Is St. Paul, Minnesota Good for Airbnb Investment?

To start an Airbnb in St. Paul, Minnesota, begin by researching the city's short-term rental regulations, which require hosts to obtain a Short-Term Rental License from the Department of Safety and Inspections, comply with zoning restrictions that limit rentals in certain residential areas, and maintain liability insurance of at least $1 million. Apply for your license through the city's online portal, paying approximately $200-300 in fees, and schedule required inspections for fire safety, building code compliance, and health standards. Find a suitable property by purchasing or leasing in zones that permit short-term rentals, focusing on neighborhoods like Cathedral Hill, Summit-University, or downtown areas that attract tourists visiting attractions like the State Capitol or nearby Minneapolis. Furnish the space with quality furniture, linens, kitchen essentials, and amenities like WiFi, smart TV, and local guidebooks, budgeting $3,000-8,000 depending on property size. Create your Airbnb listing with professional photos, competitive pricing based on comparable properties ($80-150 per night for typical units), and detailed descriptions highlighting proximity to attractions like the Science Museum of Minnesota or Xcel Energy Center. Manage your property by responding to inquiries within an hour, coordinating cleaning between guests through services like Handy or local companies, maintaining the property to city standards, collecting and remitting the required 3% city lodging tax plus 7.875% state sales tax, and keeping detailed records for annual license renewal and potential inspections by St. Paul's regulatory departments.

To identify profitable short-term rental properties in St. Paul, Minnesota, focus on locations within 2-3 miles of downtown, near the State Capitol, University of Minnesota St. Paul campus, or popular neighborhoods like Cathedral Hill, Summit Avenue, and Grand Avenue for consistent business and leisure demand. Target 2-4 bedroom properties built after 1950 with dedicated parking, updated kitchens and bathrooms, and unique character features like historic charm or modern amenities, as St. Paul's average daily rates range from $80-150 depending on season and location. Conduct pricing analysis using AirDNA and Mashvisor to track seasonal trends, with peak demand during summer months (June-August) and during major events at Xcel Energy Center or Minnesota State Fair, while monitoring occupancy rates that typically range 60-75% for well-positioned properties. Research competition by analyzing similar listings within a 1-mile radius on Airbnb and VRBO, noting their pricing strategies, amenities, and guest reviews to identify market gaps. Utilize tools like Rabbu, AllTheRooms, and local MLS data combined with St. Paul's zoning regulations and short-term rental licensing requirements, while partnering with local property management companies familiar with Minnesota's rental laws and seasonal market fluctuations to maximize profitability in this emerging but regulated STR market.

To obtain an Airbnb/STR permit in St. Paul, Minnesota, you must apply through the City of St. Paul's Department of Safety and Inspections by submitting an application for a Short-Term Rental License, which requires a completed application form, proof of property ownership or lease agreement with landlord consent, a site plan showing the rental unit layout, proof of liability insurance (minimum $500,000), a fire safety inspection certificate, and payment of the application fee of approximately $200-300 plus annual renewal fees of around $150-200. The process typically takes 4-6 weeks and includes a mandatory property inspection by city officials to ensure compliance with fire safety codes, zoning requirements, and occupancy limits. St. Paul specific requirements include registering with the Minnesota Department of Revenue for tax purposes, maintaining a 24-hour local contact person, limiting occupancy to no more than 8 guests, ensuring adequate parking spaces are available, and complying with noise ordinances and neighborhood notification requirements. You must also obtain a Certificate of Occupancy if the property use is changing, and the rental must be located in areas zoned for such use, with some residential districts having additional restrictions on the number of STR permits allowed per block.

Short-term rentals (STRs) are legal in St. Paul, Minnesota, but operate under strict regulations implemented in 2018 and updated in subsequent years. The city requires STR operators to obtain a license and comply with zoning restrictions that limit rentals primarily to owner-occupied properties, with non-owner-occupied STRs prohibited in most residential areas except for certain commercial and mixed-use zones. Properties must meet safety requirements including smoke and carbon monoxide detectors, and operators face occupancy limits, noise restrictions, and parking requirements. The city has implemented a cap on the total number of STR licenses and maintains a registry system, with violations subject to fines and license revocation. Recent changes have included stricter enforcement mechanisms and clearer definitions of prohibited areas, particularly in dense residential neighborhoods where community concerns about housing availability and neighborhood character have been most pronounced.

The best Airbnb investment areas in St. Paul, Minnesota include Downtown St. Paul, particularly near the Xcel Energy Center and RiverCentre, which attracts business travelers, convention attendees, and visitors to Wild hockey games and concerts year-round. The Cathedral Hill neighborhood offers historic charm with its Victorian architecture and proximity to the Cathedral of Saint Paul, appealing to tourists and weekend visitors seeking cultural experiences. The West 7th area, especially near the entertainment district, draws guests attending events at venues like the Palace Theatre and benefits from its walkable nightlife scene. Summit Hill provides upscale accommodations for visitors exploring the historic Summit Avenue mansions and F. Scott Fitzgerald sites, attracting literary tourists and affluent travelers. The Lowertown district, with its converted warehouse lofts and proximity to CHS Field (St. Paul Saints baseball), Union Depot, and the farmers market, appeals to both leisure tourists and business travelers using the light rail connections. Rice Park area offers prime location near the Ordway Center for Performing Arts, Science Museum of Minnesota, and other cultural attractions, making it ideal for arts and culture enthusiasts visiting throughout the year.

