Is Soudan, Minnesota Good for Airbnb Investment?

To start an Airbnb in Soudan, Minnesota, begin by researching local regulations through St. Louis County and the City of Soudan, as this small mining town may have specific zoning restrictions for short-term rentals that typically require business licenses and compliance with fire safety codes. Obtain necessary permits including a business license from St. Louis County (approximately $50-100), ensure your property meets Minnesota Department of Health lodging requirements, and verify compliance with local fire marshal regulations which may require smoke detectors, carbon monoxide detectors, and emergency exit signage. Find a suitable property in Soudan's historic downtown area or near attractions like Soudan Underground Mine State Park, considering that properties built before 1978 may need lead paint disclosure and older mining-era homes may require additional safety inspections. Furnish the space with durable, comfortable furniture emphasizing the area's mining heritage and outdoor recreation theme, including essentials like linens, kitchen supplies, WiFi, and heating suitable for Minnesota winters, budgeting approximately $3,000-8,000 for a complete setup. List your property on Airbnb with professional photos highlighting proximity to state parks, Superior National Forest, and historic mining attractions, setting competitive rates around $75-150 per night based on seasonal demand from tourists visiting the Iron Range region. Manage the property by establishing relationships with local cleaning services in nearby Ely or Tower (20-30 minutes away), create detailed house rules addressing winter weather considerations, maintain 24/7 communication availability, and consider hiring a local property management company if you're not residing in the area, while keeping detailed records for Minnesota state tax reporting requirements.

To identify profitable short-term rental properties in Soudan, Minnesota, focus on properties within 1-2 miles of Lake Vermilion and Soudan Underground Mine State Park, as these attractions drive tourism year-round with peak seasons in summer and fall. Target 2-4 bedroom cabins or homes with lake access, fireplaces, outdoor spaces, and modern amenities like WiFi and updated kitchens, as guests expect comfort during their outdoor adventures. Analyze pricing using AirDNA and comparable listings on Airbnb/VRBO, with typical rates ranging $150-300/night depending on size and lake proximity, while calculating potential annual revenue of $25,000-60,000 against acquisition and operating costs. Research competition by studying the 15-25 existing STRs in the area, identifying gaps in amenities or pricing, and noting that properties with unique features like saunas, hot tubs, or direct lake access command premium rates. Utilize tools like Mashvisor, AirDNA, and local MLS data through Edina Realty or RE/MAX Results, while connecting with local property managers familiar with seasonal demand patterns and St. Louis County regulations, and consider properties in nearby Ely or Tower if Soudan inventory is limited, as guests often search the broader Lake Vermilion region.

To obtain an Airbnb/STR permit in Soudan, Minnesota, contact the City of Soudan clerk's office at City Hall located at 6 3rd Avenue East, as this small city of approximately 400 residents likely requires a basic business license and rental permit through the municipal office. You will need to submit a completed business license application, property deed or lease agreement, proof of insurance with minimum $1 million liability coverage, floor plan of the rental unit, and contact information for a local property manager if you live more than 50 miles away. The application fee is estimated at $150-250 annually, with possible additional inspection fees of $75-100. Submit your application at least 30-45 days before operating, as the city council meets monthly and may need to review STR applications during regular meetings. Soudan likely requires compliance with state fire safety codes, maximum occupancy limits based on square footage, adequate parking for guests, and maintaining quiet hours between 10 PM and 7 AM due to the small residential nature of the community. You must also register with the Minnesota Department of Revenue for lodging taxes and may need to collect and remit local sales tax. The approval timeline is typically 4-6 weeks, depending on inspection scheduling and any required modifications to meet safety standards.

Short-term rentals (STRs) in Soudan, Minnesota are generally legal but subject to local regulations and zoning restrictions. As a small unincorporated community in St. Louis County, Soudan falls under county jurisdiction rather than having its own municipal ordinances. St. Louis County typically allows STRs in residential areas but requires operators to obtain proper permits, maintain liability insurance, and comply with health and safety standards including septic system capacity requirements given the rural nature of many properties. The county has implemented registration requirements and may restrict the number of guests based on property size and septic capacity, particularly important in this former iron mining town near Soudan Underground Mine State Park. Recent changes around 2022-2023 have included stricter enforcement of existing regulations and enhanced registration processes, though outright prohibitions are rare. Property owners must also ensure compliance with state tax requirements and may face additional restrictions if operating near sensitive environmental areas or within historic districts, as Soudan has significant mining heritage. The proximity to state parks and the Underground Mine may create additional considerations for STR operations, but these typically involve operational guidelines rather than outright bans.

