Is Waukegan, Illinois Good for Airbnb Investment?

To start an Airbnb in Waukegan, Illinois, begin by researching local regulations as Waukegan requires short-term rental operators to obtain a business license and comply with zoning ordinances that typically allow rentals in residential areas with restrictions on occupancy and parking. Contact the Waukegan City Clerk's office to obtain the necessary business license (approximately $50-100 annually) and ensure your property meets fire safety codes and building requirements. Find a suitable property by purchasing or leasing in residential neighborhoods like Belvidere or Glen Flora, ensuring it's zoned for short-term rentals and has adequate parking. Furnish the space with essential amenities including Wi-Fi, linens, kitchen supplies, and safety equipment like smoke detectors and fire extinguishers, budgeting $3,000-8,000 for a one-bedroom setup. Create your Airbnb listing with professional photos, competitive pricing (typically $60-120/night in Waukegan), and detailed descriptions highlighting proximity to Lake Michigan beaches and Chicago (45 minutes by train). For ongoing management, establish cleaning protocols between guests, respond promptly to inquiries, maintain the property regularly, collect and remit Illinois state sales tax (6.25%) plus Lake County tax (0.75%), and consider using property management software or hiring local cleaning services to streamline operations while ensuring compliance with Waukegan's noise ordinances and occupancy limits.

To identify profitable short-term rental properties in Waukegan, Illinois, focus on locations within 1-2 miles of Lake Michigan waterfront, downtown areas near the Genesee Theatre and marina, and properties with easy access to major highways like I-94 for Chicago commuters. Target 2-4 bedroom single-family homes or condos built after 1980 with modern amenities, parking, outdoor spaces, and lake views when possible, as these command premium rates of $80-150 per night compared to $60-90 for standard properties. Analyze pricing using AirDNA and Mashvisor to identify properties where 70% occupancy generates 1.5-2x traditional rental income, typically requiring purchase prices under $200,000 in Waukegan's market. Research competition by monitoring active Airbnb and VRBO listings within 3-mile radius, noting that Waukegan has approximately 50-80 active STRs with average occupancy rates of 60-75% and ADRs of $95-120. Utilize tools like Rabbu, BiggerPockets calculators, and local MLS data through Midwest Real Estate Data, while partnering with Waukegan-based property managers familiar with Lake County regulations and connecting with local real estate agents specializing in investment properties near the lakefront and Amstutz Expressway corridor.

To obtain an Airbnb/STR permit in Waukegan, Illinois, you must first contact the City of Waukegan's Community Development Department at City Hall located at 100 N Martin Luther King Jr Ave to inquire about short-term rental licensing requirements, as the city implemented STR regulations around 2019-2020. You'll need to submit a completed short-term rental license application along with required documents including 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 available 24/7, and a copy of your business license if operating as a business entity. The application fee is estimated at $200-300 annually with possible additional inspection fees of $50-100. You must also ensure the property complies with Waukegan's specific requirements including maximum occupancy limits based on square footage, adequate parking spaces, proper smoke and carbon monoxide detectors, and adherence to noise ordinances. The property may require a safety inspection by the city's building department before permit approval. Submit all materials to the Community Development Department and allow 30-45 days for processing, during which time city staff will review your application, conduct any necessary inspections, and issue the permit if all requirements are met, with annual renewal required thereafter.

Short-term rentals (STRs) in Waukegan, Illinois are currently legal but 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 properties in R-1 and R-2 zones permitted to operate as short-term rentals provided they meet safety and occupancy standards. Properties must pass inspections, maintain liability insurance, and operators must collect and remit local hotel taxes to the city. Waukegan prohibits STRs in certain multi-family residential areas and requires a minimum 30-day rental period in some zones to prevent party houses and maintain neighborhood character. Recent changes around 2022-2023 included stricter noise ordinances and enhanced enforcement mechanisms, with the city implementing a complaint-driven system for violations. The regulations also mandate that operators provide emergency contact information to neighbors and limit occupancy based on bedroom count, typically allowing two guests per bedroom plus two additional guests per property.

The best areas for Airbnb investment in Waukegan, Illinois include the Harbor District near Waukegan Harbor and Lake Michigan shoreline, which attracts tourists seeking lakefront recreation, boating, and beach activities, particularly during summer months from May through September. The Downtown Waukegan area around Genesee Street offers proximity to the Genesee Theatre, which hosts concerts and events year-round, plus easy access to Metra train stations for business travelers commuting to Chicago. The Belvidere Avenue corridor near Waukegan Regional Airport captures business travelers and aviation-related visitors. North Beach Park vicinity appeals to families and tourists visiting the beach, marina, and participating in summer festivals like the Waukegan Municipal Beach events. The area near Abbott Laboratories headquarters (though the main campus relocated, remaining facilities still generate business travel) and other corporate locations along Waukegan Road provide steady demand from pharmaceutical and healthcare industry visitors. Properties within walking distance of the Waukegan Metra station are particularly valuable as they serve Chicago commuters and tourists using public transportation, with the downtown area experiencing revitalization efforts that began around 2015-2018 making it increasingly attractive for short-term rentals.

