Is Racine, Wisconsin Good for Airbnb Investment?

To start an Airbnb in Racine, Wisconsin, begin by researching local regulations through the City of Racine's Planning and Development Department, as Wisconsin allows short-term rentals but municipalities can impose restrictions - Racine requires short-term rental operators to obtain a business license and may require special permits for properties in certain zoning districts. Contact the Racine Building Inspection Department to ensure your property meets safety codes and obtain necessary permits, which typically cost $50-200 and may require inspections for smoke detectors, carbon monoxide detectors, and egress windows. Find a suitable property by researching Racine's popular areas like downtown near the Root River or neighborhoods close to Lake Michigan, with average property prices ranging $80,000-150,000 for suitable homes. Furnish the space with essential amenities including Wi-Fi, linens, towels, kitchen basics, and local touches highlighting Racine's Danish heritage and lakefront attractions, budgeting approximately $3,000-8,000 for initial furnishing. List your property on Airbnb and other platforms like VRBO, setting competitive rates based on Racine's market of $75-125 per night, and create an attractive listing with professional photos showcasing proximity to attractions like Wind Point Lighthouse and Racine Zoo. Manage your property by establishing cleaning protocols between guests, maintaining responsive communication, handling bookings through property management software, and ensuring compliance with Wisconsin's 5.5% state sales tax plus Racine County's additional local taxes on short-term rentals.

To identify profitable short-term rental properties in Racine, Wisconsin, focus on locations within walking distance of Lake Michigan waterfront, downtown Racine's historic district, and near major attractions like the SC Johnson headquarters and Racine Art Museum. Target 2-4 bedroom properties built after 1950 with modern amenities, parking, and outdoor spaces that can accommodate families visiting for lake activities or business travelers. Conduct pricing analysis using AirDNA and Mashvisor to evaluate average daily rates ($80-150 typical for the market) and occupancy rates (40-65% annually), while researching competition through Airbnb and VRBO searches to identify gaps in amenities or underserved neighborhoods. Utilize STR Helper and Rabbu for market analysis, monitor seasonal demand patterns with higher rates during summer months (May-September) when lake tourism peaks, and consider properties near the Root River pathway system or within 10 minutes of Highway 20 for easy Chicago access. Focus on neighborhoods like North Beach, downtown historic areas, and Sturtevant for proximity to business centers, while avoiding oversaturated markets and ensuring compliance with Racine's short-term rental regulations through the city's planning department.

To obtain an Airbnb/STR permit in Racine, Wisconsin, you must first contact the City of Racine Community Development Department at City Hall located at 730 Washington Avenue to determine if short-term rentals are permitted in your specific zoning district, as the city has been developing regulations for STRs since approximately 2019-2020. You will need to submit an application that includes a completed STR permit application form, proof of property ownership or lease agreement, a site plan showing the property layout, proof of liability insurance (typically $1 million minimum), contact information for a local property manager if you live more than 50 miles away, and documentation showing compliance with building and fire codes including smoke and carbon monoxide detectors. Required documents also include a parking plan, waste management plan, and neighbor notification letters sent to properties within 100 feet of your rental. The application fee is estimated at $200-400 with annual renewal fees of approximately $100-200, and you may need additional inspections costing $50-150 each. The timeline typically takes 30-60 days for initial review and approval, with potential delays if revisions are needed. Racine-specific requirements include limiting occupancy to no more than 2 people per bedroom plus 2 additional guests, maintaining quiet hours from 10 PM to 8 AM, providing adequate off-street parking (typically 1 space per bedroom), and ensuring the property manager can respond to complaints within 30 minutes if local or 2 hours if remote, with potential restrictions on the total number of STR permits issued citywide.

Short-term rentals (STRs) are legal in Racine, Wisconsin, but operate under specific municipal regulations that require property owners to obtain proper licensing and permits before operating. The city typically requires STR operators to register their properties, pay applicable fees, and comply with zoning restrictions that may limit operations in certain residential areas or require conditional use permits. Properties must meet safety standards including smoke detectors, carbon monoxide detectors, and other building code requirements, while operators are generally required to maintain liability insurance and collect applicable taxes. Recent years have seen increased scrutiny and potential tightening of regulations as cities across Wisconsin, including Racine, have worked to balance tourism revenue with neighborhood preservation concerns, though specific recent changes would require verification with current city ordinances. STR operators in Racine must also comply with state tax collection requirements and may face restrictions on the number of guests, parking requirements, and noise ordinances, with violations potentially resulting in fines or license revocation.

The most promising Airbnb investment areas in Racine, Wisconsin include the Historic Downtown District near Main Street and the Root River, which attracts tourists visiting the Racine Art Museum, Festival Hall events, and waterfront activities. The North Beach area along Lake Michigan offers strong rental potential due to its proximity to North Beach Park, the marina, and summer beach activities that draw visitors from Milwaukee and Chicago. The Uptown neighborhood around Washington Avenue provides good investment opportunities due to its walkability to restaurants, shops, and cultural attractions, plus it serves business travelers visiting SC Johnson headquarters and Case New Holland facilities. The Mount Pleasant area, particularly near Sturtevant Airport and the I-94 corridor, appeals to corporate travelers and offers newer housing stock with easy highway access. Finally, the Wind Point and Caledonia border areas provide upscale vacation rental opportunities for visitors seeking quieter lakefront experiences while remaining close to Racine's attractions and within driving distance of Milwaukee's business district.