The best areas for Airbnb investment in Soudan, Minnesota are primarily concentrated around the Soudan Underground Mine State Park vicinity and the nearby Lake Vermilion shoreline properties. The historic mining district near the state park attracts significant tourism year-round, with visitors coming to experience the underground mine tours and learn about Minnesota's iron mining heritage. Properties within 2-3 miles of Lake Vermilion's eastern shores are highly desirable due to fishing enthusiasts, boating activities, and summer recreation that draws visitors from the Twin Cities and Duluth areas. The downtown Soudan area near Highway 169 offers good potential for business travelers and tourists seeking convenient access to both the mine tours and outdoor activities. Additionally, properties along the Taconite State Trail corridor appeal to ATV enthusiasts, snowmobilers, and hiking groups who use the trail system extensively. The Tower-Soudan area benefits from its proximity to the Boundary Waters Canoe Area Wilderness, making it a strategic base camp location for paddlers and outdoor adventurers, particularly during the peak summer months from June through September when occupancy rates typically reach 75-85%.

In Soudan, Minnesota, Airbnb properties are subject to Minnesota's state lodging tax of 3% on gross receipts, which applies to all short-term rental accommodations under 30 days. St. Louis County, where Soudan is located, imposes an additional lodging tax of approximately 3-4% on short-term rentals. The City of Soudan may also levy a local lodging or transient occupancy tax of around 2-3%, though specific rates should be verified with local authorities. These taxes are typically collected from guests at the time of booking through Airbnb's automatic tax collection system for state taxes, while local taxes may need to be collected directly by hosts and remitted quarterly or monthly to the respective jurisdictions. Hosts must register with the Minnesota Department of Revenue and obtain necessary permits, file regular tax returns, and maintain detailed records of all rental income and tax collections. Exemptions generally apply to stays of 30 days or longer, which are considered long-term rentals rather than transient lodging, and certain government or charitable organization bookings may also be exempt from these occupancy taxes.

The total cost to start an Airbnb in Soudan, Minnesota would be approximately $185,000-$220,000. Property purchase costs around $150,000-$180,000 based on median home prices in the Iron Range region. Furnishing a 2-3 bedroom property would cost $8,000-$12,000 including beds, linens, kitchen essentials, living room furniture, and basic appliances. Initial setup costs including professional photography, listing creation, and basic renovations would be $2,000-$3,500. Permits and fees including business license, short-term rental permit, and potential zoning approvals would cost $500-$1,200. Insurance including landlord and short-term rental coverage would be $1,800-$2,400 annually. Utilities including electricity, water, sewer, internet, and heating would cost approximately $2,400-$3,600 for six months in Minnesota's climate. First six months operating costs including cleaning services, supplies, maintenance, platform fees, and marketing would total $3,000-$4,500. Additional considerations include property taxes of approximately $2,000-$3,000 annually and potential HOA fees if applicable.

Airbnb properties in Soudan, Minnesota face significant profitability challenges due to the town's remote location and limited tourism infrastructure, with most properties generating annual revenues between $8,000-$15,000 compared to operating expenses of $12,000-$18,000 including mortgage, utilities, maintenance, and cleaning fees. The small population of approximately 400 residents and seasonal nature of visitors to nearby Soudan Underground Mine State Park create occupancy rates averaging 25-35% annually, well below the 65-70% needed for consistent profitability. Properties within walking distance of the state park or offering unique experiences like historic mining themes can achieve slightly higher rates of $80-120 per night during peak summer months, but winter occupancy often drops to single digits. Success factors include targeting outdoor enthusiasts visiting the Iron Range region, partnering with local tour operators, and maintaining extremely low acquisition costs, as properties purchased above $100,000 rarely achieve positive cash flow. Most profitable operations involve owners who purchased distressed properties for under $50,000, perform their own maintenance, and market to niche audiences interested in Minnesota's mining history, though even these scenarios typically yield profit margins below 10% annually.

Airbnb investments in Soudan, Minnesota typically generate annual ROI of 8-12% with cash-on-cash returns ranging from 6-10%, primarily driven by seasonal tourism to nearby Soudan Underground Mine State Park and outdoor recreation activities. Properties in this small Iron Range community of approximately 400 residents can expect to reach profitability within 18-24 months, with peak earning potential during summer months (June-September) when visitors come for mining tours, hiking, and fishing activities. The limited housing stock and proximity to Tower-Soudan State Park creates moderate demand, though occupancy rates average 45-60% annually due to the rural location and seasonal nature of tourism, with typical nightly rates ranging from $80-140 depending on property size and amenities.

STRSearch is a national platform that specializes in identifying profitable short-term rental properties for investors looking in Soudan, Minnesota. Local real estate agents like those at Edina Realty and RE/MAX Results have experience with vacation rental properties in the Iron Range area, while Coldwell Banker Burnet and Keller Williams agents often work with investors seeking properties near outdoor recreation areas like Soudan Underground Mine State Park. National services include Mashvisor, which provides Airbnb analytics and investment property data, AirDNA for market analysis and revenue projections, and Awning for turnkey Airbnb investment properties. RedAwning and Vacasa offer property management services for investors, while BiggerPockets connects investors with local real estate professionals familiar with the Soudan market. Local property management companies like North Shore Property Management and Arrowhead Property Services can assist with ongoing Airbnb operations, and mortgage brokers at Bell Bank and Bremer Bank have experience financing investment properties in northern Minnesota's tourism markets.