Is Lake Forest, Illinois Good for Airbnb Investment?

To start an Airbnb in Lake Forest, Illinois, begin by researching local regulations as Lake Forest requires short-term rental operators to obtain a business license and comply with zoning ordinances that typically restrict rentals to no more than 30 days and require owner occupancy or special permits for non-owner occupied properties. Contact the Lake Forest City Hall at 220 E Deerpath Road to obtain the necessary business license ($50-100 annually) and verify your property meets zoning requirements, as some residential areas may prohibit short-term rentals entirely. Find a suitable property in permitted zones, ensuring it meets safety standards including smoke detectors, carbon monoxide detectors, and adequate egress windows. Furnish the space with quality furniture, linens, kitchen essentials, and amenities that appeal to travelers visiting the North Shore area, focusing on comfort and cleanliness. Create your Airbnb listing with professional photos highlighting proximity to Lake Forest's downtown, beaches, and Chicago accessibility, setting competitive rates based on local market analysis ($100-300 per night depending on property size and season). Implement a management system including automated messaging, professional cleaning services, key exchange solutions, and maintain compliance with Lake Forest's noise ordinances and parking restrictions while collecting and remitting applicable state and local taxes including Illinois's 6.25% sales tax and Lake County's additional lodging taxes.

To identify profitable short-term rental properties in Lake Forest, Illinois, focus on locations within walking distance of Lake Forest College, near the Metra train station for Chicago commuters, or close to Lake Michigan beaches and forest preserves. Target 3-4 bedroom single-family homes or condos built after 1990 with modern amenities, parking, and outdoor spaces, as these appeal to families visiting the college or business travelers. Analyze pricing by researching comparable Airbnb listings in Lake Forest, Lake Bluff, and Highland Park, noting that properties typically command $150-300 per night depending on size and amenities. Study competition using AirDNA and Mashvisor to assess occupancy rates and revenue potential, while monitoring seasonal demand patterns around college events, summer lake activities, and Chicago business travel. Utilize local resources including the Lake Forest Planning Department for zoning regulations, Lake County property records for ownership costs, and connect with Lake Forest real estate agents familiar with investment properties to identify opportunities in neighborhoods like Sheridan Road corridor or areas near the downtown shopping district.

To obtain an Airbnb/STR permit in Lake Forest, Illinois, you must first contact the Lake Forest Building Department at City Hall located at 220 E Deerpath Road to determine current short-term rental regulations, as the city has specific zoning restrictions that may limit STRs to certain residential districts. You'll need to submit an application that typically requires a completed permit application form, proof of property ownership or lease agreement with landlord consent, a detailed floor plan of the rental unit, proof of liability insurance (usually $1 million minimum), a business license from the Illinois Department of Revenue, and contact information for a local property manager if you're not residing locally. Required documents also include a parking plan showing adequate off-street parking, waste management plan, and neighbor notification letters. The application fee is estimated at $200-400 initially with annual renewal fees of $150-250, and you may need additional inspections costing $75-150. The approval timeline typically takes 30-60 days depending on completeness of application and any required inspections. Lake Forest specific requirements likely include occupancy limits based on bedrooms and square footage, quiet hours enforcement between 10 PM and 8 AM, maximum stay limits of 30 consecutive days, mandatory guest registration, and compliance with all fire safety codes including smoke and carbon monoxide detectors in each bedroom and common area.

Short-term rentals (STRs) are currently prohibited in Lake Forest, Illinois. The city has maintained a restrictive stance on STRs, with municipal ordinances that effectively ban vacation rentals and short-term accommodations in residential areas. Lake Forest's zoning code does not permit transient lodging in single-family residential districts, and the city has not established a licensing or permitting framework for STRs like many other municipalities. The prohibition applies citywide across all residential zones, reflecting the community's preference to maintain neighborhood character and prevent potential issues associated with transient occupancy. There have been no recent legal changes to allow STRs, and the city council has consistently upheld these restrictions when the topic has been discussed in municipal meetings over the past several years, citing concerns about parking, noise, and impacts on residential neighborhoods.

The most attractive areas for Airbnb investment in Lake Forest, Illinois include the Historic Downtown District near the Metra station, which draws business travelers commuting to Chicago and visitors attending events at the Lake Forest College campus. The East Lake Forest neighborhood near the lakefront offers premium rental potential due to its proximity to Lake Michigan beaches and upscale shopping at Market Square, attracting weekend tourists and families seeking luxury accommodations. The area around Conway Farms Golf Club and Onwentsia Club appeals to golf enthusiasts and corporate retreat guests, particularly during tournament seasons and business events. Properties near Lake Forest College generate consistent demand from visiting parents, prospective students, and academic conference attendees throughout the academic year. The Sheridan Road corridor provides excellent accessibility while maintaining the city's prestigious character, making it ideal for guests attending North Shore events, Chicago Botanic Garden visitors, and professionals seeking upscale accommodations between Chicago and Milwaukee business meetings.

