Airbnb Madison, Wisconsin: Market Data, Laws & Investor Guide

Madison, Wisconsin has emerged as a top destination for Airbnb investors in 2024, thanks to its thriving tourism industry, diverse attractions, and favorable short-term rental regulations. With guest bookings surging by an impressive 111% between July 2015 and June 2016, the demand for vacation rentals in Madison shows no signs of slowing down.

Situated in the heart of the Midwest, Madison offers a perfect blend of urban amenities and natural beauty that appeals to a wide range of travelers. From exploring the vibrant downtown scene to enjoying outdoor activities around the city's picturesque lakes, visitors to Madison are spoiled for choice. This strong and consistent demand for accommodations presents a lucrative opportunity for Airbnb hosts.

According to market data, Airbnb hosts in Madison can expect to earn an average annual revenue of $67,300, with an average daily rate of $279.50 and an impressive occupancy rate of 66%. These figures demonstrate the potential for significant returns on investment in the Madison short-term rental market.

Furthermore, Madison's regulatory environment is relatively friendly towards Airbnb hosts compared to other cities. While there are some requirements to navigate, such as obtaining a tourist rooming house license and complying with zoning regulations, the city has not implemented overly restrictive measures that would hinder the growth of the short-term rental industry.

In this comprehensive guide, we'll dive into the key aspects of starting a successful Airbnb business in Madison, Wisconsin. From understanding the local regulations to identifying the best neighborhoods for investment, we'll provide you with the insights and strategies needed to thrive in this exciting market. Let's get started!

Madison Short-Term Rental Market Analysis

The Madison short-term rental market has experienced significant growth in recent years, driven by a thriving tourism industry and a strong demand for alternative accommodations. In this section, we'll take a closer look at the key metrics and trends shaping the Airbnb market in Madison, Wisconsin.

Madison Airbnb Occupancy Rate

• According to data from Airdna, the average occupancy rate for Airbnb properties in Madison was 66% in 2024, up from 62% in 2023 and 58% in 2022.
• Mashvisor reports that the occupancy rate for short-term rentals in Madison reached 68% in the first quarter of 2024, a 5% increase from the same period in 2023.

Madison Airbnb Nightly Rate

1. Airdna data shows that the average daily rate for Airbnb properties in Madison was $279.50 in 2024, a 4% increase from $268 in 2023 and a 9% increase from $256 in 2022.
2. According to Mashvisor, the average nightly rate for short-term rentals in Madison was $285 in the first quarter of 2024, up from $275 in the same period in 2023.

Madison Airbnb Seasonality

Madison experiences a relatively stable demand for short-term rentals throughout the year, with peak seasons in the summer months (June to August) and during major events like the Wisconsin Film Festival in April and the Art Fair on the Square in July. The city attracts a mix of leisure travelers, business travelers, and visitors attending events at the University of Wisconsin-Madison, ensuring a consistent flow of guests for Airbnb hosts.

Madison, Wisconsin Short-Term Rental Growth Rate

1. Madison's population grew by 6.2% between 2020 and 2024, reaching 269,840 residents.
2. According to data from the Greater Madison Convention & Visitors Bureau, the city welcomed over 2.5 million visitors in 2024, a 15% increase from 2023.
3. Dane County Regional Airport reported a 12% increase in passenger traffic in 2024 compared to the previous year, indicating strong growth in the tourism sector.

Madison, Wisconsin Key Local Events and Festivals

1. Wisconsin Film Festival (April)
2. Art Fair on the Square (July)
3. Dane County Farmers' Market (April to November)
4. Ironman Wisconsin (September)
5. Madison Marathon (November)

Madison Mid-Term Rental Market

Madison's mid-term rental market, which typically involves stays of 30 days or longer, has seen steady growth in recent years. According to discussions on Airbnb host forums and local rental threads, many guests in Madison seek mid-term rentals for reasons such as temporary work assignments, extended vacations, or relocation.

