October 8, 2024
Defined as a temporary abode, a short-term rental in Minneapolis encompasses various properties, ranging from standalone homes to portions within existing residences. This definition, as outlined by the Minnesota Department of Revenue, lays the foundation for understanding the scope of the STR market in the city.
However, aspiring investors eager to capitalize on the burgeoning short-term rental industry might encounter limitations unique to Minneapolis. Unlike some regions, where investors can amass multiple vacation rental properties, Minneapolis regulations restrict investors to a single STR property. This restriction, enforced by local ordinances, potentially constrains investment opportunities compared to more liberal locales.
Navigating the regulatory landscape further, prospective STR hosts must also consider zoning restrictions. Fortunately, Minneapolis' zoning regulations, while present, offer a relatively accommodating environment for short-term rentals. As long as the STR operates within a residential zone and holds a valid hotel license, it can flourish within the city's boundaries.
Yet, amidst these regulatory considerations, Minneapolis extends a welcoming hand to investors aiming to operate their Airbnb properties as a bona fide business entity. Whether as a limited company or another business structure, investors can legally manage their STRs as a business endeavor, provided they adhere to all other stipulated criteria. This flexibility, elucidated by legal experts, underscores Minneapolis' embrace of entrepreneurial ventures within its STR ecosystem.
Can investors in Minneapolis, MN, turn accessory dwelling units (ADUs), duplexes, and multifamily homes into vacation rentals? Yes, they can. Properties with additional accessory dwelling units have the option to rent out the extra space as an Airbnb vacation rental in Minneapolis.
However, there's a catch: investors are still limited to owning just one additional vacation rental property alongside their primary residence. It's important to note that short-term and regular rentals must be registered separately according to Minneapolis regulations.
What does it take to obtain a vacation rental license in Minneapolis? Here's what you need:
What are the financial implications of obtaining a vacation rental license in Minneapolis, MN? Initially, the license itself costs approximately $50.
However, there are additional expenses to consider. For instance, if the property was previously owner-occupied, there's a fee of $1000 for a property conversion inspection. Additionally, there may be supplemental fees and administrative charges, among others, depending on the specific circumstances.
These costs should be factored into the overall budget for operating a vacation rental in Minneapolis.
Source: City of Minneapolis Official Website
In Minneapolis, short-term rentals are limited to hosting no more than ten people at any given time, irrespective of the property's size.
Additionally, for multi-unit properties, no more than 10% of units can be designated for short-term rental use.
As part of the short-term rental (STR) application process, an inspection is mandatory. Some of the key physical and structural requirements include (but are not limited to):
Should a property be managed by a responsible agent rather than the owner directly, this information must be provided during the registration process. Essential details to be included are the rental's registration number, emergency contact information, street address, floor plans, and information regarding the city’s C11.
Vacation rental properties in Minneapolis necessitate liability insurance coverage of no less than $300,000. This coverage can be obtained through a dedicated short-term rental platform or a separate insurance provider.
License fees for vacation rentals are payable annually. However, renewals between September 1st and the end of February receive a 50% discount.
While guests are responsible for paying Minnesota Sales Tax and Local taxes directly through their reservations, hosts may still have additional tax obligations to Minneapolis. Hosts are required to track and fulfill these obligations directly.
