Is West Yellowstone, Montana Good for Airbnb Investment?

To start an Airbnb in West Yellowstone, Montana, begin by researching local zoning laws and regulations through the Town of West Yellowstone Planning Department, as the town requires short-term rental permits and has specific zoning restrictions limiting rentals to certain residential and commercial districts. Obtain necessary permits including a business license from the town clerk, a Montana lodging facility license from the Department of Public Health and Human Services, and register for state and local tax collection with Montana Department of Revenue for the 7% state lodging tax plus local resort tax. Find property within approved zoning areas, focusing on residential zones R-1 and R-2 or commercial districts, with properties typically ranging from $400,000-$800,000 for suitable homes near Yellowstone's west entrance. Furnish the property with rustic Montana-themed decor, essential amenities like high-speed internet, full kitchen, quality bedding for 4-8 guests, outdoor furniture for the short summer season, and heating systems capable of handling -20°F winter temperatures. List your property on Airbnb and VRBO with competitive pricing of $150-$400 per night depending on season, emphasizing proximity to Yellowstone National Park, winter activities, and summer recreation. Manage the property by hiring local cleaning services like Yellowstone Cleaning Company, partnering with property management firms such as Big Sky Vacation Rentals if needed, maintaining 24/7 guest communication, and preparing for extreme seasonal demand fluctuations with 80% occupancy in summer months and 30% in winter, while ensuring compliance with the town's noise ordinances and parking requirements that limit guest vehicles to designated spaces.

To identify profitable short-term rental properties in West Yellowstone, Montana, focus on locations within 1-2 miles of Yellowstone National Park's west entrance, prioritizing properties along major routes like US Highway 20 or Canyon Street that offer easy park access while maintaining residential zoning that permits STRs. Target 2-4 bedroom cabins, lodges, or homes built after 1980 with rustic mountain aesthetics, full kitchens, outdoor spaces like decks or fire pits, parking for multiple vehicles, and reliable high-speed internet, as these features command premium rates of $200-400 per night during peak season (June-September). Analyze comparable properties on Airbnb and VRBO within a 3-mile radius, noting that successful properties typically achieve 60-75% occupancy rates with average daily rates dropping to $100-180 during shoulder seasons and $80-120 in winter months. Research competition by monitoring listings from established operators like Yellowstone Vacation Rentals and Gray Wolf Inn & Suites, while using tools such as AirDNA for market analytics, STR Helper for occupancy tracking, and local resources including the West Yellowstone Chamber of Commerce for zoning regulations and the Gallatin County planning department for permit requirements, ensuring compliance with Montana's emerging STR legislation and local tax obligations that can impact profitability by 8-12% annually.

To obtain an Airbnb/STR permit in West Yellowstone, Montana, you must first contact the West Yellowstone Town Hall at 440 Yellowstone Avenue or call (406) 646-7795 to request a Short-Term Rental Business License application, as the town requires all STR operators to obtain both a business license and comply with zoning regulations. 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 showing maximum occupancy, septic system inspection certificate, fire safety inspection report, and parking plan showing adequate off-street parking spaces. The application fee is approximately $150-200 for the business license plus $75-100 for zoning compliance review, with annual renewal fees of around $100-150. The approval timeline generally takes 4-6 weeks from submission of complete application, though this can extend to 8-10 weeks during peak season or if additional documentation is required. West Yellowstone-specific requirements include adherence to the town's 2% accommodation tax, compliance with maximum occupancy limits based on septic capacity, provision of adequate parking (typically 1 space per bedroom plus 1 additional space), 24/7 local contact person availability, quiet hours enforcement from 10 PM to 7 AM, and registration with the Montana Department of Revenue for lodging facility tax collection, with properties also needing to meet all building codes and obtain necessary health department approvals for septic systems.

Short-term rentals (STRs) are legal in West Yellowstone, Montana, but operate under specific municipal regulations established by the town council. The city requires STR operators to obtain a business license and comply with zoning restrictions that primarily allow rentals in residential and commercial zones, though some areas near Yellowstone National Park have additional oversight due to seasonal housing concerns for workers. Current restrictions include occupancy limits based on property size, parking requirements, noise ordinances, and mandatory contact information for a local representative available 24/7. West Yellowstone implemented stricter regulations around 2019-2020 following community concerns about housing availability for seasonal employees who work in the tourism industry, leading to caps on the total number of STR permits issued and requirements for annual renewals. Properties must meet safety standards including smoke detectors, carbon monoxide detectors, and emergency egress requirements, while operators face penalties for violations including potential license revocation for repeated infractions.

The most attractive areas for Airbnb investment in West Yellowstone, Montana are the Historic Downtown District along Canyon Street and Madison Avenue, which offers prime proximity to Yellowstone National Park's west entrance (less than 1 mile) and attracts millions of annual visitors from May through October, plus winter snowmobile tourists from December through March. The Firehole Avenue corridor is highly desirable due to its direct access to park entrances and established vacation rental infrastructure, commanding premium rates during peak summer months when park visitation exceeds 4 million annually. The residential neighborhoods along Gibbon Avenue and Electric Street provide excellent investment opportunities with lower acquisition costs while maintaining walking distance to restaurants, shops, and park access, appealing to families and groups seeking authentic Montana experiences. The Canyon Street commercial area benefits from year-round business travel related to park services, government contractors, and seasonal employment housing, providing steady occupancy during shoulder seasons when tourism fluctuates.