Hosts report that the average booking duration for mid-term rentals in Madison ranges from 1 to 3 months, with some guests staying for up to 6 months or longer. The demand for mid-term rentals is particularly strong during the summer months and around the start of the academic year at the University of Wisconsin-Madison.

Best Neighborhoods in Madison for an Airbnb Business

When searching for the ideal location to start an Airbnb business in Madison, hosts should consider factors such as proximity to popular attractions, up-and-coming areas with growing demand, and established tourist hotspots. By analyzing data from reputable sources like AirDNA and Mashvisor, along with local knowledge, we've identified the top five neighborhoods in Madison for Airbnb investment.

1. Downtown Madison

As the heart of the city, Downtown Madison offers unbeatable access to popular attractions, restaurants, and nightlife. This area is perfect for hosts looking to cater to both leisure and business travelers.

1. Average Occupancy Rate: 72%
2. Average Daily Rate: $189
3. Airbnb Seasonality: High demand year-round, with peaks during summer and fall
4. Estimated Annual Revenue: $50,000

According to Zillow data from 2024, the median home value in Downtown Madison is $450,000. For the best return on investment, consider investing in a one or two-bedroom apartment, as these are in high demand among solo travelers and couples.

2. Marquette Neighborhood

The Marquette Neighborhood, located just east of downtown, has emerged as a top choice for Airbnb investors due to its affordability and strong rental demand. This vibrant area offers a mix of locally-owned shops, restaurants, and entertainment venues.

1. Average Occupancy Rate: 68%
2. Average Daily Rate: $165
3. Airbnb Seasonality: Steady demand throughout the year, with slight increases during summer months
4. Estimated Annual Revenue: $41,000

The median home value in the Marquette Neighborhood is $380,000 (Zillow, 2024). Two and three-bedroom properties provide the best balance between investment cost and rental income potential.

3. Willy Street Neighborhood

Known for its eclectic charm and thriving food scene, the Willy Street Neighborhood attracts a diverse mix of travelers seeking an authentic Madison experience. This area is perfect for hosts looking to offer unique, character-filled accommodations.

1. Average Occupancy Rate: 65%
2. Average Daily Rate: $150
3. Airbnb Seasonality: Consistent demand year-round, with slight dips during winter months
4. Estimated Annual Revenue: $35,600

The median home value in the Willy Street Neighborhood stands at $400,000 (Zillow, 2024). Investing in a two or three-bedroom property offers the best potential for maximizing rental income.

4. Monroe Street

Nestled in the heart of Madison, the Monroe Street neighborhood offers a perfect blend of urban convenience and small-town charm. This area boasts an unbeatable location, with easy access to downtown and the University of Wisconsin-Madison campus.

1. Average Occupancy Rate: 59%
2. Average Daily Rate: $278
3. Airbnb Seasonality: High demand during academic year, with peaks in fall and spring (Mashvisor, 2024)
4. Estimated Annual Revenue: $59,900

The typical home value in the Dudgeon-Monroe neighborhood, which encompasses Monroe Street, is $530,743 (Zillow, 2024). One and two-bedroom properties are ideal for targeting solo travelers and couples visiting the university.

5. Regent Neighborhood

The Regent Neighborhood, located just west of the UW-Madison campus, offers a prime location for Airbnb hosts looking to cater to university-related visitors. This area features a mix of residential streets and vibrant commercial corridors.

1. Average Occupancy Rate: 62%
2. Average Daily Rate: $160
3. Airbnb Seasonality: Strong demand during the academic year, with lulls during summer months
4. Estimated Annual Revenue: $36,200

The median home value in the Regent Neighborhood is $450,000 (Zillow, 2024). Investing in a two or three-bedroom property provides the flexibility to accommodate families and groups visiting the university.

By carefully considering factors like location, rental demand, and property type, Airbnb hosts can maximize their chances of success in Madison's thriving short-term rental market. Whether you choose to invest in the bustling downtown area or opt for a more residential neighborhood near the university, these top five neighborhoods offer excellent potential for building a profitable Airbnb business in Madison.

