Is Red Wing, Minnesota Good for Airbnb Investment?

To start an Airbnb in Red Wing, Minnesota, begin by researching local regulations through the Red Wing City Hall (651-385-3600) as the city requires short-term rental permits and has zoning restrictions limiting rentals to certain residential areas with a maximum of 30-day stays. Obtain necessary permits including a business license from the city ($50-100 annually), Minnesota sales tax permit from the Department of Revenue, and ensure compliance with fire safety codes and building inspections required by Goodhue County. Find a suitable property in approved zones such as downtown historic district or residential areas near the Mississippi River, considering proximity to attractions like Red Wing Pottery and Barn Bluff, with average property costs ranging $150,000-300,000 for suitable homes. Furnish the space with quality basics including comfortable beds, linens, kitchen essentials, WiFi, and local touches like Red Wing Pottery pieces or Mississippi River artwork, budgeting $5,000-15,000 for complete furnishing. List your property on Airbnb and VRBO with professional photos highlighting Red Wing's scenic location, set competitive rates averaging $80-150 per night based on local market analysis, and create detailed descriptions mentioning nearby attractions like Treasure Island Casino and historic downtown. Manage the property by establishing cleaning protocols between guests, responding promptly to inquiries, coordinating key exchanges or installing smart locks, maintaining the property regularly, collecting and remitting Minnesota's 7.375% sales tax plus local lodging taxes, and consider hiring local cleaning services like Red Wing area housekeeping companies for $40-80 per turnover to ensure consistent quality and guest satisfaction.

To identify profitable short-term rental properties in Red Wing, Minnesota, focus on locations within walking distance of the historic downtown district, near the Mississippi River waterfront, or close to popular attractions like the Red Wing Pottery District and Barn Bluff hiking area. Target properties built between 1900-1950 that showcase the city's historic charm, featuring 2-4 bedrooms, original hardwood floors, period details, and river or bluff views when possible. Analyze pricing using AirDNA and Mashvisor to benchmark against comparable properties, aiming for nightly rates between $120-200 depending on size and amenities, with higher premiums during peak seasons like fall foliage and summer river activities. Research competition by studying existing STRs on Airbnb and VRBO within a 2-mile radius of downtown, noting their occupancy rates, pricing strategies, and guest reviews to identify market gaps. Utilize Red Wing-specific resources including the Red Wing Visitors Bureau for tourism data, Goodhue County property records for acquisition costs, local Facebook groups like "Red Wing Community" for neighborhood insights, and consult with Red Wing Realty agents familiar with investment properties to understand zoning restrictions and neighborhood dynamics that could impact rental success.

To obtain an Airbnb/STR permit in Red Wing, Minnesota, you must first contact the Red Wing Planning and Zoning Department at City Hall located at 315 West 4th Street to determine if short-term rentals are permitted in your specific zoning district, as the city implemented STR regulations around 2019-2020. Submit a completed short-term rental permit application along with required documents including proof of property ownership or lease agreement, site plan showing parking areas, floor plan of the rental unit, proof of liability insurance (typically $1 million minimum), emergency contact information, and a waste management plan. Pay the application fee of approximately $200-300 plus an annual renewal fee of around $150-200. Red Wing requires STR operators to obtain a business license, comply with fire safety inspections, provide adequate off-street parking (usually 1-2 spaces per unit), maintain occupancy limits based on bedrooms and square footage, post emergency contact information visibly on the property, and follow noise ordinances with quiet hours typically from 10 PM to 7 AM. The approval process generally takes 4-6 weeks after submitting a complete application, and permits must be renewed annually with the city conducting periodic inspections to ensure compliance with safety and zoning requirements.

Short-term rentals (STRs) are legal in Red Wing, Minnesota, but operate under specific regulations established by the city. Red Wing requires STR operators to obtain a business license and comply with zoning restrictions that primarily allow STRs in commercial and mixed-use districts, while residential areas have more limited permissions depending on the specific zoning classification. The city has implemented occupancy limits, parking requirements, and noise ordinances that STR operators must follow. Properties must meet safety standards including smoke and carbon monoxide detectors, and operators are required to provide emergency contact information to the city and neighboring properties. Red Wing has also established complaint procedures and enforcement mechanisms, with violations potentially resulting in license revocation. Recent changes in the past few years have included stricter registration requirements and enhanced monitoring of STR activities to balance tourism benefits with neighborhood preservation concerns. The city continues to evaluate its STR ordinances as the vacation rental market evolves, with ongoing discussions about density limits in certain residential areas.

The best areas for Airbnb investment in Red Wing, Minnesota are the Historic Downtown District, particularly near Main Street and the riverfront, which attracts tourists visiting the Pottery District, antique shops, and seasonal events like River City Days. The Barn Bluff area offers scenic views and hiking access, appealing to outdoor enthusiasts and weekend visitors. Properties near the Red Wing Shoe Company headquarters and museum draw business travelers and brand enthusiasts on corporate visits. The East End residential neighborhoods provide quiet retreats while maintaining walkability to downtown attractions. The riverfront properties along the Mississippi offer premium locations for guests seeking scenic water views and access to boating activities. Areas near Treasure Island Resort and Casino capture overflow guests and gaming tourists. The Pottery Place District specifically benefits from visitors touring Red Wing Stoneware and Red Wing Pottery companies, while properties near Goodhue County Historical Society attract history buffs and genealogy researchers visiting the area's well-preserved 19th-century architecture.

