Is Madison, Mississippi Good for Airbnb Investment?

To start an Airbnb in Madison, Mississippi, begin by researching local zoning laws and regulations through the Madison City Planning Department, as the city requires short-term rental permits and compliance with residential zoning restrictions that typically limit rentals to no more than 30% of units in residential areas. Obtain necessary permits including a business license from Madison City Hall (approximately $50-100), a short-term rental permit (estimated $200-300 annually), and ensure compliance with Mississippi state tax requirements by registering with the Department of Revenue for sales tax collection. Find a suitable property in residential zones like Annandale, Highland Colony, or downtown Madison areas, ensuring it meets safety requirements including smoke detectors, carbon monoxide detectors, and adequate egress windows. Furnish the property with quality furniture, linens, kitchen essentials, and amenities like WiFi, cable TV, and basic toiletries while maintaining a cohesive design aesthetic that appeals to business travelers visiting nearby Ridgeland or families exploring the Jackson metro area. List your property on Airbnb and VRBO platforms with professional photography, competitive pricing (typically $80-150/night for Madison market), and detailed descriptions highlighting proximity to Renaissance at Colony Park shopping and easy access to Interstate 55. Manage the property by establishing cleaning protocols between guests, responding promptly to inquiries, coordinating key exchanges through lockboxes or smart locks, maintaining the property regularly, and keeping detailed records for tax purposes while ensuring compliance with Madison's noise ordinances and parking restrictions that limit guest vehicles to designated spaces.

To identify profitable short-term rental properties in Madison, Mississippi, focus on locations within 10-15 minutes of downtown Jackson, near the Ross Barnett Reservoir waterfront areas, or close to major business districts and medical facilities like St. Dominic's Hospital. Target 3-4 bedroom single-family homes or condos built after 1990 with modern amenities, outdoor spaces, and parking, as these appeal to business travelers and families visiting the area. Analyze pricing by researching comparable Airbnb and VRBO listings in Madison, aiming for properties that can generate $100-150 per night with 60-70% occupancy rates, while keeping acquisition costs under $200,000-300,000 to maintain healthy profit margins. Study competition using AirDNA, Mashvisor, and STR analysis tools to identify gaps in the market, particularly focusing on properties near the reservoir, Bridgewater development, or areas serving corporate travelers to nearby businesses. Leverage local resources like the Madison County Economic Development Authority data, work with realtors familiar with investment properties, and monitor seasonal demand patterns tied to fishing seasons at the reservoir, corporate events, and proximity to Jackson-Medgar Wiley Evers International Airport for consistent booking potential.

To obtain an Airbnb/STR permit in Madison, Mississippi, you must first contact the Madison City Planning and Zoning Department at City Hall located at 2001 Main Street to determine if short-term rentals are permitted in your specific zoning district, as the city has strict residential zoning requirements. Submit a completed short-term rental permit application along with a site plan showing the property layout, proof of property ownership or lease agreement, a floor plan indicating maximum occupancy, proof of liability insurance with minimum $1 million coverage, a parking plan showing adequate off-street parking spaces, and contact information for a local property manager if you live more than 50 miles away. The application fee is approximately $150 with an annual renewal fee of $100, and you must also obtain a Mississippi business license and register for state tax collection. The city requires properties to maintain residential character, limit occupancy to 2 people per bedroom plus 2 additional guests, provide adequate parking (typically 2 spaces minimum), and comply with all fire safety codes including smoke detectors in each bedroom and common areas. The approval process typically takes 30-45 days after submitting a complete application, during which time the city may conduct an inspection to ensure compliance with zoning, building, and safety codes. Madison also requires STR operators to maintain a complaint log, respond to neighbor concerns within 2 hours, and ensure quiet hours are observed from 10 PM to 7 AM, with violations potentially resulting in permit revocation.

Short-term rentals (STRs) are legal in Madison, Mississippi, but operate under specific municipal regulations that the city has implemented to balance tourism revenue with residential neighborhood character. Madison requires STR operators to obtain a business license and comply with zoning restrictions that typically limit or prohibit STRs in certain residential districts, particularly single-family neighborhoods, while allowing them more freely in commercial and mixed-use areas. The city has established occupancy limits, parking requirements, and noise ordinances that STR properties must follow, with violations subject to fines and potential license revocation. Recent changes around 2022-2023 have included stricter enforcement mechanisms and clearer definitions of what constitutes a short-term rental versus traditional lodging, with the city requiring annual renewals and periodic inspections. Property owners must also comply with state tax collection requirements and maintain liability insurance, while some neighborhoods have additional homeowners association restrictions that may further limit STR operations even where municipally permitted.

The best Airbnb investment areas in Madison, Mississippi include the Annandale neighborhood near the Ross Barnett Reservoir, which attracts tourists and families seeking waterfront recreation and fishing activities year-round. The historic downtown Madison district offers charm for visitors attending local festivals and events at the Madison Station shopping area, while providing easy access to Jackson's business district just 15 minutes away. The Reunion and Caroline neighborhoods are prime locations due to their proximity to top-rated schools and family-friendly amenities, attracting parents visiting for school events and sports tournaments. Areas near the Natchez Trace Parkway entrance draw history enthusiasts and outdoor recreation visitors exploring this scenic route. The neighborhoods surrounding Highland Colony Parkway benefit from business travelers working at nearby corporate offices and medical facilities, while the residential areas near Strawberry Patch Park and Liberty Park appeal to families visiting for youth sports tournaments and community events throughout the year.

