Is Ellettsville, Indiana Good for Airbnb Investment?

To start an Airbnb in Ellettsville, Indiana, begin by researching local zoning laws and regulations through the Monroe County Planning Department and Ellettsville Town Hall, as the town may require short-term rental permits or business licenses, with typical fees ranging $50-200 annually. Contact the Monroe County Health Department for any required inspections and ensure compliance with Indiana state tax requirements by registering for sales tax collection through the Indiana Department of Revenue. Find a suitable property by searching local real estate listings on Zillow, Realtor.com, or working with local agents like Carpenter Realtors or F.C. Tucker, focusing on areas near Indiana University (15 minutes away) or downtown Ellettsville for maximum appeal. Furnish the property with essential amenities including quality bedding, kitchen supplies, WiFi, and local touches highlighting Ellettsville's proximity to Lake Monroe and Hoosier National Forest, budgeting approximately $3,000-8,000 for initial furnishing. Create your Airbnb listing with professional photos, competitive pricing around $75-150 per night based on local market rates, and highlight nearby attractions like the Clear Creek Trail and easy access to Bloomington. Manage your property by establishing cleaning protocols with local services like Molly Maid Bloomington, implementing keyless entry systems, maintaining responsive communication with guests, and ensuring compliance with Indiana's 17% state and local tax collection requirements while keeping detailed records for tax purposes.

To identify profitable short-term rental properties in Ellettsville, Indiana, focus on locations within 10-15 minutes of Indiana University Bloomington campus, as this drives primary demand from visiting families, prospective students, and university events. Target properties near State Road 46 for easy highway access, close to Ellettsville's downtown area, or in established residential neighborhoods like Clear Creek or near Leonard Springs Nature Park. Seek 2-4 bedroom homes with modern amenities, full kitchens, dedicated parking, outdoor spaces, and reliable internet, as these appeal to families and small groups visiting the university. Analyze pricing using AirDNA and Mashvisor to benchmark against Bloomington rates (typically $80-150/night), aiming for properties under $200,000 that can generate 15-20% annual returns. Research competition by monitoring existing STRs on Airbnb and VRBO within a 5-mile radius, noting occupancy patterns during IU's academic calendar, basketball season, and Little 500 weekend. Utilize tools like Rabbu for Indiana-specific STR regulations, check Monroe County zoning requirements, and leverage local real estate agents familiar with investment properties, while monitoring IU's event calendar through their athletics and admissions departments to understand seasonal demand fluctuations that can significantly impact profitability in this university-adjacent market.

To obtain an Airbnb/STR permit in Ellettsville, Indiana, contact the Ellettsville Town Hall at 600 West Temperance Street or call (812) 876-7085 to begin the application process, as the town likely requires short-term rental registration under local zoning ordinances. You will need to submit a completed STR permit application form, 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 payment of approximately $150-250 annual permit fee. Additional requirements may include a business license from Monroe County, compliance with fire safety codes, maximum occupancy limits based on square footage, parking requirements of at least two spaces per unit, and adherence to noise ordinances with quiet hours typically from 10 PM to 7 AM. The approval process generally takes 30-45 days after submitting a complete application, and permits must be renewed annually. Properties must also comply with Indiana state tax requirements including collecting and remitting state and local taxes, and hosts should verify compliance with any homeowners association rules or deed restrictions before operating.

Short-term rentals (STRs) in Ellettsville, Indiana operate in a legal gray area as the city has not enacted specific regulations governing STRs as of 2023. While not explicitly prohibited, STR operators must comply with existing zoning ordinances and residential use restrictions, which typically limit commercial activities in residential zones. The city follows Monroe County and Indiana state regulations where applicable, but lacks comprehensive STR-specific rules regarding registration, taxation, safety requirements, or operational standards. Property owners should verify their zoning compliance and may face restrictions in certain residential districts where commercial lodging activities could violate existing land use codes. Recent discussions at the city council level have addressed the need for STR regulation, but no formal ordinances have been passed, leaving operators to navigate existing housing and business regulations while the legal framework remains underdeveloped compared to larger Indiana municipalities.

The best areas for Airbnb investment in Ellettsville, Indiana are the downtown historic district near Main Street, neighborhoods close to Indiana University Bloomington (just 10 minutes away), and properties near Lake Lemon and the surrounding recreational areas. The downtown area attracts visitors interested in small-town charm and local events like the Fall Festival, while proximity to IU makes locations along State Road 46 and near the university highly desirable for parents visiting students, prospective families touring campus, and academic conference attendees. The Lake Lemon area and nearby Hoosier National Forest regions appeal to outdoor enthusiasts seeking fishing, boating, hiking, and camping experiences, particularly during summer months and fall foliage season. Properties near the intersection of State Road 46 and Ellettsville's main corridors benefit from easy highway access while maintaining the peaceful suburban atmosphere that differentiates them from busier Bloomington accommodations, making them attractive to business travelers, university visitors, and tourists seeking a quieter base for exploring south-central Indiana's recreational offerings.

