Before you turn that charming cabin or downtown condo into your Airbnb cash cow, let’s make sure it doesn’t become a regulatory nightmare. The world of short-term rentals (STRs) in Minnesota is changing faster than you can say “vacation rental income,” and knowing the latest rules can save you money, time, and yes, a few stress-induced forehead wrinkles.
So whether you’re a seasoned investor, a first-time buyer eyeing that perfect lakeside property, or just STR-curious, here’s what you need to know in 2025.
1. Permit, Please: City-Level Registration Requirements
Some of Minnesota’s most popular STR markets have tightened the rules around registration.
- Minneapolis now requires all STR operators to register with the city. You must have either a homeshare license (renting part of your home) or a rental license for non-owner-occupied units. Penalties for noncompliance can include fines and removal from platforms like Airbnb.
- Duluth, a favorite among North Shore explorers, has zoning overlays and caps on the number of vacation rentals allowed per area. New permit applications are reviewed annually, and neighborhood feedback can influence approval.
Pro Tip: Just because the property next door is a rental doesn’t mean yours will be approved. Cities often have quota limits or spacing rules to prevent STR clustering.
2. HOAs: The Silent STR Killers
You found the perfect turnkey townhome, and the HOA even includes snow removal. Win-win, right? Maybe not.
Homeowners associations across Minnesota are cracking down on STRs. Many now include specific language in their bylaws prohibiting rentals under 30 days. And enforcement? Oh, they’re serious.
- Some HOAs require written approval before leasing your unit.
- Others impose hefty fines for unauthorized short-term stays.
Quick Scenario: Jenna bought a vacation home in Brainerd, dreaming of summer bookings. What she missed? The HOA’s updated rulebook that banned STRs six months earlier. Oops.
Pro Tip: Always request the most recent HOA rules in writing before making an offer.
3. Statewide Updates: Taxes, Insurance & Fire Codes
While Minnesota hasn’t passed a comprehensive state law for STRs (yet), 2025 could be the year that changes.
Here’s what’s on the table:
- Lodging taxes: The state is reviewing how lodging taxes are applied to STRs, particularly those booked through platforms like Airbnb and VRBO.
- Safety requirements: Fire extinguisher placement, smoke detector rules, and emergency exit signage may soon be standardized statewide.
- Insurance minimums: Lawmakers are considering baseline coverage requirements to protect both hosts and guests.
Pro Tip: STR platforms often offer basic coverage, but it may not meet future state mandates. Check with a local insurance agent familiar with STR policies.
4. Zoning and Local Nuances: Do Your Homework
Not all cities are alike. What flies in Ely might flop in Edina.
- Zoning ordinances define whether short-term rentals are allowed at all—and where.
- Some townships treat STRs as commercial activity and limit them to business zones.
- Rural counties may be more lenient, but they’re increasingly looking at safety and septic capacity as reasons to regulate.
Need an Example? A buyer in Stillwater purchased a historic home steps from downtown. Gorgeous? Yes. Zoned for STRs? Nope. He ended up converting it into a long-term rental instead.
Pro Tip: Search your city’s municipal code online, or better yet, talk to a local planner before purchasing.
So, What Does This Mean for Buyers in 2025?
In short: you need more than a down payment and a dream. STR investing in Minnesota requires due diligence and local insight.
But don’t let that scare you off. With the right team, including a lender who gets STRs, you can absolutely succeed.
At KTR Loans, we specialize in helping:
- Real estate investors finance their first (or next) short-term rental
- Buyers understand what local rules could impact their investment
- Minnesotans turn vacation homes into income-generating assets
Ready to Explore STR Financing Options in Minnesota?
Email Kyle at kyle@ktrloans.com to chat about your goals, zoning questions, or just to run a property by someone who’s seen it all.
You can also visit ktrloans.com to explore financing options, apply online, or browse our investor-friendly resources.
We’re here to make sure your STR journey starts with confidence—and no nasty surprises.
Sources:
- Minneapolis Department of Community Planning & Economic Development
- City of Duluth Planning Division
- Minnesota House of Representatives 2025 Legislative Agenda (STR section)
- Minnesota Realtors Association Policy Guide
- AirDNA and VRBO STR Policy Tracker
