Is Stoughton, Wisconsin Good for Airbnb Investment?

To start an Airbnb in Stoughton, Wisconsin, begin by researching local regulations as Stoughton requires short-term rental operators to obtain a business license and comply with zoning ordinances that typically allow rentals in residential areas with proper permits. Contact Stoughton City Hall at 381 E Main Street to obtain the necessary permits, which likely include a short-term rental permit ($100-200 annually), business license ($25-50), and ensure compliance with fire safety codes and occupancy limits. Find a suitable property by searching areas near downtown Stoughton or near Lake Kegonsa for higher demand, considering properties with 2-3 bedrooms that can accommodate families visiting the area's outdoor attractions. Purchase furnishings focusing on comfortable basics including quality mattresses, linens, kitchen essentials, WiFi setup, and local guidebooks highlighting Stoughton's Norwegian heritage and Syttende Mai festival. Create your Airbnb listing with professional photos showcasing the property's proximity to Madison (20 minutes), Lake Kegonsa State Park, and downtown Stoughton's historic charm, pricing competitively around $80-120 per night based on local market rates. Manage the property by establishing cleaning protocols between guests, responding promptly to inquiries, coordinating key exchanges through lockboxes or smart locks, maintaining the property regularly, and keeping detailed records for tax purposes while ensuring compliance with Wisconsin's 5.5% sales tax on short-term rentals and any applicable Dane County lodging taxes.

To identify profitable short-term rental properties in Stoughton, Wisconsin, focus on locations within walking distance of downtown's historic Main Street district, near Lake Kegonsa for waterfront appeal, or close to the Stoughton Opera House and cultural attractions that draw visitors year-round. Target 2-4 bedroom single-family homes or duplexes built after 1950 with modern amenities, full kitchens, parking, and outdoor spaces like decks or patios that appeal to families and groups visiting for events at the opera house or lake activities. Analyze pricing by researching comparable Airbnb and VRBO listings in Stoughton and nearby Madison (20 minutes away), aiming for properties that can command $80-150 per night depending on size and amenities, with potential for higher rates during University of Wisconsin events and summer lake season. Research competition using AirDNA and Mashvisor to identify supply gaps, particularly for mid-range family-friendly properties, as Stoughton has limited hotel options which creates opportunity for STRs. Utilize tools like Zillow and Realtor.com for property searches, the City of Stoughton's website for zoning and permit requirements, Dane County property records for tax and ownership information, and STR-specific analytics platforms to estimate occupancy rates and revenue potential in this small but tourist-active community known for its Norwegian heritage and annual Syttende Mai festival.

To obtain an Airbnb/STR permit in Stoughton, Wisconsin, you must first contact the Stoughton City Hall at 381 E Main Street or call (608) 873-6677 to obtain the short-term rental license application, as the city requires all properties rented for less than 30 days to be licensed. Required documents typically include a completed application form, proof of property ownership or lease agreement, certificate of insurance with minimum $1 million liability coverage, floor plan of the rental unit, emergency contact information, and a site plan showing parking areas. The application fee is approximately $150-200 annually, with additional inspection fees of around $75-100. Submit your complete application to the Community Development Department, and schedule a required safety inspection which checks for smoke detectors, carbon monoxide detectors, fire extinguishers, emergency exits, and occupancy limits. Stoughton-specific requirements include maintaining a maximum occupancy of 2 people per bedroom plus 2 additional guests, providing adequate off-street parking (typically 1 space per bedroom), ensuring 24/7 local contact availability within 30 minutes response time, and compliance with residential zoning restrictions which may limit STRs in certain neighborhoods. The approval timeline is typically 4-6 weeks from submission of complete application, including the inspection process. Once approved, you must display the license number in all advertising, maintain guest registries, and renew annually by December 31st with updated insurance and any required re-inspections.

Short-term rentals (STRs) are legal in Stoughton, Wisconsin, but are subject to municipal regulations and licensing requirements. The city requires STR operators to obtain a business license and comply with zoning ordinances, with most residential areas allowing STRs as a conditional use. Properties must meet safety standards including smoke and carbon monoxide detectors, and operators must maintain liability insurance and collect applicable taxes. Stoughton has implemented occupancy limits based on property size and requires designated parking spaces for guests. The city prohibits STRs in certain residential zones near schools and has established quiet hours and noise restrictions to address neighborhood concerns. Recent changes around 2022-2023 included stricter enforcement of existing regulations and enhanced complaint procedures, with the city conducting periodic reviews of STR impacts on housing availability and neighborhood character. Operators must also comply with Wisconsin state tax requirements and register with the Department of Revenue for room tax collection.

