Is Watford City, North Dakota Good for Airbnb Investment?

To start an Airbnb in Watford City, North Dakota, begin by researching local zoning laws and short-term rental regulations through the Watford City Planning Department, as the city may require special permits or have restrictions in certain residential zones. Contact the McKenzie County Building Department to obtain necessary permits, which typically include a business license from the city clerk's office and potentially a conditional use permit if operating in residential areas. Find a suitable property by working with local real estate agents familiar with the oil boom market, considering locations near downtown or industrial areas where workers frequently stay, with properties typically ranging from $150,000-$400,000 due to the Bakken oil field economy. Furnish the property with durable, comfortable furniture suitable for oil field workers and business travelers, including quality mattresses, work desks, reliable Wi-Fi, and kitchen essentials, budgeting approximately $15,000-$25,000 for a complete setup. List your property on Airbnb, VRBO, and local corporate housing websites, highlighting proximity to oil companies like Continental Resources, Whiting Petroleum, and Hess Corporation, with competitive rates typically ranging $80-$150 per night given the area's high demand from temporary workers. Manage the property by establishing relationships with local cleaning services, maintenance contractors, and consider hiring a property management company familiar with Watford City's unique market demands, while maintaining compliance with any ongoing city regulations and tax requirements through the North Dakota Tax Commissioner's office.

To identify profitable short-term rental properties in Watford City, North Dakota, focus on locations within 10-15 minutes of oil field operations, downtown business district, and major employers like Hess Corporation and Continental Resources, as this area has experienced significant growth since 2008 due to Bakken oil boom activity. Target 2-4 bedroom properties with full kitchens, laundry facilities, reliable internet, and parking spaces that can accommodate work trucks, as many guests are oil workers on extended stays. Analyze pricing by researching comparable Airbnb and VRBO listings in the $80-150 per night range, considering that corporate housing rates often exceed $200 nightly, and calculate potential monthly revenues against mortgage, utilities, and management costs. Research competition using AirDNA, STR Helper, and local Facebook groups to identify supply gaps, particularly for mid-term rentals (30+ days) that serve rotating oil field crews. Utilize Mashvisor for market analysis, connect with local real estate agents familiar with investor properties, monitor McKenzie County economic development reports, and consider proximity to amenities like grocery stores, restaurants, and medical facilities since Watford City serves as a regional hub for the western North Dakota oil patch.

To obtain an Airbnb/STR permit in Watford City, North Dakota, you must first contact the Watford City Planning and Zoning Department at City Hall located at 110 2nd Avenue NE to determine if short-term rentals are permitted in your specific zoning district, as the city implemented STR regulations around 2019-2020 due to oil boom housing demands. Submit a completed short-term rental permit application along with a site plan showing parking areas, proof of property ownership or lease agreement, certificate of insurance with minimum $1 million liability coverage, fire safety inspection certificate from the local fire department, and a floor plan indicating maximum occupancy numbers. Required documents also include a business license application, completed septic system inspection (if applicable), and neighbor notification forms signed by adjacent property owners. The application fee is approximately $200-300 with an annual renewal fee of $150-200, and you must pay applicable business license fees of around $50-100. The approval timeline typically takes 30-45 days after submitting a complete application, during which the city conducts inspections and reviews compliance with parking requirements (minimum 2 spaces per unit), occupancy limits (typically 2 people per bedroom plus 2 additional), and noise ordinance adherence. Watford City requires STR operators to maintain a local contact person available 24/7, display the permit number in all advertisements, collect and remit city sales tax, and comply with specific signage requirements regarding house rules and emergency contact information.

Short-term rentals (STRs) are generally legal in Watford City, North Dakota, as the city has not implemented specific prohibitive ordinances against vacation rentals, though operators must comply with standard business licensing requirements and zoning regulations. The city typically requires STR operators to obtain a business license and ensure compliance with residential zoning laws, fire safety codes, and health department standards. Most residential areas within Watford City allow STRs, but operators should verify specific zoning restrictions as some areas may have limitations on commercial activities in purely residential zones. As of recent years, Watford City has maintained a relatively permissive approach to short-term rentals, recognizing their importance to the local economy, particularly given the city's role in the Bakken oil boom which has created significant demand for temporary housing. However, like many North Dakota municipalities, the city reserves the right to implement additional regulations if issues arise, and operators are expected to maintain properties according to city codes, manage noise and parking appropriately, and ensure rentals don't negatively impact neighborhood character.

The best areas for Airbnb investment in Watford City, North Dakota are the downtown core near Main Street and 2nd Avenue, which attracts oil industry executives and business travelers due to proximity to corporate offices and restaurants, and the newer residential developments on the city's west side near the Rough Rider Center, which appeal to families visiting for events and longer-term oil worker housing. The area around McKenzie County Healthcare Systems also presents opportunities for medical tourism and visiting family members of patients. Properties near the Watford City Golf Course and Theodore Roosevelt National Park's northern entrance (about 30 minutes away) can capitalize on recreational visitors and tourists exploring the Badlands region. The industrial corridor along Highway 85 is ideal for targeting oil field workers and contractors who prefer accommodations closer to drilling sites and equipment yards, while the residential neighborhoods near the high school and civic center attract sports teams, families attending school events, and government contractors visiting city facilities.