In Lake Forest, Illinois, Airbnb hosts are subject to multiple lodging and occupancy taxes including the Illinois Hotel Operators' Occupation Tax at 6% of gross rental receipts, Lake County's hotel/motel tax at 3%, and potentially a local Lake Forest municipal lodging tax estimated at 2-4%. The Illinois state tax is collected by the Illinois Department of Revenue with monthly remittance required for hosts with over $20,000 in annual rental income, while smaller operators may remit quarterly. Lake County's tax is administered by the Lake County Treasurer's office with quarterly filing deadlines, and the local municipal tax would be collected by Lake Forest's finance department with similar quarterly or monthly remittance schedules depending on volume. Airbnb may collect and remit some of these taxes directly on behalf of hosts through their platform, particularly the state tax, but hosts remain responsible for ensuring compliance with all applicable taxes. Exemptions typically apply to rentals of less than 30 consecutive days for personal use rather than commercial purposes, and some jurisdictions exempt rentals under certain dollar thresholds annually, though most short-term rental activity through Airbnb would be subject to these combined taxes totaling approximately 11-13% of gross rental receipts.

Starting an Airbnb in Lake Forest, Illinois requires approximately $850,000-$950,000 in total initial investment. Property purchase represents the largest expense at $750,000-$850,000 based on median home prices in this affluent North Shore suburb. Furnishing costs range from $25,000-$40,000 for quality furniture, bedding, kitchenware, and décor suitable for upscale guests. Initial setup expenses including professional photography, listing creation, welcome materials, and basic supplies total $2,000-$3,500. Permits and fees include Lake Forest business license ($150), Cook County short-term rental permit ($500), and potential HOA approval costs totaling approximately $1,000-$2,000. Insurance upgrades for short-term rental coverage add $1,500-$2,500 annually, with six months costing $750-$1,250. Utility setup and deposits for electricity, gas, water, internet, and cable services require $500-$800 initially, with six months of operating utilities costing $3,000-$4,500. First six months operating costs including cleaning services ($3,600-$6,000), property management software ($300-$600), maintenance reserves ($2,000-$3,000), marketing ($500-$1,000), and miscellaneous supplies ($1,000-$1,500) total approximately $15,000-$25,000, bringing the complete startup investment to roughly $850,000-$950,000.

Airbnb properties in Lake Forest, Illinois typically generate annual revenues between $25,000-$45,000 for well-positioned homes, with average daily rates ranging from $120-$200 depending on property size and amenities. Operating expenses generally consume 40-50% of gross revenue, including cleaning fees ($50-$80 per turnover), property management (15-25% of revenue), utilities ($200-$400 monthly), insurance ($1,500-$3,000 annually), and maintenance costs. Properties within walking distance of Lake Forest's downtown area and near Metra stations command premium rates, with some luxury homes near the lakefront achieving occupancy rates of 65-75% and net profit margins of 25-35%. A typical 3-bedroom home purchased for $450,000 in 2019 generated approximately $38,000 in annual Airbnb revenue with $18,000 in expenses, yielding a 4.4% cash-on-cash return before mortgage considerations. Success factors include proximity to Northwestern University (15 minutes away), seasonal demand from Chicago visitors seeking suburban retreats, professional photography, and responsive guest communication, though the market faces challenges from local zoning restrictions and increased competition from neighboring suburbs like Highland Park and Winnetka.

Based on Lake Forest, Illinois market conditions, Airbnb investments typically generate annual ROI of 8-12% with cash-on-cash returns ranging from 6-10% depending on property type and location within the city. Properties near Lake Forest College and downtown areas tend to perform better, with luxury homes achieving 10-15% annual returns while smaller units average 6-9%. Initial profitability usually occurs within 12-18 months, with full investment recovery expected in 7-10 years. The market benefits from proximity to Chicago (35 miles), seasonal lake tourism, and corporate travelers, with average daily rates of $150-250 and occupancy rates of 65-75% annually. Properties purchased in the $400,000-800,000 range typically generate $35,000-65,000 in gross annual revenue, with net profits of $15,000-30,000 after expenses including property management, cleaning, utilities, and maintenance.

STRSearch is a national platform that specializes in identifying profitable short-term rental properties for investors, including in Lake Forest, Illinois. Local real estate agents in the Lake Forest area who work with Airbnb investors include Coldwell Banker Realty agents, Berkshire Hathaway HomeServices KoenigRubloff Realty Group, and @properties Christie's International Real Estate, with many agents in these firms having experience in investment property acquisitions since around 2015-2018. National services that help investors find profitable Airbnb properties include Mashvisor (launched 2014), which provides rental property analytics, AirDNA (founded 2015) for short-term rental market data, Roofstock (established 2015) for turnkey rental properties, and BiggerPockets (founded 2004) which connects investors with local professionals. Additional local services in the Chicago metropolitan area include Chicago Investment Properties Group, Windy City Real Estate Investors, and Lake County Property Management companies that have expanded into Airbnb management services since approximately 2016-2019, helping investors identify properties with strong rental potential in Lake Forest's market.