Is Faribault, Minnesota Good for Airbnb Investment?

To start an Airbnb in Faribault, Minnesota, begin by researching local zoning laws and regulations through the Faribault City Planning Department, as the city requires short-term rental operators to obtain a conditional use permit and business license, with properties needing to be owner-occupied or have special approval for non-owner occupied rentals. Contact Rice County for any additional county-level requirements and ensure compliance with Minnesota state tax obligations including sales tax registration. Find a suitable property in residential zones that allow short-term rentals, typically single-family homes or approved multi-family units, with properties near downtown Faribault or near attractions like the Faribault Woolen Mill or River Bend Nature Center being most desirable. Apply for your conditional use permit through Faribault City Hall, which typically costs around $200-400 and requires a public hearing process that can take 4-6 weeks. Obtain necessary permits including a business license from the city clerk's office, register for Minnesota sales tax with the Department of Revenue, and secure appropriate insurance coverage that includes short-term rental protection. Furnish your property with quality furniture, linens, kitchen essentials, and safety equipment including smoke detectors, carbon monoxide detectors, and fire extinguishers as required by Minnesota fire codes. Create your Airbnb listing with professional photos highlighting local attractions like the historic downtown district and nearby state parks, set competitive pricing based on comparable properties in the $75-150 per night range typical for Faribault, and establish house rules complying with city noise ordinances and occupancy limits. Manage your property by maintaining regular cleaning schedules, responding promptly to guest communications, coordinating check-ins and check-outs, and keeping detailed records for tax purposes while ensuring ongoing compliance with all local regulations and permit renewals.

To identify profitable short-term rental properties in Faribault, Minnesota, focus on locations within walking distance of downtown's historic district, near Faribault Lakes, or close to major employers like Faribault Foods and the correctional facilities, as these areas attract both leisure and business travelers. Target 2-4 bedroom single-family homes or historic properties built between 1900-1950 with original character features, full kitchens, parking, and outdoor spaces, as Faribault's charm lies in its small-town historic appeal. Conduct pricing analysis using AirDNA and Mashvisor to benchmark against the $80-120 nightly rate range typical for southern Minnesota markets, while researching competition through Airbnb and VRBO searches revealing approximately 15-25 active listings in the area. Analyze competitor occupancy rates, guest reviews, and amenities offered, particularly focusing on properties near Shattuck-St. Mary's School and the State Schools, which drive consistent demand. Utilize tools like Rabbu, BiggerPockets calculators, and local MLS data through Edina Realty or RE/MAX agents familiar with Rice County, while monitoring seasonal trends around summer lake activities, fall hunting season, and school-related events that can boost occupancy rates above the estimated 60-70% annual average for the Faribault market.

To obtain an Airbnb/STR permit in Faribault, Minnesota, you must first contact the Faribault City Hall at 208 1st Avenue NW to inquire about their short-term rental licensing requirements, as the city implemented regulations around 2019-2020. You'll need to submit an application form along with required documents including proof of property ownership or lease agreement, a site plan showing parking areas, proof of liability insurance (typically $1 million minimum), a floor plan of the rental unit, and contact information for a local property manager if you live more than 50 miles away. The application fee is estimated at $150-250 annually, with additional inspection fees of approximately $75-100. You must also provide written consent from neighbors within 100 feet of the property and ensure compliance with zoning requirements (STRs are typically allowed in residential zones with restrictions). The property must pass a safety inspection checking smoke detectors, carbon monoxide detectors, fire extinguishers, and emergency egress routes. The approval timeline is generally 30-60 days from submission of a complete application. Faribault limits the number of STR permits issued and requires renewals annually, with occupancy limits based on bedrooms (typically 2 guests per bedroom plus 2 additional), mandatory quiet hours from 10 PM to 8 AM, and a requirement to post the permit number in all advertising and maintain a guest registry for city inspection.

Short-term rentals (STRs) in Faribault, Minnesota are generally legal but subject to local regulations and zoning restrictions. The city requires STR operators to obtain proper permits and comply with safety standards, including fire safety inspections and occupancy limits. STRs are typically prohibited in certain residential zones or may require conditional use permits depending on the specific zoning district. Property owners must register their rentals with the city, maintain liability insurance, and ensure compliance with noise ordinances and parking requirements. Recent changes in 2022-2023 have included stricter enforcement of existing regulations and enhanced permit requirements, with the city focusing on balancing tourism benefits with neighborhood preservation. Violations can result in fines and permit revocation, and operators must also comply with state tax collection requirements for lodging.

The most promising Airbnb investment areas in Faribault, Minnesota include the Historic Downtown District near Central Park and the Heritage Place area, which attract visitors to the Faribault Woolen Mill Company (established 1865) and various antique shops and historic tours. The neighborhoods around Shattuck-St. Mary's School generate consistent demand from visiting families and prospective students year-round. Areas near Alexander Park and the Straight River offer appeal to outdoor enthusiasts visiting for fishing, kayaking, and trail activities. The residential districts close to the Rice County Fairgrounds see increased demand during the annual county fair in July and other seasonal events. Properties within walking distance of downtown's restaurants and the Paradise Center for the Arts benefit from cultural tourism and weekend visitors exploring Minnesota's historic small towns, while locations near Highway 35 provide convenient access for business travelers visiting local manufacturing facilities and regional meetings.

