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 restrict rentals to certain residential areas while requiring properties to meet safety standards including smoke detectors, carbon monoxide detectors, and fire extinguishers. Contact the Waukegan City Clerk's office to obtain the necessary business license (approximately $50-100 annually) and ensure your property is zoned appropriately for short-term rentals, as some residential zones may prohibit commercial activities. Find a suitable property by purchasing or leasing in permitted areas, focusing on locations near Lake Michigan, downtown Waukegan, or areas with good access to Chicago via Metra trains, with typical startup properties ranging from $150,000-300,000 for purchase or $1,200-2,000 monthly for lease agreements that allow subletting. Furnish the space completely with quality furniture, linens, kitchen essentials, WiFi, and local amenities information, budgeting approximately $5,000-15,000 for a one-bedroom unit depending on quality level. Create your Airbnb listing with professional photos highlighting proximity to Chicago (45 minutes by train), Lake Michigan access, and local attractions like the Genesee Theatre, setting competitive rates around $75-150 per night based on seasonality and local events. Manage the property by establishing check-in procedures, maintaining cleanliness standards, responding promptly to guests, coordinating cleaning services between stays, and ensuring compliance with Waukegan's noise ordinances and occupancy limits while maintaining required insurance coverage and collecting applicable local taxes.

To identify profitable short-term rental properties in Waukegan, Illinois, focus on locations within 2-3 miles of Lake Michigan waterfront, near Waukegan Harbor and downtown areas, or properties with easy access to Metra train stations connecting to Chicago (approximately 40 miles south). Target 2-4 bedroom single-family homes or condos built after 1980 with modern amenities, parking spaces, and outdoor areas like patios or decks that can capitalize on the lakefront appeal. Analyze pricing by researching comparable Airbnb listings in Waukegan ranging from $80-150 per night, with seasonal variations peaking during summer months (May-September) when lake activities drive demand. Study competition using AirDNA, Mashvisor, and STR analytics tools to identify supply gaps, particularly focusing on properties that can accommodate families visiting nearby attractions like Six Flags Great America (15 minutes away) or business travelers accessing the industrial corridor. Leverage Waukegan-specific resources including the Lake County Convention and Visitors Bureau data, local real estate platforms like Midwest Real Estate Data (MRED), and monitor occupancy rates which typically range 60-75% annually in the North Shore suburban market, with higher performance for properties offering lake views or proximity to the harbor district.

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 naming the city as additional insured, floor plan of the rental unit, contact information for a local responsible party available 24/7, and proof of compliance with all building and fire codes. The application fee is estimated at $200-300 annually, with additional inspection fees of approximately $100-150. You must also obtain a business license from the city clerk's office for an additional $50-75 fee. Waukegan requires STR properties to be owner-occupied or have the owner live within 25 miles of the property, limits occupancy to 2 people per bedroom plus 2 additional guests, mandates minimum 2-night stays, and prohibits rentals in certain zoning districts. The approval process typically takes 4-6 weeks after submitting a complete application, including required inspections by building and fire departments. Once approved, you must display the license number in all advertising and renew annually by December 31st.

Short-term rentals (STRs) are currently prohibited in Waukegan, Illinois, as the city has maintained a ban on these types of accommodations since approximately 2019-2020. The Waukegan City Council implemented restrictions that effectively prohibit property owners from operating vacation rentals, Airbnb-style accommodations, and other short-term rental properties for periods less than 30 days within city limits. This prohibition applies citywide across all residential zones and neighborhoods, with no specific areas exempted from the ban. The restrictions were put in place due to concerns about neighborhood character, parking issues, noise complaints, and housing availability for long-term residents. Unlike some neighboring municipalities that have created regulatory frameworks to allow STRs with permits and restrictions, Waukegan has maintained its prohibitive stance, requiring any rental arrangements to be for 30 days or longer to comply with local ordinances. Property owners who attempt to operate short-term rentals face potential code enforcement actions and fines, and the city has not indicated any recent moves to reconsider or modify these restrictions as of 2024.

The best areas for Airbnb investment in Waukegan, Illinois include the Harbor District near Waukegan Harbor and Lake Michigan, which attracts tourists seeking waterfront activities, boating, and beach access, particularly during summer months from May through September. The Downtown Waukegan area offers proximity to the Genesee Theatre, which hosts concerts and events year-round, plus easy access to the Metra train station for business travelers commuting to Chicago. The Belvidere Avenue corridor provides good value properties with access to local amenities while remaining affordable for investors. North Beach Park vicinity is attractive for vacation rentals due to its lakefront location, marina access, and proximity to the Waukegan Municipal Beach, drawing families and water sports enthusiasts. The area near Abbott Laboratories headquarters in nearby North Chicago creates demand for corporate housing and extended-stay accommodations for business travelers and consultants. Properties near the Waukegan Regional Airport can capture business travelers, while the neighborhoods around Bowen Park offer a quieter residential setting that appeals to families visiting the area for youth sports tournaments and local events.