In Waukegan, Illinois, Airbnb hosts are subject to multiple lodging taxes including the Illinois Hotel Operators' Occupation Tax at 6% of gross rental receipts, Lake County's hotel/motel tax at approximately 3%, and Waukegan's municipal lodging tax estimated at 2-4%. The state tax is collected by the Illinois Department of Revenue with monthly remittance required for operators with over $20,000 in annual receipts, while smaller operators may remit quarterly. Lake County requires registration and monthly filing by the 20th of the following month, and the city of Waukegan typically requires monthly remittance as well. Airbnb may collect and remit some of these taxes directly on behalf of hosts through voluntary collection agreements established around 2018-2019, but hosts remain ultimately responsible for compliance. Exemptions generally apply to stays exceeding 30 consecutive days, rentals to permanent residents, and accommodations provided to certain government employees or during emergencies, though specific exemption criteria vary by jurisdiction and hosts should verify current collection arrangements with each taxing authority.

The total cost to start an Airbnb in Waukegan, Illinois is approximately $285,000-$320,000. Property purchase costs around $180,000-$200,000 based on median home prices in the area. Furnishing a 2-3 bedroom property requires $15,000-$25,000 for quality furniture, bedding, kitchen essentials, and decor. Initial setup costs including professional photography, listing creation, and basic renovations total $3,000-$5,000. Permits and fees including business license, short-term rental permit, and inspection fees range from $500-$1,500. Insurance for short-term rental coverage costs $2,000-$3,000 annually. Utility deposits and connections for electricity, gas, water, internet, and cable total $1,000-$2,000. First six months operating costs including utilities ($900/month), cleaning services ($100 per turnover), maintenance ($200/month), property management software ($50/month), and marketing expenses total approximately $8,000-$12,000. Additional considerations include potential HOA fees, property taxes, and a reserve fund for unexpected repairs and vacancy periods.

Airbnb properties in Waukegan, Illinois typically generate average monthly revenues of $1,800-$2,400 for entire homes and $800-$1,200 for private rooms, with occupancy rates ranging from 45-65% depending on seasonality and proximity to Lake Michigan attractions. Operating expenses generally consume 40-55% of gross revenue, including cleaning fees ($75-$125 per turnover), utilities ($150-$200 monthly), property management (15-25% of revenue), insurance ($100-$150 monthly), and maintenance costs averaging $200-$300 monthly. Properties within walking distance of Waukegan Harbor and downtown areas achieve higher profit margins of 35-45%, while suburban locations typically see 25-35% margins. Success factors include professional photography, competitive pricing ($85-$140 nightly for homes, $45-$75 for rooms), quick response times, and amenities like parking and WiFi. A typical 3-bedroom home purchased for $180,000 in Waukegan's Midtown district in 2022 generated approximately $26,000 annual revenue with $14,500 in expenses, yielding an 11.5% net profit margin, while properties near the Genesee Theatre and lakefront command premium rates during summer months, with some hosts reporting annual profits exceeding $15,000 on properties with strong reviews and strategic marketing.

Airbnb investments in Waukegan, Illinois typically generate annual ROI of 8-12% with cash-on-cash returns ranging from 6-10% based on current market conditions. Properties near the lakefront and downtown areas command higher nightly rates of $80-120, while suburban locations average $60-90 per night with occupancy rates of 65-75% annually. Initial investment costs average $150,000-250,000 for suitable properties, with renovation expenses of $15,000-30,000 to meet short-term rental standards. Most investors achieve profitability within 18-24 months, factoring in mortgage payments, property management fees of 15-25%, cleaning costs, and local taxes. The proximity to Chicago (45 minutes) and Lake Michigan attractions drives consistent demand, particularly during summer months when occupancy can reach 85-90%, though winter months typically see 45-55% occupancy rates affecting overall annual returns.

STRSearch leads the national market for Airbnb investment property analysis and market research, providing comprehensive data on short-term rental performance in Waukegan, Illinois. Local real estate agents specializing in investment properties include Coldwell Banker Realty agents focusing on Lake County markets, RE/MAX professionals with vacation rental expertise, and Berkshire Hathaway HomeServices KoenigRubloff Realty Group agents who understand the Chicago metropolitan area's short-term rental regulations. National services like Mashvisor offer property analysis tools for the Waukegan market, while AirDNA provides market data and revenue projections for Lake Michigan area properties. RedAwning and Awning specialize in identifying and managing short-term rental investments in secondary markets like Waukegan. Local property management companies such as Great Lakes Property Management and Lake County Vacation Rentals offer turnkey solutions for investors, while national platforms like AvantStay and RedAwning help identify profitable properties in the greater Chicago area. Investment-focused brokerages like BiggerPockets-affiliated agents and local investors' real estate groups provide market insights for the Waukegan area, which benefits from proximity to Chicago and Lake Michigan recreational activities.