Best Madison Investment Property Types and Maximizing Your STR Revenue

Choosing the right investment property and incorporating in-demand amenities are crucial factors in maximizing your short-term rental revenue in Madison. In this section, we'll explore the best property types for Airbnb investment in the city and provide insights on how to optimize your listing for success.

Best Real Estate Property Investment in Madison

Based on recent trends and data from the last few years, the following property types have proven to be the most popular and profitable for short-term rental use in Madison:

Single-Family Homes: Average Property Price: $400,000

Potential Annual Revenue:

• 2-bedroom: $45,000
• 3-bedroom: $60,000
• 4-bedroom: $75,000

Condominiums: Average Property Price: $300,000

Potential Annual Revenue:

• Studio: $30,000
• 1-bedroom: $40,000
• 2-bedroom: $55,000

Townhouses: Average Property Price: $350,000

Potential Annual Revenue:

• 2-bedroom: $50,000
• 3-bedroom: $65,000

Apartments: Average Property Price: $250,000

Potential Annual Revenue:

• Studio: $28,000
• 1-bedroom: $38,000
• 2-bedroom: $50,000

Best Airbnb Amenities in Madison, Wisconsin

By analyzing the top-performing Airbnb listings in Madison, we've identified the following amenities and features that contribute to their success:

• Self Check-In: Listings that offer self check-in options, such as lockboxes or smart locks, tend to perform better as they provide guests with flexibility and convenience.
• Unique Decor: Properties with distinctive, stylish decor that reflects the character of Madison tend to attract more bookings and command higher nightly rates.
• Outdoor Space: Listings with access to private outdoor spaces, such as balconies, patios, or backyards, are highly sought-after by guests looking to enjoy Madison's beautiful summers.
• Fully-Equipped Kitchen: Properties with well-equipped kitchens, including modern appliances, cooking essentials, and dining ware, are popular among guests who prefer to cook their own meals.
• High-Speed Internet: With the rise of remote work and online learning, listings with reliable, high-speed internet access have become increasingly important to guests.
• Proximity to Attractions: Listings that highlight their proximity to popular Madison attractions, such as the State Capitol, University of Wisconsin-Madison, and the Dane County Farmers' Market, tend to perform well.
• Local Recommendations: Hosts who provide personalized recommendations for local restaurants, activities, and hidden gems can differentiate their listings and create a more memorable guest experience.

By incorporating these in-demand amenities and features into your Airbnb listing, you can maximize your short-term rental revenue and attract a steady stream of bookings in Madison's competitive market. Remember to regularly review and update your listing based on guest feedback and evolving market trends to ensure your property remains a top choice for travelers visiting the city.

Understanding Madison Short-Term Rental Regulations

Madison, Wisconsin has seen a significant growth in short-term rentals through platforms like Airbnb and VRBO. However, the city has implemented regulations to ensure the safe operation of STRs while minimizing negative impacts on neighborhoods.

To legally operate an STR in Madison, hosts must obtain a Tourist Rooming House license from Public Health Madison & Dane County (PHMDC). This license requires a pre-inspection, annual health inspections, and a $535 fee. Hosts must also acquire a Wisconsin Seller's Permit for sales tax collection and register with the City Treasurer for room tax collection.

Madison imposes several key regulations on STRs, including:

• The STR must be the host's primary residence
• In multi-unit buildings, STRs are only allowed in the unit the host lives in
• Off-site hosts are limited to 30 rental days per licensing year
• Tenants must have written landlord permission to operate an STR
• STRs must meet all building code and zoning requirements

The city actively enforces STR regulations, with fines for violations ranging from hundreds to thousands of dollars. However, opinions among local hosts vary, with some finding the rules manageable and others considering them overly restrictive.

To start an STR business in Madison, hosts should confirm their property's eligibility, obtain necessary permits and licenses, prepare their space according to health and safety standards, and create listings on booking platforms like Airbnb and VRBO. The City of Madison Zoning Department and PHMDC are available to answer questions about regulations and licensing.