In Red Wing, Minnesota, Airbnb hosts are subject to both state and local lodging taxes. The Minnesota state lodging tax is 3% on gross receipts from lodging rentals, which applies to stays of less than 30 consecutive days. Red Wing imposes a local lodging tax of 3% as well, bringing the total lodging tax rate to approximately 6%. Additionally, Minnesota state sales tax of 6.875% applies to short-term rental accommodations. Airbnb typically collects and remits these taxes automatically for hosts through their platform as of 2019, including both the state lodging tax and local Red Wing lodging tax. For hosts collecting taxes manually, remittance to the Minnesota Department of Revenue is required monthly if annual tax liability exceeds $500, otherwise quarterly filing is permitted. Local Red Wing lodging taxes are remitted to the city's finance department on a monthly basis by the 20th of the following month. Exemptions include stays of 30 days or longer, rentals to permanent residents, and accommodations provided to certain government employees on official business. Hosts must register with both the state and city for tax collection purposes and maintain detailed records of all rental transactions and tax collections.

The total cost to start an Airbnb in Red Wing, Minnesota is approximately $285,000-$315,000. Property purchase costs around $220,000-$250,000 based on median home prices in the area. Furnishing a 2-3 bedroom property requires $15,000-$25,000 for quality furniture, bedding, kitchen essentials, and decor. Initial setup costs including professional photography, listing creation, and basic renovations total $3,000-$5,000. Permits and fees including business license, short-term rental permit, and tax registration cost approximately $500-$1,000. Insurance for short-term rental coverage adds $2,000-$3,000 annually. Utilities including electricity, gas, water, internet, and cable average $300-$400 monthly or $1,800-$2,400 for six months. First six months operating costs including cleaning services ($150 per turnover), supplies, maintenance, property management software, and marketing total $8,000-$12,000. Additional considerations include potential HOA fees, property taxes, and a reserve fund for unexpected repairs and vacancy periods.

Airbnb properties in Red Wing, Minnesota typically generate annual revenues between $15,000-$35,000 for well-positioned properties, with average daily rates ranging from $85-$150 depending on location and amenities. Operating expenses generally consume 40-60% of gross revenue, including cleaning fees ($25-$40 per turnover), utilities ($150-$250 monthly), property management (10-20% of revenue), insurance ($800-$1,200 annually), and maintenance costs ($2,000-$4,000 yearly). Properties near the Mississippi River waterfront or historic downtown district command premium rates, particularly during summer months and fall foliage season when occupancy rates peak at 70-85%. A typical 2-bedroom property generating $25,000 annually might net $10,000-$12,000 after expenses, yielding profit margins of 40-48%. Success factors include proximity to Treasure Island Casino, Red Wing Pottery District, and outdoor recreation areas, with properties offering river views or historic charm performing 20-30% better than standard residential listings. The market benefits from consistent demand from casino visitors, antique shoppers, and tourists exploring the scenic Mississippi River valley, though winter months typically see 30-40% lower occupancy rates.

Based on Red Wing, Minnesota 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 the Mississippi River waterfront and historic downtown district command premium rates of $120-180 per night during peak seasons (spring through fall), while standard residential properties average $80-120 nightly. Initial profitability usually occurs within 18-24 months for well-positioned properties, with break-even points accelerated by Red Wing's tourism draws including Treasure Island Casino, Red Wing Pottery District, and outdoor recreation activities. Investment properties purchased in the $200,000-350,000 range with 20-25% down payments typically achieve positive monthly cash flow within 6-12 months, assuming 60-70% average occupancy rates throughout the year, with stronger performance during summer months and pottery/antique shopping seasons when occupancy can reach 80-85%.

STRSearch is a national platform that specializes in identifying profitable short-term rental investment properties and provides market analysis for Airbnb investments in Red Wing, Minnesota. Local real estate agents who focus on investment properties in the Red Wing area include Coldwell Banker Realty agents and RE/MAX Results professionals who understand the Mississippi River tourism market. Awning, a national service founded in 2018, offers end-to-end Airbnb property management and investment guidance for Red Wing properties. Mashvisor provides rental property analysis tools and market data for Red Wing's short-term rental market. Local property management companies like Red Wing Property Management and River City Rentals offer services to investors looking to maximize their Airbnb returns. BiggerPockets, the national real estate investment platform, connects investors with local Red Wing market experts and provides educational resources. AirDNA offers short-term rental market analytics specifically for Red Wing, helping investors identify the most profitable neighborhoods near Treasure Island Resort and Casino and the historic downtown district. Vacasa, a national vacation rental management company, provides full-service property management for Airbnb investments in the Red Wing market.