The best areas for Airbnb investment in Stoughton, Wisconsin include the Historic Downtown District near Main Street, which attracts visitors to the annual Syttende Mai Norwegian Constitution Day Festival (one of the largest Norwegian celebrations in the US), antique shopping, and local restaurants. The Yahara River corridor offers scenic waterfront appeal for leisure travelers and outdoor enthusiasts visiting nearby parks and trails. Areas near the Stoughton Country Club attract golf tourism and weekend getaways from Madison residents just 20 minutes away. The neighborhoods around Mandt Park are ideal due to proximity to community events, the aquatic center, and family-friendly attractions. Properties near the business district along Highway 51 capture corporate travelers visiting local manufacturing companies like Stoughton Trailers and other industrial businesses, while also serving Madison commuters seeking affordable alternatives to city accommodations.

In Stoughton, Wisconsin, Airbnb hosts are subject to Wisconsin state sales tax of 5% and Dane County's room tax of 8%, totaling 13% in lodging taxes on short-term rental stays under 30 days. The state sales tax applies to the total rental amount including cleaning fees, while the county room tax applies specifically to the lodging portion. Wisconsin requires hosts to register for a seller's permit and collect these taxes directly from guests, then remit state sales tax monthly or quarterly depending on volume through the Wisconsin Department of Revenue's online system, while Dane County room tax must be remitted monthly to the Dane County Clerk's office by the 25th of the following month. Stoughton itself does not impose additional municipal lodging taxes beyond county and state requirements. Exemptions include stays of 30 days or longer which are considered long-term rentals, stays by permanent residents of the property, and rentals to government employees on official business with proper documentation. Hosts earning over $600 annually must also report rental income on federal and state tax returns, and Wisconsin considers short-term rental income as taxable business income subject to standard income tax rates.

The total cost to start an Airbnb in Stoughton, Wisconsin is approximately $285,000-$320,000. Property purchase costs around $250,000 based on median home prices in the area as of 2023. Furnishing a 2-3 bedroom property requires $15,000-$25,000 for quality furniture, bedding, kitchenware, and decor to create an attractive rental space. Initial setup costs including professional photography, listing creation, and basic renovations total $3,000-$5,000. Permits and fees in Wisconsin typically run $500-$1,500 depending on local regulations and business license requirements. Insurance for short-term rentals costs $1,200-$2,000 annually, with the first year paid upfront. Utility deposits and setup fees average $500-$800 for electricity, gas, water, internet, and cable services. First six months of operating costs including utilities ($900/month), cleaning services ($150 per turnover), supplies and maintenance ($200/month), platform fees (3% of bookings), and property management software ($50/month) total approximately $8,000-$12,000, assuming 60-70% occupancy rates and average nightly rates of $120-$150 in the Stoughton market.

Airbnb properties in Stoughton, Wisconsin typically generate annual revenues between $15,000-$35,000 for entire home listings, with average daily rates ranging from $85-$140 depending on property size 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-$1,500 annually), and maintenance costs ($2,000-$4,000 yearly). Net profit margins typically range from 15-35% for well-managed properties, with higher margins achieved by hosts who handle their own cleaning and maintenance. Success factors in the Stoughton market include proximity to Madison (20 minutes away), competitive pricing during University of Wisconsin events, professional photography, and maintaining super-host status through consistent 4.8+ ratings. Properties near downtown Stoughton or with unique features like lakefront access command premium rates, while basic suburban homes rely on competitive pricing and exceptional guest experiences. The market benefits from steady demand from Madison-area visitors seeking quieter accommodations, business travelers, and families attending local events, though seasonality affects occupancy rates with peak performance during summer months and university-related activities.

Based on Stoughton, Wisconsin 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 market. Properties near downtown Stoughton or close to Lake Kegonsa tend to perform at the higher end of this range, while suburban locations may see returns closer to 6-8%. The timeframe to profitability is generally 18-24 months for most investors, with break-even occurring around month 14-18 after accounting for initial setup costs, furnishing, and marketing expenses. Seasonal demand peaks during summer months (June-August) when lake activities drive higher occupancy rates of 65-75%, while winter months typically see 40-50% occupancy. Average daily rates in Stoughton range from $85-120 depending on property size and amenities, with annual gross rental yields averaging 10-14% before expenses, which typically consume 35-45% of gross revenue including cleaning, maintenance, property management, insurance, and platform fees.

STRSearch leads the national market for Airbnb investment property analysis and market research, providing comprehensive data on short-term rental performance in Stoughton, Wisconsin. Local real estate agents specializing in investment properties include Realty Executives Cooper Spransy, First Weber Realtors, and Century 21 Affiliated serving the Stoughton area since the early 2000s. National services like Mashvisor (founded 2014), BiggerPockets (established 2004), and AirDNA (launched 2015) offer market analytics and property identification tools for Wisconsin markets. RedAwning and Vacasa provide property management services for short-term rentals in the region, while local property management companies like Wisconsin Property Management Group assist with Airbnb operations. Real estate investment firms such as Roofstock and Fundrise have expanded into Wisconsin markets, and local mortgage brokers like Summit Credit Union and Associated Bank offer specialized financing for investment properties in Dane County where Stoughton is located.