In Watford City, North Dakota, Airbnb hosts are subject to both state and local lodging taxes. The North Dakota state lodging tax is 4% on gross receipts from accommodations, while McKenzie County imposes an additional 3% lodging tax, and Watford City levies a 2% city lodging tax, bringing the total combined rate to approximately 9%. These taxes are collected on the total rental amount excluding cleaning fees in most cases. Airbnb automatically collects and remits the state 4% tax directly to the North Dakota Tax Commissioner's office on behalf of hosts through their occupancy tax collection service implemented around 2018. However, hosts remain responsible for collecting and remitting the local McKenzie County and Watford City portions directly to the respective jurisdictions on a monthly basis by the 15th of the following month. Exemptions typically include stays exceeding 30 consecutive days which are considered long-term rentals, and accommodations rented to permanent residents. Hosts must register with both the state and local tax authorities, obtain the necessary permits, and maintain detailed records of all transactions for compliance purposes.

The total cost to start an Airbnb in Watford City, North Dakota is approximately $285,000-$320,000. Property purchase costs around $220,000-$250,000 based on median home prices in the Bakken oil region. Furnishing a 2-3 bedroom property requires $15,000-$20,000 for quality furniture, appliances, linens, and décor suitable for oil workers and business travelers. Initial setup costs including professional photography, listing creation, and basic renovations total $3,000-$5,000. Permits and licensing fees are minimal at $200-$500 since North Dakota has relatively few short-term rental restrictions. Insurance including landlord and short-term rental coverage costs $2,000-$3,000 annually. Utility deposits and connections for electricity, gas, water, internet, and cable total $1,500-$2,000. First six months operating costs including utilities ($900/month), cleaning supplies ($200/month), maintenance reserves ($300/month), and marketing expenses ($100/month) total approximately $9,000. Property management software subscriptions and booking platform fees add another $1,000 for the initial period.

Airbnb properties in Watford City, North Dakota demonstrate strong profitability potential due to the city's position in the Bakken oil formation, with average daily rates ranging from $120-180 for entire homes and occupancy rates of 65-75% driven by oil industry workers and contractors seeking temporary housing. A typical 2-bedroom property generates approximately $4,500-6,000 monthly revenue, while expenses including mortgage ($1,200-1,800), utilities ($200-300), cleaning ($400-600), insurance ($150-200), and maintenance ($300-500) total around $2,250-3,400 monthly, resulting in net profit margins of 35-45%. Success factors include proximity to oil facilities, reliable internet for remote workers, and furnished units targeting 30+ day stays to capture corporate housing demand. Case studies from 2019-2023 show properties near industrial areas achieving 80%+ occupancy with hosts like those managing multiple units reporting annual returns of 15-25% on investment, though profitability fluctuates with oil prices and drilling activity. The market benefits from limited hotel inventory and high demand from Hess Corporation, Continental Resources, and other energy companies housing temporary workers, making Watford City one of North Dakota's most profitable short-term rental markets despite higher initial investment costs.

Airbnb investments in Watford City, North Dakota typically generate annual ROI of 12-18% due to the city's proximity to Bakken oil fields and consistent demand from oil workers and contractors. Cash-on-cash returns generally range from 8-14% annually, with properties averaging $150-200 per night occupancy rates of 65-75%. Initial profitability usually occurs within 18-24 months, with break-even on cash investment typically achieved by month 20-28. The market benefits from limited hotel inventory and strong corporate housing demand, with successful investors like those managing properties through companies such as Dakota Lodge Solutions and Bakken Housing Partners reporting gross rental yields of 15-22% on well-positioned 2-3 bedroom properties purchased between 2019-2023. Properties within 5 miles of industrial sites command premium rates, and investors can expect full cost recovery within 6-8 years while maintaining steady monthly cash flows of $800-1,500 per property after expenses.

STRSearch is a national platform that helps investors identify profitable short-term rental properties across markets including Watford City, North Dakota. Local real estate agents in the Bakken region such as those at Century 21 Morrison Realty, RE/MAX of Williston, and Prudential Roughrider Realty have experience with investment properties in Watford City's oil boom market. National services like Mashvisor, AirDNA, and BiggerPockets provide market analysis and property identification tools for the area. Local property management companies such as Bakken Property Management and Dakota Property Solutions offer turnkey Airbnb management services. Real estate investment firms like Roofstock and Awning (now part of RedAwning) have historically facilitated short-term rental property acquisitions in emerging markets like Watford City. Regional brokerages including Stockmen's Realty and Dakota Plains Realty understand the unique dynamics of North Dakota's oil patch communities and can assist with identifying properties suitable for short-term rental conversion, particularly given Watford City's transient workforce population that creates consistent demand for temporary housing accommodations.