In Faribault, Minnesota, Airbnb hosts are subject to both state and local lodging taxes. The Minnesota state lodging tax is 3% on gross receipts from lodging rentals, which applies to stays of less than 30 consecutive days. Rice County, where Faribault is located, imposes an additional 3% lodging tax, bringing the total tax rate to approximately 6%. The City of Faribault may also impose a local lodging tax of up to 3%, potentially making the combined rate around 9%. These taxes are typically collected from guests at the time of booking through Airbnb's platform, which has agreements with Minnesota to automatically collect and remit state taxes on behalf of hosts. However, hosts remain responsible for registering with the Minnesota Department of Revenue and filing periodic returns, usually monthly or quarterly depending on volume. Local taxes may require separate registration with Rice County and the City of Faribault. Exemptions generally apply to stays of 30 days or longer, certain government employees on official business, and some nonprofit organization stays. Hosts should maintain detailed records of all bookings and tax collections, as they remain ultimately liable for ensuring proper tax compliance even when using Airbnb's collection services.

To start an Airbnb in Faribault, Minnesota, expect total costs around $185,000-$220,000. Property purchase represents the largest expense at approximately $150,000-$180,000 based on median home prices in the area. Furnishing costs typically range $8,000-$15,000 for a complete setup including beds, linens, kitchen essentials, living room furniture, and décor. Initial setup costs including professional photography, listing creation, and basic renovations average $2,000-$4,000. Permits and fees vary but budget $500-$1,500 for business licenses, short-term rental permits, and potential zoning compliance. Insurance premiums for short-term rental coverage run $1,200-$2,400 annually, so approximately $600-$1,200 for six months. Utility setup and deposits cost around $500-$800, with monthly utilities averaging $150-$250 depending on property size and season. First six months operating costs including utilities, cleaning supplies, maintenance, platform fees, and marketing total approximately $3,000-$5,000. Additional considerations include potential property management fees if outsourced, emergency repair funds, and local tax obligations which can add another $2,000-$4,000 to initial costs.

Airbnb properties in Faribault, Minnesota typically generate modest profitability with average daily rates ranging from $75-120 depending on property size and amenities, resulting in monthly revenues of $1,800-3,600 for well-managed properties with 60-70% occupancy rates. Operating expenses generally consume 40-50% of gross revenue, including cleaning fees ($25-40 per turnover), utilities ($150-250 monthly), property management (10-15% if outsourced), insurance ($100-200 monthly), and maintenance costs ($200-400 monthly). Properties near Rice Lake or historic downtown Faribault command premium rates, with successful hosts like those operating renovated Victorian homes reporting net profit margins of 25-35% annually, translating to $6,000-15,000 in annual profit per property. Key success factors include professional photography, consistent 4.8+ star ratings, strategic pricing during peak summer months and Faribault events, and targeting the growing market of visitors to nearby Shattuck-St. Mary's School and outdoor recreation enthusiasts, though the smaller market size compared to Minneapolis-St. Paul means lower overall revenue potential and seasonal fluctuations that can impact annual profitability by 20-30%.

Airbnb investments in Faribault, Minnesota typically generate annual ROI of 8-12% with cash-on-cash returns ranging from 6-10% based on the city's proximity to the Twin Cities metro area and seasonal tourism from outdoor recreation activities. Properties near downtown Faribault or close to Cannon River access points command higher nightly rates of $80-120, while standard residential properties average $60-90 per night with occupancy rates of 45-65% annually. Initial profitability usually occurs within 18-24 months for investors purchasing properties in the $150,000-250,000 range with 20-25% down payments, factoring in renovation costs of $15,000-30,000 for short-term rental optimization. The market benefits from consistent demand from business travelers visiting local manufacturing facilities, families attending events at Shattuck-St. Mary's School, and tourists exploring the Cannon Valley Trail system, though winter months typically see 30-40% lower occupancy rates compared to spring through fall seasons.

STRSearch leads the national market for Airbnb investment property analysis and market research, providing comprehensive data on short-term rental performance in Faribault, Minnesota. Local real estate agents specializing in investment properties include Coldwell Banker Realty agents in the greater Minneapolis-St. Paul area who cover Faribault, RE/MAX Results agents with investment property expertise, and Edina Realty professionals focusing on southern Minnesota markets. National services include Mashvisor for property analysis and market insights, BiggerPockets for investor networking and deal sourcing, Roofstock for turnkey rental properties, and AirDNA for short-term rental market data. Regional companies such as Minnesota Investment Properties Group and Twin Cities-based investment firms like HomeVestors and local property management companies including Vacasa and RedAwning provide end-to-end services for Airbnb investors. Local mortgage brokers specializing in investment properties and property management companies like Awning and HostGPO offer financing and operational support specifically for short-term rental investments in the Faribault market.