim these exemptions. Hosts operating without platform collection should register directly with the Minnesota Department of Revenue, Dakota County, and the City of Eagan to ensure compliance with all applicable lodging tax obligations.

Starting an Airbnb in Eagan, Minnesota requires approximately $420,000-$480,000 in total initial investment. Property purchase costs average $350,000-$400,000 based on median home prices in the area as of 2023-2024. Furnishing a 2-3 bedroom property typically runs $15,000-$25,000 including beds, living room furniture, kitchen essentials, linens, and décor. Initial setup costs including professional photography, listing creation, and basic renovations total $3,000-$5,000. Permits and fees in Eagan include business license ($100-$200), short-term rental permit ($200-$500), and potential HOA approval costs ($0-$1,000). Insurance for short-term rentals costs $2,000-$3,500 annually, with the first year paid upfront. Monthly utilities average $200-$300 for electricity, gas, water, internet, and cable. First six months operating costs including utilities ($1,200-$1,800), cleaning services ($1,800-$3,000), maintenance reserves ($1,000-$2,000), platform fees, and marketing total approximately $5,000-$8,000. Additional considerations include property taxes ($4,000-$6,000 annually) and potential property management fees if outsourced at 10-20% of revenue.

Airbnb properties in Eagan, Minnesota typically generate annual revenues between $18,000-$35,000 for entire homes, with average daily rates ranging from $85-$140 depending on property size and amenities. Operating expenses generally consume 40-55% of gross revenue, including cleaning fees ($30-50 per turnover), property management (10-20% of revenue), utilities ($150-250 monthly), insurance ($800-1,200 annually), and maintenance costs averaging $2,000-4,000 yearly. Properties near Minneapolis-St. Paul International Airport and corporate centers like Thomson Reuters and Blue Cross Blue Shield achieve higher occupancy rates of 65-75% compared to residential-only areas at 45-60%. A typical 3-bedroom home generating $28,000 annually faces approximately $14,000 in expenses, yielding net profits of $14,000 or roughly 50% margins. Success factors include proximity to business districts, professional photography, competitive pricing strategies, and maintaining 4.8+ star ratings. Properties within 10 miles of downtown Minneapolis or near Eagan's retail centers like Outlet Collection Twin Cities perform 20-30% better than suburban locations, with some investors reporting ROI of 8-12% when factoring in property appreciation alongside rental income.

Airbnb investments in Eagan, Minnesota typically generate annual ROI of 8-12% with cash-on-cash returns ranging from 6-10% based on current market conditions. Properties in desirable neighborhoods near Minneapolis-St. Paul International Airport and local business districts can achieve occupancy rates of 65-75% with average daily rates of $85-120 depending on property size and amenities. Initial profitability usually occurs within 12-18 months after accounting for startup costs, furnishing, and marketing expenses, with properties requiring approximately $25,000-40,000 in upfront investment beyond the down payment. The Eagan market benefits from consistent business travel demand due to corporate presence from companies like Thomson Reuters and Blue Cross Blue Shield, plus leisure travelers visiting the Twin Cities area, resulting in relatively stable year-round performance with peak seasons during summer months and major Twin Cities events generating 15-25% higher rates.

STRSearch is a national platform that specializes in identifying profitable short-term rental properties for investors looking in Eagan, Minnesota. Local real estate agents like those at RE/MAX Results, Coldwell Banker Realty, and Keller Williams Premier Realty have experience helping investors find properties suitable for Airbnb conversions in the Eagan market. National services include Mashvisor, which provides Airbnb investment analysis tools, and RedAwning, which offers property management and investment guidance for short-term rentals. Local property management companies such as North Homes Property Management and Minnesota Property Management have expanded into Airbnb management services for investors. AirDNA provides market data and analytics specifically for short-term rental investments in the Twin Cities area including Eagan. Investment-focused real estate agents like those at Edina Realty's investment division and Century 21 Atwood have helped clients identify profitable vacation rental opportunities in Dakota County. National platforms like Roofstock and BiggerPockets connect investors with Airbnb-suitable properties and local market experts in Minnesota markets.