Madison draws visitors all year for Badger games, graduations, the Capitol and Farmers' Market on the Square. But the city's own rules make most investor-owned Airbnbs inside city limits a non-starter, so the real STR opportunity for Madison investors is usually an hour or less up the road.
In short: LendingStreet finances short-term rentals for Madison-area investors with DSCR loans that can qualify on projected short-term rental revenue on some programs, with no W-2s or tax returns. The catch is local: the City of Madison generally allows tourist rooming houses only in the operator's primary residence, so investor STRs usually make sense in places like Wisconsin Dells, Lake Delton, Baraboo or lake towns where nightly rentals are permitted. Loans start at $150,000 with a 620 minimum credit score.
Madison regulates short-term rentals as tourist rooming houses. Under the city's zoning rules, a tourist rooming house generally has to be the operator's primary residence, and stays when the host is away are capped. A non-owner-occupied house bought only for Airbnb guests usually does not fit, and our investor loans are business-purpose loans on non-owner-occupied property.
Rules change, and some downtown condo buildings and HOAs add their own bans. Before you underwrite any Madison property on nightly income, confirm the current ordinance with the city's zoning office and read the association documents.
The same caution applies to suburbs around Madison. Middleton, Fitchburg, Sun Prairie, Verona and Monona each write their own rules, and some limit or prohibit nightly rentals in residential areas. Wisconsin state law limits how far local governments can restrict rentals of seven days or longer, but shorter stays can be regulated, so a weekly-rental model can look different from a nightly one. Get the answer in writing from the municipality before you rely on it.
Most Madison investors who want nightly income look north and west. Wisconsin Dells and Lake Delton are the state's best-known family vacation market, built around waterparks and the Wisconsin River. Baraboo and the Devil's Lake area pull hikers, and Spring Green draws summer theater crowds. Further out, Lake Geneva and Door County are established second-home markets.
Each town, village or county sets its own permit, inspection and room tax rules, and Wisconsin requires a tourist rooming house license, typically through the state or a local health department. Check every layer before you make an offer.
| Area | Main draw | Season | Check before buying |
|---|---|---|---|
| Wisconsin Dells / Lake Delton | Waterparks, river tours | Summer peak, winter waterpark weekends | Village or city STR rules, room tax |
| Baraboo / Devil's Lake | State park, hiking | Spring through fall | County zoning, septic and well |
| Spring Green area | Theater, river | Summer | Town zoning, license |
| Lake Geneva area | Lake homes | Strong summer | City and HOA limits |
| Madison city | Events, UW | Year-round | Primary-residence rule |
Wisconsin STR revenue is lumpy. A Dells cabin can book most summer nights and then sit quieter from November to March outside holiday and waterpark weekends. Lake properties lean even harder on June through August.
That is why lenders look at annual projected revenue, not your best month. If you are using a third-party revenue projection, make sure it reflects the property's real bedroom count, amenities and location, and budget for winter heating, snow removal and higher cleaning costs in peak months.
Event weekends help in Madison's orbit too. Badger home games, UW graduation in May and big concerts fill rooms across south-central Wisconsin, but they are a handful of nights a year and should not carry the whole projection.
This example is illustrative and not a quote. An investor buys a three-bedroom home near Lake Delton for $415,000 in an area where nightly rentals are allowed. A revenue projection estimates $46,800 a year, or about $3,900 a month.
At 75% LTV the loan is $311,250. Estimated principal and interest is about $2,230, taxes are budgeted at $610 a month and STR insurance at $240, for a total payment of about $3,080. Projected revenue covers that payment at about 1.27x. Cleaning, supplies, platform fees and utilities are on top of this, so plan for them separately.
| Item | Amount |
|---|---|
| Purchase price | $415,000 |
| Loan at 75% LTV | $311,250 |
| Estimated principal and interest | $2,230 |
| Taxes and STR insurance | $850 |
| Total monthly payment | $3,080 |
| Projected monthly revenue | $3,900 |
| DSCR on projected revenue | About 1.27x |
Wisconsin STR operators generally collect state and county sales tax on stays under 30 days, plus any municipal room tax. Some platforms collect part of this for you, but not always all of it, so confirm with the Wisconsin Department of Revenue and the local municipality.
Property taxes are another line to watch. Wisconsin taxes are relatively high, and resort-area assessments can jump after a sale. Budget on the expected post-purchase tax bill, not the seller's.
If you live in your Madison home and rent a room or rent it while away under the city's rules, that is owner-occupied use, which we do not finance. If you have moved out and the home now rents to a 12-month tenant, a standard DSCR loan on the long-term lease may be the better fit. Madison's long-term rental demand, driven by UW-Madison, state government and Epic in nearby Verona, is steady.
Our STR DSCR program uses the same basics as our long-term DSCR loans: a minimum 620 credit score, LLC borrowers allowed, 30-year terms available, purchase up to 80% LTV and cash-out up to 75% LTV, with max leverage varying by program. Some programs qualify on projected short-term revenue; others use the property's booking history. If your projection comes in lower than expected, read our guide on low projections.
Send the property address, price, projected revenue and the local permit status through the form below, or call (877) 298-1001. We will run the numbers on annual revenue and tell you plainly whether the property fits. If the projected income falls short, we can also show what the same property would need as a long-term rental.
Generally not. Madison limits tourist rooming houses to the operator's primary residence. Confirm the current ordinance with the city before buying.
Common choices are Wisconsin Dells, Lake Delton, Baraboo and the Devil's Lake area, Spring Green and lake towns further out. Each has its own rules.
On some programs, yes. A third-party revenue projection can stand in for a long-term lease, and lenders look at the annual figure.
Wisconsin generally requires a tourist rooming house license, and many municipalities add their own permit and room tax. Check with the state and the local government.
Lenders use annual projected revenue, so slow months are averaged in. A property that only works in July is a risky file.
Yes. Our STR refinance program can use booking history, with cash-out up to 75% LTV depending on the program.
No. Our investor loans are business-purpose loans on non-owner-occupied property.
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