Is Stillwater, Minnesota Good for Airbnb Investment?

To start an Airbnb in Stillwater, Minnesota, begin by researching the city's short-term rental regulations, as Stillwater requires a business license and rental license from the city clerk's office, with properties needing to comply with zoning ordinances that typically allow short-term rentals in residential areas with proper permits. Contact Stillwater City Hall at 216 North 4th Street to obtain the necessary permits, including a rental dwelling license ($100-200 annually) and business license ($50-100), while ensuring compliance with Washington County health and safety requirements and Minnesota state tax registration for lodging taxes. Find a suitable property in desirable areas like the historic downtown district near the St. Croix River or residential neighborhoods within walking distance of Main Street attractions, considering properties with 2-3 bedrooms that can accommodate families visiting local attractions like the Stillwater Lift Bridge and antique shops. Furnish the space with comfortable, durable furniture emphasizing the area's historic charm, including quality bedding, kitchen essentials, WiFi, and local guidebooks highlighting Stillwater's riverboat cruises, wineries, and seasonal festivals. List your property on Airbnb with professional photos showcasing river views or historic architecture, competitive pricing ($80-150/night depending on season and size), and detailed descriptions mentioning proximity to Twin Cities (30 minutes), local attractions, and parking availability. Manage the property by establishing cleaning protocols between guests, maintaining responsive communication, coordinating with local cleaning services, and staying updated on Stillwater's evolving short-term rental regulations while building relationships with neighbors and the local tourism community.

To identify profitable short-term rental properties in Stillwater, Minnesota, focus on locations within walking distance of downtown's historic Main Street, near the St. Croix River waterfront, or in established residential neighborhoods like Oak Glen Heights that offer easy access to attractions while maintaining quiet appeal. Target properties with 2-4 bedrooms, updated kitchens and bathrooms, outdoor spaces like decks or patios, parking availability, and unique character features that photograph well, as Stillwater attracts tourists seeking charming, historic experiences. Analyze pricing by researching comparable Airbnb and VRBO listings in Stillwater, examining seasonal rate fluctuations during peak summer months and fall foliage season, and calculating potential revenue against mortgage, insurance, and management costs using the 1% rule as a baseline. Research competition by studying existing STR listings within a 2-mile radius, identifying gaps in amenities or property types, and monitoring occupancy rates and guest reviews on platforms like AirDNA or Mashvisor. Utilize tools such as Zillow and MLS for property searches, STR-specific analytics platforms like Rabbu or AllTheRooms for market data, the City of Stillwater's licensing requirements and zoning regulations, and local resources including the Stillwater Chamber of Commerce for tourism trends and the Washington County property records for investment analysis.

To obtain an Airbnb/STR permit in Stillwater, Minnesota, you must first contact the Stillwater Community Development Department at City Hall located at 216 4th Street North to begin the application process. Required documents typically include a completed short-term rental license application, 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 within 30 minutes of the property, and payment of applicable fees which generally range from $200-400 annually. Stillwater requires that all short-term rentals be owner-occupied or have a designated local contact person available 24/7, maintain adequate parking for guests without impacting neighbors, comply with occupancy limits based on bedrooms and square footage, and pass safety inspections including smoke and carbon monoxide detectors. The application process typically takes 4-6 weeks for review and approval, during which time the city may conduct site inspections and review compliance with zoning regulations. Properties must also comply with Minnesota state lodging tax requirements and register with the Minnesota Department of Revenue, and operators must collect and remit local lodging taxes to Washington County. Once approved, licenses are valid for one year and must be renewed annually with updated documentation and fees.

Short-term rentals (STRs) are legal in Stillwater, Minnesota, but operate under specific regulations established by the city. As of recent years, Stillwater requires STR operators to obtain a conditional use permit and business license, with properties limited to owner-occupied dwellings or properties where the owner lives within a certain distance. The city restricts STRs in certain residential zones and requires compliance with occupancy limits, parking requirements, noise ordinances, and good neighbor policies. Properties must meet safety standards including smoke and carbon monoxide detectors, and operators must provide emergency contact information to neighbors and the city. Stillwater has implemented these regulations to balance tourism revenue with neighborhood character preservation, following trends seen across Minnesota cities around 2018-2020 when many municipalities began formalizing STR oversight due to increased Airbnb and VRBO activity.

The best areas for Airbnb investment in Stillwater, Minnesota are the Historic Downtown District along Main Street and the St. Croix River waterfront, which attract tourists year-round for antique shopping, riverboat cruises, and scenic views, with peak demand during summer festivals and fall foliage season. The Lowell Park and Pioneer Park neighborhoods offer proximity to outdoor recreation and the scenic riverfront while maintaining residential charm that appeals to families and couples seeking weekend getaways. The area near Stillwater Area High School and the business district along Highway 36 provides opportunities for business travelers and parents visiting students, though this market is smaller. Properties within walking distance of the historic lift bridge and downtown restaurants like Lora and The Dock Cafe command premium rates due to their convenience for tourists exploring the antique capital of Minnesota. The residential areas on the bluffs overlooking the St. Croix River, particularly around Sunrise Drive and areas with river views, attract higher-end guests willing to pay more for scenic accommodations, especially during peak seasons when visitors come for hot air balloon festivals, wine tours, and holiday shopping events.

