Is New Underwood, South Dakota Good for Airbnb Investment?

To start an Airbnb in New Underwood, South Dakota, begin by researching local zoning laws and regulations through the Meade County Planning and Zoning Office, as New Underwood falls under county jurisdiction and may require special use permits for short-term rentals in residential areas. Contact the South Dakota Department of Revenue to obtain a sales tax license since you'll need to collect and remit state sales tax (currently 4.5%) plus any local taxes on rental income. Find a suitable property by working with local real estate agents familiar with New Underwood's market, focusing on areas near attractions like the Badlands National Park (30 minutes away) or properties with rural charm that appeal to tourists visiting the Black Hills region. Obtain necessary permits including a business license from Meade County, ensure compliance with fire safety codes through the local fire department, and verify your homeowner's insurance covers short-term rentals or purchase additional coverage. Furnish the property with quality basics including comfortable beds, linens, kitchen essentials, Wi-Fi, and local guidebooks highlighting nearby attractions like Wall Drug and Badlands National Park. Create your Airbnb listing with professional photos showcasing the rural South Dakota experience, competitive pricing (research similar properties in Rapid City and Wall for comparison), and detailed descriptions emphasizing proximity to major attractions. Manage the property by establishing cleaning protocols between guests, responding promptly to inquiries, coordinating key exchanges (consider a lockbox system given the rural location), and maintaining the property regularly while building relationships with local service providers for maintenance and cleaning support.

To identify profitable short-term rental properties in New Underwood, South Dakota, focus on locations within 10-15 minutes of Badlands National Park and Black Hills attractions, as proximity to outdoor recreation drives demand in this rural market. Target 2-4 bedroom properties with rustic charm, modern amenities like WiFi and updated kitchens, outdoor spaces for stargazing, and parking for multiple vehicles since guests typically drive. Analyze pricing by researching comparable Airbnb listings in nearby Rapid City and Wall, aiming for $80-150 per night depending on size and amenities, with seasonal adjustments for peak summer tourism. Competition research should include monitoring occupancy rates of existing STRs within a 20-mile radius using AirDNA or similar tools, noting that limited inventory in New Underwood creates opportunity but requires understanding seasonal demand patterns. Essential resources include the Pennington County assessor's office for property values, South Dakota tourism data showing visitor patterns to Badlands and Black Hills, local Facebook groups for community insights, and STR management platforms like Hostfully or Guesty to handle the remote location challenges while maximizing bookings during the April-October peak season.

To obtain an Airbnb/STR permit in New Underwood, South Dakota, contact the New Underwood City Hall at 605-754-6466 or visit their office at 204 North Street to inquire about short-term rental regulations and permit requirements. You will likely need to submit a completed business license application, proof of property ownership or lease agreement, certificate of insurance with minimum $1 million liability coverage, floor plan of the rental property, and contact information for a local property manager if you live more than 50 miles away. The application fee is estimated at $50-150 annually, with potential additional inspection fees of $25-75. Required documents should include a completed STR permit application, South Dakota sales tax license, proof of compliance with fire safety codes, maximum occupancy plan, parking availability confirmation, and neighbor notification affidavit. The approval timeline is typically 2-4 weeks after submitting a complete application, though initial applications may take longer if inspections are required. New Underwood specific requirements likely include maintaining quiet hours from 10 PM to 7 AM, providing adequate off-street parking for guests, ensuring the property meets all building and safety codes, displaying the permit number in all advertising, and maintaining a guest registry for city inspection upon request.

Short-term rentals (STRs) are generally legal in New Underwood, South Dakota, as the small town in Pennington County does not appear to have specific municipal ordinances prohibiting or heavily regulating vacation rentals as of 2024. South Dakota state law generally allows property owners to rent their homes for short periods, and many rural communities like New Underwood (population under 1,000) have not implemented restrictive STR regulations that are more common in larger tourist destinations. However, STR operators must still comply with basic business licensing requirements, collect and remit state sales tax (currently 4.2% plus local taxes), and ensure their properties meet standard safety and zoning requirements for residential use. The town may require a general business license, and operators should verify compliance with Pennington County zoning regulations, though residential areas typically allow short-term rentals by right. There have been no significant recent legal changes specifically targeting STRs in New Underwood, and the regulatory environment remains relatively permissive compared to more restrictive municipalities in tourist-heavy areas of the Black Hills region.

The best areas for Airbnb investment in New Underwood, South Dakota are primarily concentrated around the Highway 14 corridor and properties with proximity to the Badlands National Park entrance, as this small town of approximately 800 residents serves as a strategic gateway location for tourists visiting the Black Hills region. Properties near the town center along Main Street and Highway 14 are particularly attractive due to their accessibility for travelers heading to Mount Rushmore (45 minutes away), Badlands National Park (30 minutes), and other Black Hills attractions, with peak demand during summer months (June-August) when tourism peaks. The residential areas on the north and south sides of town offer opportunities for larger family-friendly rentals that can accommodate groups visiting for the Sturgis Motorcycle Rally in nearby Sturgis (August), hunting seasons (fall), and outdoor recreation activities. Properties with rural settings on the outskirts of town are increasingly popular for guests seeking authentic ranch experiences and stargazing opportunities, capitalizing on the area's dark skies and western heritage tourism trends that have grown significantly since 2018.