Read our full STR regulations guide for more detailed information about Madison’s short-term rental regulations, including insights from local hosts and a closer look at other policies.

Keys to Success as a Madison Airbnb Host

Becoming a successful Airbnb host in Madison requires a combination of strategic planning, attention to detail, and a commitment to providing exceptional guest experiences. In this section, we'll explore the key factors that contribute to the success of top-performing Airbnb listings in the city and provide actionable insights for new hosts looking to maximize their revenue potential.

Popular Design Themes in Madison

By analyzing the most in-demand and best-performing Airbnb listings in Madison, we've identified the following common design themes and layouts that contribute to their success:

• Rustic Charm: Many top-performing listings in Madison feature a rustic, cabin-inspired aesthetic, incorporating natural wood elements, cozy textiles, and vintage decor pieces. This design theme resonates with guests seeking a quintessential Midwestern experience.
• Modern Minimalism: Sleek, modern spaces with clean lines, neutral color palettes, and minimalist decor are also popular among Madison Airbnb guests. These listings often feature high-end finishes, such as quartz countertops and stainless steel appliances, and prioritize functionality over clutter.
• Eclectic Artsy: Listings that showcase Madison's vibrant arts scene, with colorful, eclectic decor, local artwork, and unique architectural features, tend to perform well. These spaces often have a bohemian or mid-century modern vibe that appeals to creative-minded travelers.
• University-Inspired: Given Madison's strong ties to the University of Wisconsin-Madison, some successful listings incorporate subtle nods to the university, such as vintage campus photographs, Badgers memorabilia, or a red and white color scheme.

To implement these design themes, new hosts should focus on creating a cohesive, well-curated space that reflects the unique character of Madison. Incorporate high-quality furnishings, thoughtful decor elements, and modern amenities to ensure a comfortable and memorable stay for guests.

How to Attract More Madison Customers

To effectively market your Airbnb listing and attract more bookings in Madison, consider the following tips and strategies:

Highlight Local Attractions: Emphasize your listing's proximity to popular Madison attractions, such as the State Capitol, Monona Terrace, and the University of Wisconsin-Madison campus. Use your listing description and photos to showcase how easily guests can access these destinations.

Leverage Seasonal Events: Madison hosts a variety of popular seasonal events, such as the Dane County Farmers' Market, Art Fair on the Square, and the Wisconsin Film Festival. Promote your listing's availability during these events and consider offering special packages or discounts to attract event attendees.

Offer Local Recommendations: Share your insider knowledge of Madison with guests by providing personalized recommendations for restaurants, bars, shops, and activities in your listing description or guest welcome book. This added value can set your listing apart and encourage positive reviews.

Invest in Professional Photography: High-quality, professional photos are crucial for capturing the attention of potential guests. Invest in a professional photographer to showcase your space in the best possible light and highlight its unique features and amenities.

Respond Promptly to Inquiries: Maintain a high response rate by promptly answering guest inquiries and pre-booking questions. Airbnb's algorithm favors responsive hosts, and quick, helpful responses can increase the likelihood of securing bookings.

Potential Challenges and Guidelines to Success for Madison Airbnb Hosts

While Madison offers a promising market for Airbnb hosts, there are potential challenges to be aware of and guidelines to follow for success:

• Regulatory Compliance: As discussed in the previous section, Madison has specific regulations for short-term rentals, including licensing requirements, zoning restrictions, and occupancy limits. Failure to comply with these regulations can result in fines and legal issues. Successful hosts stay informed about local laws and ensure their listings are fully compliant.
• Seasonality: Madison experiences seasonal fluctuations in tourism, with higher demand during the summer months and university events. Hosts should anticipate these fluctuations and adjust their pricing and marketing strategies accordingly. Consider offering discounts during slower periods to maintain occupancy rates.
• Competition: With the growing popularity of Airbnb in Madison, hosts face increasing competition for bookings. To stand out, successful hosts focus on providing exceptional guest experiences, maintaining high cleanliness standards, and offering unique amenities or services that set their listings apart.
• Neighbor Relations: Some Madison residents have expressed concerns about the impact of short-term rentals on neighborhood quality of life. Successful hosts are proactive in communicating with neighbors, setting clear house rules for guests, and ensuring their listings do not disrupt the surrounding community.

