Is Ottumwa, Iowa Good for Airbnb Investment?

To start an Airbnb in Ottumwa, Iowa, begin by researching local regulations through the Ottumwa City Hall at 105 E 3rd Street, as the city requires short-term rental operators to obtain a business license and comply with zoning ordinances that typically allow rentals in residential areas with proper permits. Contact the Wapello County Health Department for any health and safety inspections required, and ensure your property meets Iowa fire safety codes by installing smoke detectors and carbon monoxide alarms. Find a suitable property in desirable neighborhoods like downtown Ottumwa near the Historic Ottumwa Opera House or areas close to Indian Hills Community College, considering properties with 2-3 bedrooms that can accommodate families visiting for college events or business travelers. Purchase essential furnishings including quality mattresses, linens, basic kitchen appliances, WiFi equipment, and local guidebooks featuring attractions like the Airpower Museum and Bridge View Center. Create your Airbnb listing with professional photos highlighting unique features, set competitive pricing around $75-120 per night based on local market rates, and write descriptions emphasizing proximity to local attractions and the Des Moines River. For ongoing management, establish relationships with local cleaning services, maintenance contractors, and consider using automated messaging systems for guest communication, while maintaining a 4.8+ star rating by providing excellent customer service and quick response times to booking inquiries and guest needs.

To identify profitable short-term rental properties in Ottumwa, Iowa, focus on locations near the Indian Hills Community College campus, downtown historic district, and proximity to recreational areas like Lake Ottumwa and the Des Moines River. Target 2-4 bedroom properties built after 1950 with updated kitchens, reliable Wi-Fi capability, parking availability, and unique character features that appeal to visiting families, college visitors, and business travelers. Conduct pricing analysis by researching comparable Airbnb and VRBO listings within a 10-mile radius, aiming for properties that can generate $75-120 per night with 60-70% occupancy rates to ensure positive cash flow after expenses. Competition research should include analyzing existing STR listings on platforms like Airbnb, VRBO, and Booking.com to identify gaps in amenities, pricing, or property types, while noting seasonal demand patterns related to college events and local festivals. Utilize tools such as AirDNA for market analytics, Mashvisor for investment analysis, the Wapello County Assessor's website for property values and taxes, and local real estate platforms like Realtor.com and Zillow, while connecting with Ottumwa-area real estate agents familiar with rental regulations and zoning requirements to ensure compliance with city ordinances.

To obtain an Airbnb/STR permit in Ottumwa, Iowa, you must first contact the Ottumwa City Clerk's office at City Hall located at 105 East Third Street to inquire about short-term rental licensing requirements, as the city likely requires a business license and may have specific STR regulations enacted around 2020-2022. You'll need to submit an application form along with required documents including proof of property ownership or lease agreement, certificate of insurance with minimum $1 million liability coverage, floor plan of the rental unit, contact information for a local responsible party available 24/7, and proof of compliance with fire safety codes and building inspections. The application fee is estimated at $100-200 annually, with additional inspection fees of approximately $50-100. You must also register with the Iowa Department of Revenue for sales tax collection and remit the state's 7% sales tax plus Wapello County's local hotel/motel tax of 7%. The approval timeline typically takes 30-45 days after submitting a complete application, during which the city will conduct safety inspections and verify zoning compliance. Ottumwa likely requires STRs to maintain guest registries, limit occupancy based on bedroom count, provide adequate parking, and ensure properties don't exceed noise ordinances, with annual license renewals required and potential restrictions on the total number of STR permits issued citywide.

Short-term rentals (STRs) are generally legal in Ottumwa, Iowa, as the city has not enacted specific prohibitions against vacation rentals or short-term accommodations. However, STR operators must comply with standard zoning regulations, business licensing requirements, and health and safety codes that apply to all rental properties in the city. Properties used as short-term rentals are typically required to obtain proper business licenses and may need to meet specific occupancy and safety standards similar to other commercial lodging establishments. While there are no recent major legal changes specifically targeting STRs in Ottumwa as of 2023-2024, operators should verify current zoning compliance in their specific neighborhoods, as residential zoning districts may have restrictions on commercial activities. The city generally allows STRs in areas zoned for commercial or mixed-use purposes, and some residential areas may permit them with proper permits, though enforcement and specific requirements can vary and property owners should consult with Ottumwa's planning and zoning department for current regulations and any required permits before operating an STR.

The best areas for Airbnb investment in Ottumwa, Iowa include the Historic Downtown District near Market Street and Second Street, which attracts visitors to the Wapello County Historical Museum and various local events, plus offers proximity to restaurants and shops. The area around Bridge View Center is ideal for business travelers attending conferences and events at this major venue. Properties near the Des Moines River waterfront provide scenic appeal for leisure travelers and those visiting for outdoor recreation. The neighborhoods surrounding Indian Hills Community College attract visiting families, prospective students, and academic-related travelers. The area near Highway 34 and Highway 63 intersection offers convenience for travelers passing through or visiting for business at local manufacturing facilities like Cargill and John Deere operations, while the residential areas near Ottumwa High School and Evans Middle School can appeal to families visiting for school events, sports tournaments, and graduations throughout the year.