In Racine, Wisconsin, Airbnb hosts are subject to both state and local lodging taxes. The Wisconsin state sales tax of 5% applies to short-term rental accommodations, along with the state's room tax of 5%, for a combined state rate of 10%. Racine County imposes an additional room tax of 3%, bringing the total tax rate to approximately 13% on gross rental receipts. The City of Racine may also impose its own local room tax, typically ranging from 2-4%, which could result in a total tax burden of 15-17%. These taxes are collected from guests at the time of booking through Airbnb's platform in most cases, as Airbnb has agreements with Wisconsin to automatically collect and remit state and many local taxes on behalf of hosts. However, hosts remain responsible for registering with the Wisconsin Department of Revenue and potentially with local tax authorities, filing periodic returns (usually monthly or quarterly), and remitting any taxes not collected by the platform. Exemptions typically include stays of 30 days or longer, which are considered long-term rentals rather than transient accommodations, and certain government or charitable organization bookings may also be exempt from room taxes.

The total cost to start an Airbnb in Racine, Wisconsin is approximately $185,000-$220,000. Property purchase costs around $150,000 based on median home prices in Racine as of 2023. Furnishing a 2-3 bedroom property requires $8,000-$12,000 for quality furniture, bedding, kitchen essentials, and decor. Initial setup costs including professional photography, listing creation, and basic renovations total $2,000-$3,000. Permits and fees including business license, short-term rental permit, and inspection fees cost approximately $500-$800. Insurance for short-term rental coverage adds $1,200-$1,800 annually. Utility deposits and connections for electricity, gas, water, internet, and cable cost $800-$1,200. First six months operating costs including utilities ($600/month), cleaning supplies ($100/month), maintenance reserves ($200/month), property management software ($50/month), and marketing ($100/month) total approximately $6,300. Additional startup costs for linens, towels, basic amenities, and emergency repairs fund add another $2,000-$3,000 to ensure smooth operations during the initial period.

Airbnb properties in Racine, Wisconsin typically generate annual revenues between $15,000-$35,000 for entire homes and $8,000-$18,000 for private rooms, with average daily rates ranging from $75-$140 depending on property size and location proximity to Lake Michigan. Operating expenses generally consume 40-60% of gross revenue, including cleaning fees ($25-$40 per turnover), utilities ($150-$300 monthly), property management (10-20% of revenue), insurance ($800-$1,500 annually), and maintenance costs ($2,000-$4,000 yearly). Properties within walking distance of downtown Racine or lakefront areas achieve occupancy rates of 55-70% with profit margins of 25-35%, while suburban locations typically see 35-50% occupancy and 15-25% margins. Success factors include professional photography, responsive communication, competitive pricing during peak summer months (June-August when lake activities drive demand), and targeting business travelers visiting SC Johnson headquarters or Modine Manufacturing. A typical 3-bedroom lakefront property purchased for $180,000 in 2022 generated approximately $28,000 in gross revenue with $11,000 in expenses, yielding a 17% return on investment, though properties closer to the harbor and Root River pathway command premium rates and achieve higher profitability due to Racine's growing tourism focus on its historic architecture and Lake Michigan recreation.

Airbnb investments in Racine, Wisconsin typically generate annual ROI of 8-12% with cash-on-cash returns ranging from 6-10% based on current market conditions. Properties near Lake Michigan and downtown areas command higher nightly rates of $80-120, while suburban locations average $60-90 per night with occupancy rates of 55-70% annually. Initial investment recovery and profitability generally occurs within 18-24 months for well-positioned properties, with average property acquisition costs of $120,000-180,000 requiring $25,000-40,000 in initial capital including down payment, furnishing, and setup costs. The market benefits from seasonal tourism during summer months and proximity to Milwaukee, though winter occupancy drops significantly, making properties with strong local business traveler appeal more consistently profitable with potential for 10-15% annual returns in prime locations.

STRSearch is a national platform that helps investors identify profitable short-term rental properties across markets including Racine, Wisconsin. Local real estate agents in Racine who specialize in investment properties include Shorewest Realtors, Coldwell Banker Real Estate Group, and RE/MAX Newport Elite, with agents like those at First Weber Realtors also serving the investment community since the 1960s. National services that assist with Airbnb property acquisition include Awning (founded 2018), Mashvisor (established 2014), AirDNA (launched 2015), and Roofstock (started 2015), all of which provide market analysis and property recommendations for the Racine area. RedAwning and Vacasa also offer property management and acquisition services for short-term rental investors, while local property management companies like Kenosha Property Management and Milwaukee-based firms extend services to the Racine market. BiggerPockets, the real estate investment platform founded in 2004, connects investors with local professionals and resources in Wisconsin markets including Racine.