By understanding these challenges and adhering to guidelines for success, Airbnb hosts in Madison can navigate the market effectively and build thriving short-term rental businesses. Staying informed, adaptable, and guest-focused are key to maximizing revenue potential and creating memorable experiences for travelers visiting this vibrant Midwestern city.

Using BNBCalc to Find Profitable Properties in Madison, Wisconsin

Starting a short-term rental business in Madison can be a lucrative venture, but it's essential to find the right property to maximize your return on investment. BNBCalc is a powerful tool that can help aspiring business owners navigate the process of finding and analyzing profitable properties in the city. In this section, we'll walk you through the steps to use BNBCalc effectively and make informed decisions when investing in a short-term rental property.

1. Analyze Properties Using BNBCalc

To begin your search for a profitable property, input the address of the potential investment into BNBCalc's search bar. The tool will provide you with a detailed analysis of the property's estimated revenue, occupancy rates, and expenses based on historical data and market trends. BNBCalc also offers insights into the property's cash flow, cap rate, and return on investment, helping you determine its overall profitability.

2. Benchmark Comparable Rentals

BNBCalc allows you to compare your potential investment property to other nearby rentals in the area. By analyzing the performance of similar listings, you can gain valuable insights into pricing strategies, amenities, and guest preferences. Use this information to optimize your listing and ensure that you're fetching top dollar for your short-term rental.

3. Determine The Right Price and Property Size

With BNBCalc's help, you can determine the ideal number of bedrooms, bathrooms, and purchase price to maximize your revenue potential. The tool provides a breakdown of estimated revenue based on different property configurations, allowing you to make informed decisions about the size and layout of your investment property. By optimizing these factors, you can ensure that your short-term rental is well-positioned to generate maximum returns.

4. Make an Offer

Once you've identified a property that meets your investment criteria, it's time to make an offer. BNBCalc's analysis will help you determine a fair purchase price based on the property's projected returns. To streamline the financing process, consider working with BNBCalc's partnered STR lender, such as Brian Bockholdt at Alliant Credit Union, to secure the lowest interest rates and get prequalified for a mortgage.

5. Use Our Tax Calculator

BNBCalc's tax calculator is a valuable tool for understanding the potential tax deductions associated with your short-term rental investment. By inputting your property's details, you can estimate the benefits of bonus depreciation and other tax incentives, helping you optimize your investment strategy and maximize your overall returns.

6. Come Up With a Buy Box

When creating a buy box for your Madison short-term rental investment, focus on properties that exhibit the following qualities:

• Location: Prioritize properties in popular neighborhoods, such as Downtown Madison, Marquette, and Willy Street, that offer easy access to attractions, restaurants, and public transportation.
• Property Type: Consider investing in single-family homes, condos, or townhouses with 2-3 bedrooms, as these tend to generate the highest returns in Madison's market.
• Amenities: Look for properties with in-demand amenities, such as outdoor spaces, fully-equipped kitchens, and unique design elements that cater to the preferences of Madison's Airbnb guests.
• Price Point: Focus on properties that align with your budget and offer a strong return on investment based on BNBCalc's analysis, typically in the $300,000 to $500,000 range for Madison.

By using BNBCalc to analyze properties, benchmark comparable rentals, determine the right price and size, make informed offers, and understand tax benefits, aspiring business owners can confidently navigate the process of finding and investing in profitable short-term rental properties in Madison, Wisconsin.

Ready to start your Airbnb journey in Madison? Use BNBCalc to analyze potential properties and make informed investment decisions. Our powerful tool provides comprehensive data to help you maximize your profits. Check out this pre-analyzed Madison Airbnb opportunity and see how BNBCalc can help you succeed in the short-term rental market. Visit BNBCalc.com today and take the first step towards building your Airbnb business.