Is Ely, Iowa Good for Airbnb Investment?

To start an Airbnb in Ely, Iowa, begin by researching local zoning laws and regulations through the City of Ely's planning department, as Iowa municipalities typically require short-term rental permits and may have occupancy limits or parking requirements. Contact Ely City Hall at 319-848-4103 to obtain necessary business licenses and short-term rental permits, which may cost $50-200 annually and require property inspections for safety compliance. Find a suitable property by searching MLS listings in Ely's residential areas near Cedar Rapids, focusing on 2-3 bedroom homes priced between $150,000-300,000 that allow rental activities according to HOA or deed restrictions. Furnish the property with essential amenities including quality mattresses, linens, kitchen appliances, WiFi, and local touches highlighting Iowa's agricultural heritage and proximity to Cedar Rapids attractions. Create your Airbnb listing with professional photos showcasing the property's connection to Eastern Iowa's recreational opportunities like the Cedar Valley Nature Trail, pricing competitively at $75-125 per night based on local market rates. Manage the property by establishing cleaning protocols between guests, responding promptly to inquiries, coordinating key exchanges through lockboxes or smart locks, and maintaining compliance with Iowa's 6% state sales tax and any local lodging taxes while keeping detailed records for tax purposes and ensuring proper insurance coverage through Airbnb's Host Protection program or additional short-term rental insurance policies.

To identify profitable short-term rental properties in Ely, Iowa, focus on properties within walking distance of downtown attractions and near recreational areas like Lake Macbride State Park, which draws visitors year-round. Target 2-4 bedroom homes or condos built after 1990 with modern amenities, full kitchens, parking, and outdoor spaces that appeal to families and groups visiting the area. Conduct pricing analysis by researching comparable Airbnb and VRBO listings within a 10-mile radius, aiming for properties that can generate $80-150 per night depending on size and amenities, with occupancy rates of 60-70% being realistic for this market. Research competition by analyzing existing STR listings in Ely and nearby Cedar Rapids, Iowa City, and Coralville to identify gaps in the market, such as pet-friendly options or properties that accommodate larger groups. Utilize tools like AirDNA, Mashvisor, and Rabbu for market analysis, while leveraging local resources such as the Ely Chamber of Commerce for area insights, Linn County property records for ownership and tax information, and platforms like Zillow and Realtor.com for property searches, ensuring you understand local zoning laws and STR regulations before investing.

To obtain an Airbnb/STR permit in Ely, Iowa, you must first contact the Ely City Hall at 1570 Dows Street or call (319) 848-4103 to inquire about their specific short-term rental ordinance requirements, as many small Iowa municipalities have implemented STR regulations since 2020-2022. You will likely need to submit a completed STR permit application form, provide proof of property ownership or lease agreement, submit a site plan or floor plan of the rental unit, obtain a certificate of occupancy, provide proof of liability insurance (typically $1 million minimum), and pass a safety inspection covering smoke detectors, carbon monoxide detectors, fire extinguishers, and emergency egress routes. Required documents typically include a valid Iowa driver's license, property tax records, utility bills, emergency contact information for a local representative within 30 miles, and a parking plan showing adequate off-street parking spaces. The application fee is estimated between $100-300 with an annual renewal fee of $50-150, plus inspection fees of approximately $75-125. The timeline usually takes 30-60 days from application submission to permit approval, depending on inspection scheduling and any required corrections. Ely likely requires STR operators to maintain occupancy limits based on bedroom count (typically 2 guests per bedroom plus 2 additional), implement quiet hours from 10 PM to 7 AM, provide trash collection arrangements, and register with the Iowa Department of Revenue for state lodging taxes, while also ensuring compliance with Linn County health department regulations if applicable.

Short-term rentals (STRs) in Ely, Iowa are generally legal but subject to local regulations and zoning restrictions. As a small city in Linn County with approximately 2,000 residents, Ely typically follows Iowa state law which allows STRs while permitting municipalities to establish their own regulatory frameworks. The city likely requires STR operators to obtain business licenses and comply with zoning ordinances that may restrict rentals in certain residential areas or require conditional use permits. Common restrictions probably include occupancy limits, parking requirements, noise ordinances, and safety standards including smoke detectors and emergency exits. Properties in historic districts or areas zoned exclusively for single-family residential use may face additional limitations or prohibitions. Recent trends in Iowa municipalities have included implementing registration requirements, tax collection procedures, and neighbor notification processes, though specific recent changes in Ely would need verification with the city clerk's office. Property owners should consult Ely's municipal code and zoning department to ensure compliance with current regulations before operating an STR.

The best areas for Airbnb investment in Ely, Iowa include the downtown historic district near Main Street, which attracts visitors interested in the town's heritage and proximity to local restaurants and shops, and neighborhoods close to Ely City Park and the recreational trail system that draws outdoor enthusiasts and families seeking weekend getaways. The residential areas near Highway 1 corridor offer good accessibility for business travelers commuting to nearby Cedar Rapids while maintaining the small-town charm that appeals to tourists. Properties within walking distance of local events venues and the areas surrounding Ely's annual community festivals like Ely Fun Days generate seasonal rental demand. The neighborhoods near local schools and community centers also perform well due to visiting families and sports teams, while homes close to the Cedar Valley Nature Trail attract cyclists and outdoor recreation visitors year-round.