In St. Paul, Minnesota, Airbnb hosts must collect and remit several taxes including the state sales tax of 6.875%, Ramsey County lodging tax of 3%, and St. Paul city lodging tax of 3%, totaling approximately 12.875% in combined taxes on short-term rental stays. The Minnesota Department of Revenue requires hosts to register for a sales tax permit and file monthly or quarterly returns depending on volume, while the city lodging tax is collected by the City of St. Paul and must be remitted monthly by the 20th of the following month. Airbnb automatically collects and remits these taxes for most bookings made through their platform as of 2018, but hosts remain responsible for ensuring compliance and may need to collect taxes directly for off-platform bookings. Stays of 30 days or longer are typically exempt from lodging taxes but may still be subject to sales tax, and certain nonprofit or government-related stays may qualify for exemptions with proper documentation, though hosts should verify current rates and requirements with local tax authorities as these can change periodically.

To start an Airbnb in St. Paul, Minnesota, the total initial costs would be approximately $285,000-$320,000. Property purchase represents the largest expense at $250,000-$280,000 based on median home prices in desirable neighborhoods like Highland Park or Mac-Groveland. Furnishing costs typically range $15,000-$25,000 for a complete 2-3 bedroom setup including furniture, bedding, kitchenware, and décor from retailers like IKEA, Target, and West Elm. Initial setup costs including professional photography, listing optimization, and basic renovations add $3,000-$5,000. Permits and fees in St. Paul include a short-term rental license ($200), business license ($50), and potential zoning compliance costs totaling $500-$1,500. Insurance upgrades for short-term rental coverage cost $1,200-$2,000 annually. Utility deposits and setup fees for electricity, gas, water, internet, and cable total $800-$1,200. First six months of operating costs including utilities ($900/month), cleaning services ($100 per turnover), supplies and maintenance ($200/month), platform fees (3% of bookings), and property management software ($50/month) amount to approximately $8,000-$12,000, assuming 60-70% occupancy rates and average nightly rates of $120-$150 in the St. Paul market.

Airbnb properties in St. Paul, Minnesota typically generate annual revenues ranging from $15,000-$45,000 depending on property type and location, with downtown and Cathedral Hill properties commanding premium rates of $80-150 per night while residential neighborhoods average $60-90 per night. 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 ($1,200-2,500 annually), and maintenance costs averaging $2,000-4,000 yearly. Net profit margins typically range from 15-35% for well-managed properties, with successful hosts achieving higher margins through strategic pricing during events like the Minnesota State Fair, Wild hockey games, and summer festivals. Properties near the University of St. Thomas and Macalester College show consistent demand, while Victorian homes in Historic Hill District command premium rates but require higher maintenance investments. Success factors include professional photography, rapid guest communication, maintaining 4.8+ star ratings, dynamic pricing strategies, and offering amenities like parking and local guidebooks, with top-performing hosts in areas like Grand Avenue and Summit Avenue reporting annual net profits of $8,000-18,000 per property.

Airbnb investments in St. Paul, Minnesota typically generate annual ROI of 8-12% with cash-on-cash returns ranging from 6-10% based on current market conditions. Properties in popular neighborhoods like Cathedral Hill, Summit-University, and areas near the University of Minnesota tend to perform better, with average daily rates of $85-120 and occupancy rates of 65-75%. Initial profitability usually occurs within 12-18 months, assuming a 20-25% down payment on properties valued between $200,000-350,000. The market benefits from consistent demand from business travelers visiting 3M headquarters, university visitors, and tourists exploring the Twin Cities metro area. Cash-on-cash returns can reach 12-15% for well-positioned properties with strong management, while break-even typically occurs in months 8-14 depending on seasonal fluctuations and property management efficiency.

STRSearch is a national platform that specializes in identifying profitable short-term rental properties across markets including St. Paul, Minnesota. In the Twin Cities area, local real estate agents like those at RE/MAX Results, Coldwell Banker Realty, and Keller Williams Premier Realty have experience with investment properties suitable for Airbnb conversions. National services include Mashvisor, which provides rental property analytics, and BiggerPockets, offering investor networking and deal analysis tools. Local property management companies like RedAwning and Vacasa can assist with both property acquisition advice and subsequent Airbnb management in St. Paul. Real estate investment firms such as Roofstock and Fundrise, while primarily focused on traditional rentals, also provide market analysis that can be valuable for short-term rental investors. Additionally, local real estate investors and wholesalers often network through Twin Cities Real Estate Investors Association (TCREIA) meetings, where Airbnb-focused opportunities are frequently discussed. Companies like AirDNA provide market data and revenue projections specifically for short-term rental properties in the St. Paul market, helping investors identify the most profitable neighborhoods and property types.