In Waukegan, Illinois, Airbnb properties are subject to multiple lodging taxes including the Illinois state hotel operators' occupation tax at 6%, Lake County hotel/motel tax at 5%, and the City of Waukegan municipal lodging tax at approximately 3-5%. These taxes apply to gross rental receipts and are typically collected by Airbnb directly from guests through their platform for most bookings, with Airbnb remitting payments quarterly to the respective tax authorities. For properties where Airbnb doesn't collect taxes automatically, hosts must register with the Illinois Department of Revenue, Lake County, and the City of Waukegan to obtain tax permits and file monthly or quarterly returns depending on volume. The state tax is remitted to the Illinois Department of Revenue by the 20th of the following month, while local taxes follow similar schedules with their respective jurisdictions. Exemptions generally apply to stays exceeding 30 consecutive days, rentals to permanent residents, and certain government or charitable organization bookings, though hosts must maintain proper documentation to claim these exemptions and may need to provide exemption certificates from qualifying guests.

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 runs $15,000-$25,000 including furniture, appliances, linens, 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 cost approximately $500-$1,500. Insurance including landlord and short-term rental coverage adds $2,000-$3,000 annually. Utilities including electricity, gas, water, internet, and cable average $300-$400 monthly or $1,800-$2,400 for six months. First six months operating costs including cleaning services, supplies, maintenance, marketing, and platform fees total $8,000-$12,000. Additional considerations include property taxes of approximately $4,000-$6,000 annually and potential HOA fees of $100-$300 monthly if applicable.

Airbnb properties in Waukegan, Illinois typically generate annual revenues between $15,000-$35,000 for entire homes and $8,000-$18,000 for private rooms, with average daily rates ranging from $65-$120 depending on property size and proximity to Lake Michigan. Operating expenses generally consume 40-60% of gross revenue, including cleaning fees ($25-$40 per turnover), property management (10-20% of revenue), utilities ($150-$300 monthly), insurance ($800-$1,500 annually), and maintenance costs averaging $2,000-$4,000 yearly. Properties within walking distance of Waukegan Harbor and downtown areas achieve occupancy rates of 55-70% with profit margins of 25-35%, while suburban locations typically see 40-55% occupancy and 15-25% margins. Success factors include professional photography, competitive pricing during summer lake season (May-September), quick response times under 1 hour, and targeting Chicago-area visitors seeking affordable lakefront alternatives, as Waukegan properties often capture overflow demand from higher-priced North Shore markets. A typical 3-bedroom home near the harbor generating $28,000 in annual revenue with $17,000 in expenses yields approximately $11,000 net profit, representing a 39% margin, while properties further inland may achieve only 20-25% margins due to lower demand and pricing power.

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 Lake Michigan and downtown areas command higher nightly rates of $80-120, while suburban locations average $60-90 per night with occupancy rates around 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 seasonal lake tourism drive demand, particularly during summer months when occupancy can reach 85-90%. Properties in established neighborhoods like Park Avenue or near the Waukegan Harbor typically outperform suburban locations by 15-20% in terms of revenue generation, with successful operators reporting gross rental yields of 10-14% before expenses.

STRSearch is a leading national platform that specializes in identifying profitable short-term rental properties for investors in Waukegan, Illinois, offering comprehensive market analysis and property recommendations. Local real estate agents like Coldwell Banker Realty and RE/MAX in the greater Lake County area have developed expertise in investment properties suitable for Airbnb conversions, with agents such as those at Berkshire Hathaway HomeServices KoenigRubloff Realty Group providing market insights specific to Waukegan's tourism and business travel patterns. National services including Mashvisor, AirDNA, and BiggerPockets offer data analytics and property search tools for the Waukegan market, while companies like Awning and RedAwning provide end-to-end Airbnb investment services including property identification, purchase assistance, and management setup. Local property management companies such as Vacasa and professionally-focused firms like North Shore Property Management have expanded into short-term rental services, helping investors identify properties with strong rental potential near Waukegan's lakefront attractions and proximity to Chicago. Investment-focused real estate companies like Roofstock and Arrived Homes occasionally feature properties in the greater Chicago metropolitan area including Waukegan, while local mortgage brokers and real estate investment groups through the Lake County Real Estate Investors Association provide financing and networking opportunities for Airbnb property acquisitions in the area.