In Ely, Iowa, Airbnb hosts are subject to Iowa state sales tax of 6% on lodging rentals, which applies to stays of less than 31 consecutive days, and this tax is typically collected by Airbnb directly from guests and remitted to the Iowa Department of Revenue on behalf of hosts through their automated tax collection system that began around 2018. Additionally, hosts may be subject to local hotel/motel taxes imposed by Linn County, which is estimated at approximately 7% based on typical county lodging tax rates in Iowa, though this would need to be collected and remitted directly by the host to the county treasurer's office on a monthly or quarterly basis depending on local requirements. The city of Ely itself does not appear to impose a separate municipal lodging tax as of recent years, but hosts should verify current local ordinances as small municipalities sometimes implement such taxes. Exemptions typically apply to stays of 31 days or longer which are considered residential rather than transient lodging, and some jurisdictions may exempt rentals to permanent residents or government employees on official business, though specific exemption criteria should be confirmed with local tax authorities.

To start an Airbnb in Ely, Iowa, the total estimated costs would be approximately $185,000-$220,000. Property purchase represents the largest expense at $150,000-$180,000 based on median home prices in small Iowa towns near Cedar Rapids. Furnishing costs typically range $8,000-$12,000 for a complete 2-3 bedroom home including furniture, bedding, kitchenware, and decor from retailers like IKEA, Wayfair, and local stores. Initial setup costs including professional photography, listing creation, and basic renovations average $2,000-$3,000. Permits and fees vary but expect $500-$1,500 for business licenses, short-term rental permits, and city compliance requirements. Insurance costs approximately $1,200-$2,000 annually for landlord and short-term rental coverage through companies like Proper Insurance or CBIZ. Utility setup and deposits for electricity, gas, water, internet, and cable total around $500-$800. First six months operating costs including utilities ($150/month), cleaning supplies ($100/month), maintenance reserves ($200/month), platform fees to Airbnb (3% of bookings), and marketing expenses total approximately $3,500-$5,000, assuming moderate occupancy rates of 40-60% typical for smaller Iowa markets.

Airbnb properties in Ely, Iowa show moderate profitability potential with average nightly rates ranging from $75-120 for typical 2-3 bedroom homes, generating approximately $18,000-28,000 in annual revenue assuming 60-70% occupancy rates. Operating expenses typically consume 40-50% of gross revenue, including cleaning fees ($30-50 per turnover), property management (10-15%), utilities ($150-200 monthly), insurance ($800-1,200 annually), and maintenance costs averaging $2,000-3,500 yearly. Net profit margins generally fall between 25-35% for well-managed properties, with successful hosts like those operating renovated farmhouses near Lake Macbride State Park achieving higher margins through premium pricing and extended stays targeting Cedar Rapids business travelers. Key success factors include proximity to recreational areas, professional photography, consistent 4.8+ star ratings, and targeting the growing market of remote workers seeking rural retreats, with properties within 30 minutes of Cedar Rapids or Iowa City performing significantly better than purely rural locations. The limited competition in Ely compared to larger Iowa markets allows dedicated hosts to capture strong market share, though seasonal fluctuations require careful cash flow management during slower winter months.

Airbnb investments in Ely, Iowa typically generate annual ROI of 8-12% with cash-on-cash returns ranging from 6-10%, though these figures are modest due to the small rural market size of approximately 1,200 residents and limited tourist attractions. Properties in Ely, located near Cedar Rapids, can expect occupancy rates of 40-55% annually, with average daily rates of $75-95 for typical 2-3 bedroom homes, generating gross rental income of $12,000-18,000 per year. Initial investment costs for suitable properties range from $150,000-220,000, with additional startup costs of $8,000-12,000 for furnishing and marketing, while operating expenses including utilities, cleaning, maintenance, and platform fees typically consume 35-45% of gross revenue. Most investors achieve break-even within 18-24 months and reach full profitability by year 3-4, though success heavily depends on proximity to Cedar Rapids attractions, Iowa Speedway events, and maintaining competitive pricing against limited local competition from traditional hotels and other short-term rentals.

STRSearch is a national platform that helps investors identify profitable short-term rental properties across markets including Ely, Iowa. For local expertise, Cedar Rapids-based real estate agents like those at Lepic-Kroeger Realtors and Coldwell Banker Hedges Realty Group serve the Ely area and have experience with investment properties. RE/MAX Real Estate Concepts in nearby Cedar Rapids also works with investors seeking Airbnb opportunities in smaller Iowa markets. National services include Mashvisor, which provides rental property analytics and market data for Iowa markets, and BiggerPockets, which connects investors with local professionals. AirDNA offers short-term rental market analysis that covers the Cedar Rapids-Ely area. Local property management companies like Iowa City Property Management and Cedar Rapids Property Solutions can assist with Airbnb operations once properties are acquired. Roofstock and Fundrise are national platforms that occasionally feature Iowa investment properties, while local mortgage brokers such as Mortgage Services of Iowa can provide financing expertise for investment properties in the Ely market.