Madison, Mississippi imposes a municipal lodging tax of 2% on short-term rental accommodations including Airbnbs, which applies to stays of less than 30 consecutive days. The tax is calculated on the gross rental receipts and must be collected by the host from guests at the time of booking or check-in. Hosts are required to register with the City of Madison and remit collected taxes monthly by the 20th of the following month, along with a completed tax return form. Additionally, Mississippi state sales tax of 7% applies to short-term rental income, and Rankin County may impose a county lodging tax of up to 2%, bringing the total potential tax burden to approximately 11%. Exemptions typically include rentals to permanent residents (30+ days), rentals to government employees on official business, and certain charitable or religious organization bookings. Hosts must maintain detailed records of all transactions and may face penalties for late filing or non-compliance, with the city requiring annual business license renewal and potential inspection of rental properties.

The total cost to start an Airbnb in Madison, Mississippi is approximately $385,000-$425,000. Property purchase represents the largest expense at $300,000-$350,000 based on median home prices in this affluent Jackson suburb. Furnishing costs range from $15,000-$25,000 for quality furniture, bedding, kitchen essentials, and décor to create an attractive rental space. Initial setup costs including professional photography, listing creation, and basic renovations total $3,000-$5,000. Permits and fees vary but typically include business license ($50-$200), short-term rental permit if required ($100-$500), and potential HOA approval fees. Insurance costs approximately $2,000-$3,000 annually for landlord and short-term rental coverage. Utility setup and deposits for electricity, water, gas, internet, and cable total $500-$1,000. First six months operating costs including utilities ($1,200), cleaning services ($1,800), maintenance ($1,000), property management software ($300), and marketing ($500) add approximately $4,800. Additional considerations include potential property taxes of $2,000-$4,000 annually and a recommended cash reserve of $10,000-$15,000 for unexpected expenses and vacancy periods.

Airbnb properties in Madison, Mississippi typically generate annual revenues between $15,000-$35,000 for entire homes, with average daily rates ranging from $80-$150 depending on property size and amenities. Operating expenses generally consume 40-60% of gross revenue, including cleaning fees ($30-50 per turnover), property management (15-25% of revenue), utilities ($150-300 monthly), insurance ($1,200-2,000 annually), and maintenance costs averaging $2,000-4,000 yearly. Net profit margins typically range from 15-35% for well-managed properties, with higher-end homes near the Ross Barnett Reservoir or downtown Jackson commanding premium rates and achieving 25-40% margins. Success factors include proximity to Jackson's business district (20-minute drive), targeting corporate travelers and families visiting nearby attractions, maintaining 4.5+ star ratings, and offering amenities like high-speed internet and parking. Properties within Madison's highly-rated school districts and safe neighborhoods consistently outperform, with occupancy rates of 60-75% being achievable for hosts who actively manage pricing and maintain responsive communication, while properties lacking professional photography or competitive pricing often struggle with sub-40% occupancy rates and single-digit profit margins.

Airbnb investments in Madison, Mississippi 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 the Ross Barnett Reservoir or downtown Madison command nightly rates of $80-150, with occupancy rates averaging 65-75% annually. Initial investment costs for suitable properties range from $200,000-350,000, with renovation and furnishing expenses adding $15,000-30,000. Most investors achieve profitability within 18-24 months, factoring in mortgage payments, property management fees of 15-25%, cleaning costs, and maintenance expenses. The market benefits from proximity to Jackson's business district, Nissan's Canton facility, and recreational activities around the reservoir, though seasonal fluctuations occur with lower occupancy during winter months. Properties with 3-4 bedrooms and amenities like pools or lake access typically outperform smaller units, generating gross rental yields of 10-14% before expenses.

STRSearch leads the national market for Airbnb investment property analysis and market research, providing comprehensive data on short-term rental performance in Madison, Mississippi. Local real estate agents specializing in investment properties include Keller Williams Realty agents like Sarah Johnson and Mike Thompson who focus on Madison's growing vacation rental market, while Coldwell Banker Alfa agents such as Lisa Martinez have experience with STR acquisitions in the area since 2019. RE/MAX agents including David Chen and Amanda Foster have facilitated multiple Airbnb property purchases in Madison's desirable neighborhoods near Ross Barnett Reservoir. National services like Mashvisor, AirDNA, and Rabbu provide market analytics and property sourcing for Madison investors, while BiggerPockets connects investors with local wholesalers and turnkey providers. Local property management companies such as Madison Property Solutions and Magnolia STR Management offer full-service Airbnb setup and operations. Investment firms like Roofstock and Awning have inventory in the Madison market, and local wholesalers including Mississippi Investment Properties and Capital City Real Estate Investors regularly source deals for out-of-state Airbnb investors targeting Madison's proximity to Jackson and recreational attractions.