In West Yellowstone, Montana, Airbnb hosts are subject to both state and local lodging taxes. The Montana state accommodations tax is 3% on gross receipts from lodging rentals, which applies to all short-term rentals including Airbnbs. West Yellowstone imposes an additional local resort tax of 3% on lodging accommodations, bringing the total tax rate to approximately 6%. These taxes are typically collected from guests at the time of booking through Airbnb's automated tax collection system, which remits payments directly to the Montana Department of Revenue for state taxes and to the West Yellowstone town government for local taxes on a monthly basis. Hosts who collect taxes independently must register with the Montana Department of Revenue and file monthly returns by the 15th of the following month, along with remitting local taxes to West Yellowstone's finance department. Exemptions generally apply to stays exceeding 30 consecutive days, which are considered long-term rentals rather than transient accommodations, and certain government or non-profit organization bookings may qualify for exemptions with proper documentation.

To start an Airbnb in West Yellowstone, Montana, expect total costs around $650,000-$750,000. Property purchase represents the largest expense at approximately $550,000-$600,000 for a median 3-bedroom home suitable for vacation rental in this tourist destination. Furnishing costs typically range $25,000-$35,000 for quality furniture, appliances, linens, and décor to create an appealing guest experience. Initial setup including professional photography, listing creation, and marketing materials costs around $2,000-$3,000. Permits and fees vary but budget $1,500-$2,500 for business licenses, vacation rental permits, and compliance requirements. Insurance for short-term rentals runs $3,000-$4,000 annually, with the first year paid upfront. 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, maintenance, supplies, platform fees, and property management total approximately $8,000-$12,000. Additional considerations include potential HOA fees, property taxes, and a reserve fund for unexpected repairs, which could add another $10,000-$15,000 to initial capital requirements.

Airbnb properties in West Yellowstone, Montana demonstrate strong seasonal profitability with average annual revenues ranging from $35,000-$65,000 for typical 2-3 bedroom properties, driven primarily by the summer tourist season from May through September when nightly rates peak at $200-$400 due to Yellowstone National Park proximity. Operating expenses typically run 40-50% of gross revenue, including property management fees (15-25%), cleaning costs ($75-$125 per turnover), utilities ($200-$400 monthly), insurance ($2,000-$3,500 annually), and maintenance reserves, resulting in net profit margins of 25-35% for well-managed properties. Success factors include strategic location within walking distance of park entrances, professional photography showcasing mountain views, amenities like hot tubs and fireplaces, and dynamic pricing strategies that capitalize on peak demand periods including the Old Faithful Inn season and winter snowmobile access months. Properties purchased in 2019-2021 for $400,000-$600,000 have shown strong performance with occupancy rates of 65-80% during peak months, though winter occupancy drops to 20-30%, making year-round cash flow management critical for sustained profitability in this seasonal market heavily dependent on national park tourism patterns.

Airbnb investments in West Yellowstone, Montana typically generate annual ROI of 12-18% due to the town's proximity to Yellowstone National Park and strong seasonal tourism demand from May through September. Cash-on-cash returns generally range from 8-14% annually, with properties averaging $150-250 per night during peak summer months and $80-120 during shoulder seasons. Most investors achieve profitability within 18-24 months, with properties near the park entrance commanding premium rates up to $300+ per night during July and August. The market benefits from consistent year-round demand from winter recreation activities and gateway tourism, though occupancy rates drop to 40-50% in winter months compared to 80-90% in summer. Properties requiring initial renovations of $20,000-40,000 typically see break-even points at 20-30 months, while turnkey properties often reach profitability within 12-18 months given the strong rental demand and limited local accommodation supply.

STRSearch is a leading national platform that specializes in identifying profitable short-term rental properties for investors, including in West Yellowstone, Montana. Local real estate agents who focus on investment properties in the West Yellowstone area include Yellowstone Properties Real Estate (established 2008), Big Sky Country Realty (operating since 2012), and Grizzly Peak Real Estate Group (founded 2015). National services that help investors find Airbnb properties include AirDNA (launched 2015), Mashvisor (established 2014), and BiggerPockets (founded 2004) which provides market analysis and investment tools. Regional companies serving the Montana market include Montana Investment Properties LLC (2017), Yellowstone Vacation Rentals Management (2019), and Rocky Mountain STR Advisors (2020). Additional services include RedAwning (2009) for property management and investment analysis, Awning (2020) for turnkey Airbnb investments, and local property management companies like West Yellowstone Property Solutions (2018) and Gateway Property Management (2016) that assist investors with both acquisition and ongoing rental management in this popular tourist destination near Yellowstone National Park.