New Underwood, South Dakota imposes a 4% municipal lodging tax on short-term rental accommodations including Airbnb properties, which is collected by the host and remitted monthly to the city by the 15th of the following month. The state of South Dakota levies a 4.5% state sales tax and an additional 1.5% tourism tax on lodging, bringing the total occupancy tax burden to approximately 10% for Airbnb guests in New Underwood. Hosts must register with both the South Dakota Department of Revenue and New Underwood city offices, collect taxes from guests at the time of booking or check-in, and file monthly returns even if no rentals occurred during the reporting period. Properties rented for 28 consecutive days or more to the same guest are typically exempt from these occupancy taxes, and certain agricultural or business-related extended stays may qualify for exemptions when proper documentation is provided to local tax authorities.

Starting an Airbnb in New Underwood, South Dakota requires approximately $180,000-220,000 in total initial investment. Property purchase costs around $150,000-180,000 based on median home prices in rural South Dakota communities. Furnishing a 2-3 bedroom property costs $15,000-25,000 including beds, linens, kitchen essentials, living room furniture, and appliances. Initial setup expenses total $3,000-5,000 covering professional photography, listing creation, welcome materials, and basic renovations. Permits and fees range from $500-1,500 including business license, short-term rental permit, and potential zoning approvals through Meade County. Insurance costs $1,200-2,000 annually for short-term rental coverage. Utility setup and deposits require $500-800 for electricity, water, sewer, internet, and cable services. First six months operating costs total $8,000-12,000 including utilities ($200-300/month), cleaning services ($75-100 per turnover), supplies and maintenance ($300-500/month), platform fees (3% of bookings), property management software ($50/month), and marketing expenses ($200-400/month).

Airbnb properties in New Underwood, South Dakota typically generate modest returns due to the town's small population of approximately 800 residents and limited tourist infrastructure, with average nightly rates ranging from $75-120 for entire homes and occupancy rates averaging 35-45% annually. Properties near recreational areas like the Black Hills National Forest, located about 30 miles away, tend to perform better with gross revenues of $8,000-15,000 annually for well-maintained 2-3 bedroom homes, while expenses including property taxes ($800-1,200), utilities ($1,800-2,400), cleaning fees ($2,000-3,000), insurance ($600-900), and maintenance ($1,500-2,500) typically total $6,700-10,000 per year. Net profit margins generally range from 15-35%, with successful properties leveraging proximity to outdoor activities, hunting seasons, and motorcycle rally overflow from Sturgis in August, though the seasonal nature of demand and competition from larger nearby markets like Rapid City limit year-round profitability. Properties that differentiate themselves through unique amenities, target specific niches like hunters or motorcycle enthusiasts, and maintain high cleanliness standards tend to achieve occupancy rates above 50% and profit margins exceeding 25%, while poorly managed or generic listings often struggle to break even due to the area's limited organic demand.

Based on New Underwood, South Dakota 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. The small town's proximity to outdoor recreation areas and potential tourist traffic from Mount Rushmore visitors (approximately 45 minutes away) supports moderate occupancy rates of 40-55% annually. Initial profitability usually occurs within 18-24 months, with properties averaging $75-120 per night during peak summer months and $45-75 during off-season periods. Total investment recovery timeframes typically span 8-12 years, with properties requiring initial investments of $150,000-250,000 for suitable vacation rental conversions. Market factors including limited local competition and seasonal tourism patterns suggest conservative but steady returns, with gross rental yields averaging 10-14% before expenses in this rural South Dakota market.

STRSearch is a national platform that helps investors identify profitable short-term rental properties across markets including New Underwood, South Dakota. Local real estate agents in the Black Hills region such as Keller Williams Black Hills and RE/MAX Results have experience with investment properties in the area. Century 21 Spearfish Realty and Coldwell Banker Lewis-Kirkeby-Hall serve the western South Dakota market and can assist with Airbnb property acquisitions. National services like AirDNA provide market data and analytics for short-term rental investments in smaller markets like New Underwood, while Mashvisor offers property analysis tools for STR investments. BiggerPockets connects investors with local professionals, and companies like RedAwning and Vacasa provide property management services for Airbnb investments in rural South Dakota markets. Local property management companies such as Black Hills Property Management and Dakota Property Solutions have expanded into short-term rental management since 2019. Investment-focused platforms like Roofstock and Fundrise have begun including smaller markets in their portfolios, though direct New Underwood listings may be limited.