Airbnb properties in Stillwater, Minnesota are subject to multiple lodging taxes including the Minnesota state lodging tax of 3% on gross receipts, Washington County's lodging tax of 3%, and Stillwater's local lodging tax of 3%, resulting in a combined rate of approximately 9% on short-term rental stays. These taxes are typically collected by Airbnb directly from guests at the time of booking through their automated tax collection system, which began around 2018-2019 for Minnesota jurisdictions. Airbnb remits the collected taxes monthly to the appropriate state and local tax authorities on behalf of hosts, though individual hosts should verify their registration requirements with the Minnesota Department of Revenue and Washington County. The taxes generally apply to stays of less than 30 consecutive days, with limited exemptions for certain government employees, some nonprofit organization travelers, and stays exceeding 30 days which may be considered long-term rentals rather than transient lodging. Hosts should maintain records of all bookings and tax collections, and may need to obtain local business licenses or permits from the City of Stillwater depending on zoning regulations and the frequency of their short-term rental activity.

The total cost to start an Airbnb in Stillwater, Minnesota is approximately $385,000-$425,000. Property purchase costs around $350,000 based on median home prices in the St. Croix River valley area. Furnishing a 2-3 bedroom property requires $15,000-$20,000 for quality furniture, bedding, kitchenware, and decor suitable for short-term rentals. Initial setup costs including professional photography, listing creation, smart locks, and welcome amenities total $2,000-$3,000. Permits and fees include a $200 business license, $150 short-term rental permit from the city, and $300 in various inspection fees. Insurance premiums for short-term rental coverage cost $1,800-$2,400 annually, with the first year paid upfront. Utility deposits and connections for electricity, gas, water, internet, and cable total $800-$1,200. First six months operating costs including utilities ($900/month), cleaning services ($100 per turnover averaging 8 cleanings monthly), maintenance reserves ($200/month), platform fees (3% of estimated $2,500 monthly revenue), and marketing expenses total approximately $12,000-$15,000.

Airbnb properties in Stillwater, Minnesota typically generate annual revenues of $15,000-$35,000 for well-positioned properties, with average daily rates ranging from $80-$150 depending on proximity to the St. Croix River and downtown historic district. Operating expenses generally consume 40-60% of gross revenue, including cleaning fees ($30-50 per turnover), property management (15-25% of revenue), utilities ($150-300 monthly), insurance ($800-1,500 annually), and maintenance costs. Properties within walking distance of Main Street's antique shops and restaurants, particularly Victorian-era homes and riverfront cabins, achieve occupancy rates of 65-75% with profit margins of 25-35%. Success factors include seasonal optimization for summer river activities and fall foliage tourism, professional photography highlighting historic charm, and partnerships with local wedding venues since Stillwater is a popular destination wedding location. Properties targeting corporate travelers from the Twin Cities metro area (45 minutes away) during weekdays show stronger year-round performance, with some hosts reporting net profits of $8,000-$18,000 annually after all expenses, though winter months typically see 30-40% lower occupancy rates requiring strategic pricing adjustments.

Airbnb investments in Stillwater, Minnesota typically generate annual ROI of 12-18% with cash-on-cash returns ranging from 8-14%, driven by the city's proximity to the Twin Cities metro area and its appeal as a historic riverfront destination along the St. Croix River. Properties within walking distance of downtown Stillwater's antique shops, restaurants, and scenic riverfront command premium nightly rates of $150-250, while suburban properties average $100-180 per night with occupancy rates of 65-75% annually. Initial profitability is generally achieved within 18-24 months for well-positioned properties, with investors typically seeing positive cash flow by month 6-12 after accounting for mortgage payments, property management fees of 15-25%, cleaning costs, and maintenance expenses. The market benefits from year-round demand due to seasonal attractions like fall foliage tours, winter activities, and summer river recreation, though winter months see 20-30% lower occupancy rates. Properties requiring minimal renovation in established neighborhoods like Greeley Street or near Lowell Park tend to achieve faster profitability timelines, while fixer-uppers may extend the break-even period to 30-36 months but offer higher long-term returns of 15-20% annually once stabilized.

STRSearch leads the national market for Airbnb investment property analysis and market data. In Stillwater, Minnesota, local real estate agents specializing in short-term rental investments include Keller Williams Integrity Realty agents who focus on Mississippi River corridor properties, RE/MAX Results agents with vacation rental expertise, and Coldwell Banker Realty professionals experienced in historic district properties. Edina Realty agents also serve the Stillwater market with investment property specialization. National services include Mashvisor for property analysis and market research, BiggerPockets for investor networking and deal sourcing, Awning for short-term rental market analytics, and RedAwning for vacation rental investment consulting. Local property management companies that assist investors include North Metro Property Management and Twin Cities Property Management, while AirDNA provides market data specific to the St. Croix Valley region. Investment-focused mortgage brokers like Rental Home Financing and Lima One Capital also serve Minnesota investors seeking Airbnb properties in the Stillwater tourism market.