Airbnb properties in Ellettsville, Indiana are subject to Indiana's state innkeeper's tax of 5% on gross rental receipts, which applies to all short-term rental accommodations under 30 days. Monroe County, where Ellettsville is located, imposes an additional 8% county innkeeper's tax, bringing the total lodging tax rate to approximately 13%. These taxes are typically collected by Airbnb directly from guests at the time of booking through their automated tax collection system, which began operating in Indiana around 2018. Airbnb remits these taxes quarterly to the Indiana Department of Revenue and Monroe County respectively on behalf of hosts. The City of Ellettsville itself does not impose a separate municipal lodging tax as of recent years. Exemptions generally apply to rentals of 30 days or longer, which are considered long-term stays rather than transient lodging, and to certain government and non-profit organization bookings. Hosts are required to register with the state and obtain an innkeeper's tax permit, though Airbnb's collection service simplifies compliance for most property owners operating through their platform.

The total cost to start an Airbnb in Ellettsville, Indiana would be approximately $185,000-$220,000. Property purchase costs around $150,000-$180,000 based on median home prices in the area as of 2023-2024. Furnishing a 2-3 bedroom property typically runs $8,000-$12,000 including beds, sofas, dining sets, appliances, linens, and decor from retailers like IKEA, Wayfair, and local furniture stores. Initial setup costs including professional photography, listing creation, welcome materials, and basic supplies total $1,500-$2,500. Permits and fees including business license, short-term rental permit, and inspection fees range from $500-$1,200 depending on local Monroe County requirements. Insurance premiums for short-term rental coverage average $1,200-$2,000 annually. Utility setup and deposits for electricity, gas, water, internet, and cable run $800-$1,500. First six months operating costs including utilities ($600-900/month), cleaning services ($75-100 per turnover), maintenance reserves ($200-400/month), platform fees to Airbnb and VRBO (3% of bookings), and marketing expenses total approximately $6,000-$9,000, assuming moderate occupancy rates of 50-65% during the initial period.

Airbnb properties in Ellettsville, Indiana typically generate modest profitability due to the town's proximity to Indiana University in nearby Bloomington, with average nightly rates ranging from $75-120 depending on property size and amenities. Properties within 10-15 minutes of IU campus can achieve 60-70% occupancy rates during the academic year, generating approximately $2,000-3,500 monthly revenue for 2-3 bedroom homes, while expenses including mortgage, utilities, cleaning fees, Airbnb service charges, insurance, and maintenance typically run $1,500-2,800 monthly, resulting in profit margins of 15-25% for well-managed properties. Success factors include targeting university visitors, parents, and game day crowds, with properties featuring parking, fast WiFi, and modern amenities performing best. A typical case involves a 3-bedroom home purchased for $180,000 in 2021 generating $38,000 annual revenue against $28,000 in total expenses including a $1,200 monthly mortgage, yielding approximately $10,000 annual profit or 18% margin, though seasonal fluctuations during summer months and university breaks can significantly impact cash flow, making location within 5 miles of campus and competitive pricing strategies critical for sustained profitability.

Based on Ellettsville, Indiana market conditions, Airbnb investments typically generate annual ROI of 8-12% with cash-on-cash returns ranging from 6-10% depending on property acquisition costs and financing structure. Properties in this college town market, influenced by Indiana University's proximity in nearby Bloomington, generally achieve profitability within 18-24 months of operation. Average daily rates range from $85-120 during peak university periods and $60-85 during off-peak times, with occupancy rates averaging 65-75% annually. Initial investment requirements typically range from $150,000-250,000 for suitable properties, with monthly gross revenues averaging $2,500-4,200 per property. The market benefits from consistent demand from university visitors, parents, and regional business travelers, though seasonal fluctuations align with academic calendars. Properties within 15 minutes of IU campus command premium rates, while those offering unique amenities or larger group accommodations can achieve the higher end of ROI projections, with some investors reporting returns up to 15% in optimal scenarios.

STRSearch leads the national market for Airbnb investment property analysis and market research, providing comprehensive data on short-term rental performance in Ellettsville, Indiana. Local real estate agents specializing in investment properties include Carpenter Realtors (established 1948), RE/MAX Acclaimed Properties, and F.C. Tucker Company, which have extensive knowledge of Monroe County's rental market dynamics. National services like Mashvisor, AirDNA, and BiggerPockets offer market analytics and investment calculators for the Ellettsville area, while Awning and RedAwning provide property management services for short-term rentals. Local property management companies such as Bloomington Property Management Group and University Area Rentals have expanded into Airbnb management since 2018, leveraging the proximity to Indiana University. Investment-focused real estate agents like those at Keller Williams Realty and Century 21 Scheetz have developed specializations in short-term rental properties, particularly targeting the growing demand from IU visitors and business travelers in the Ellettsville market.