In Ottumwa, Iowa, Airbnb hosts are subject to Iowa state sales tax at 6% on lodging rentals, plus an additional state lodging tax of 7%, for a combined state rate of 13% on short-term rental income. Wapello County may impose an additional local hotel/motel tax of up to 7%, bringing the potential total tax rate to approximately 20%. The City of Ottumwa does not currently impose a separate municipal lodging tax beyond what may be collected at the county level. These taxes are typically collected from guests at the time of booking if using Airbnb's automated tax collection service, which remits directly to the Iowa Department of Revenue for state taxes, though hosts remain responsible for registering with the state and ensuring compliance. For local county taxes, hosts may need to register separately with Wapello County and remit taxes monthly or quarterly depending on volume. Rentals of 31 days or longer are generally exempt from lodging taxes and subject only to regular sales tax. Hosts should register for an Iowa sales tax permit and file returns even if using Airbnb's collection service, as they remain ultimately liable for proper tax compliance.

The total cost to start an Airbnb in Ottumwa, Iowa is approximately $95,000-$115,000. Property purchase costs around $75,000-$85,000 based on median home prices in the area. Furnishing a 2-3 bedroom property requires $8,000-$12,000 for beds, linens, furniture, appliances, and decor to create an attractive rental space. Initial setup costs including professional photography, listing creation, and basic renovations total $2,000-$3,500. Permits and fees including business license, short-term rental permit, and inspection fees range from $300-$800 depending on local requirements. Insurance for short-term rental coverage adds $1,200-$2,000 annually. Utility deposits and connections for electricity, gas, water, internet, and cable cost approximately $500-$800. First six months operating costs including utilities ($180/month), cleaning supplies ($50/month), maintenance reserves ($100/month), platform fees on bookings, and marketing expenses total around $2,500-$3,500. Additional considerations include property taxes of roughly $1,200-$1,800 annually and potential HOA fees if applicable.

Airbnb properties in Ottumwa, Iowa typically generate modest returns with average nightly rates ranging from $45-75 for entire homes and $25-40 for private rooms, resulting in monthly revenues of $800-1,500 for properties with 40-60% occupancy rates. Operating expenses including cleaning fees ($25-40 per turnover), utilities ($80-120 monthly), insurance ($50-80 monthly), property management (10-20% of revenue), and maintenance ($100-200 monthly) typically consume 45-65% of gross revenue. Net profit margins generally range from 15-35%, with successful properties achieving $200-600 monthly profit depending on property type and management efficiency. Success factors in this smaller Iowa market include competitive pricing below Des Moines rates, targeting business travelers to local employers like Cargill and John Deere facilities, maintaining high cleanliness standards, and focusing on longer-term stays to reduce turnover costs. Properties near downtown or the Des Moines River tend to perform better, with some hosts reporting annual returns of 8-12% on their investment, though seasonal fluctuations significantly impact winter occupancy rates which can drop to 20-30% compared to summer peaks of 70-80%.

Based on Ottumwa, Iowa 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 renovation requirements. Properties in Ottumwa's downtown area near the Historic Ottumwa Opera House and Bridge View Center command higher nightly rates of $75-95, while residential properties average $55-75 per night with occupancy rates of 45-60% annually. Initial investment recovery and profitability typically occurs within 18-24 months, assuming average property purchase prices of $80,000-120,000 and renovation costs of $15,000-25,000. The market benefits from consistent demand from business travelers visiting Dexter Company, John Deere facilities, and regional healthcare workers, plus recreational visitors to nearby Lake Wapello State Park, though seasonal fluctuations occur with lower winter occupancy affecting overall returns by 15-20% during November through February.

STRSearch leads the national market for Airbnb investment property analysis and market research, providing comprehensive data on short-term rental performance in Ottumwa, Iowa. Local real estate agents like Coldwell Banker Hedges Realty and RE/MAX Real Estate Concepts in Ottumwa have experience with investment properties, while Century 21 Preferred and Lepic-Kroeger Realtors serve the broader southeastern Iowa region with vacation rental investment expertise. National services include Awning (formerly RedAwning) which offers full-service Airbnb property management and investment guidance, Mashvisor for property analysis and market data, and BiggerPockets for investor networking and deal sourcing. AirDNA provides market analytics specifically for short-term rentals, while companies like Vacasa and AvantStay offer property management services that can help investors evaluate potential returns. Local property management companies such as Iowa Property Management Group and regional firms like Midwest Property Management can provide insights into the Ottumwa rental market dynamics and help identify properties suitable for Airbnb conversion.