Minneapolis lets investors run short-term rentals, but only with a city license and the taxes that come with it. The bigger challenge is the calendar: summer, the State Fair and stadium events fill nights, and January does not.
In short: LendingStreet finances short-term rentals in Minneapolis and the wider Twin Cities with DSCR loans that can qualify on projected short-term rental revenue on some programs, with no W-2s or tax returns and LLC borrowers allowed. Loans start at $150,000, purchases go up to 80% LTV, and the standard minimum DSCR is 1.0x. Before you buy, confirm the property can be licensed by the city and allowed by any HOA or condo association, and underwrite the slow winter months honestly.
Minneapolis regulates short-term rentals through its licensing and regulatory services department. Hosts generally must obtain a city short-term rental license, show the license number on listings, and meet safety and occupancy rules. The rules have been revised more than once, so read the current ordinance and confirm with the city before you write an offer.
St. Paul has its own short-term rental registration, and suburbs such as Bloomington, Edina, Richfield and Minnetonka each set their own rules. Some suburbs restrict or prohibit non-owner-occupied nightly rentals in single-family zones. Condo buildings downtown, in the North Loop and along the riverfront often ban rentals under 30 days in their bylaws, even where the city would allow them.
Our lending decision follows the local answer: if the property cannot legally operate as a short-term rental, we underwrite it on a long-term lease instead, or not at all.
Nightly demand in Minneapolis is event-driven. Vikings games and concerts at U.S. Bank Stadium, Twins games at Target Field, Timberwolves and Lynx games at Target Center, conventions at the Minneapolis Convention Center and the Minnesota State Fair in late August all push weekend rates up. Medical visitors to the University of Minnesota and Hennepin Healthcare add midweek stays.
Investors often look in Northeast Minneapolis, Longfellow, Nokomis, Linden Hills and the neighborhoods around the Chain of Lakes, where guests want walkable streets and quick access to downtown and the airport. In St. Paul, Highland Park and Macalester-Groveland see demand from family visits and college events.
Many Minnesota investors who want a pure vacation rental look north instead of buying in the city. The Brainerd Lakes area, Alexandria, the Detroit Lakes region and the North Shore of Lake Superior all draw summer cabin guests, and some see winter demand from snowmobiling, ice fishing and skiing.
Rules up north are set by cities, counties and sometimes townships, and some are strict. Duluth, for example, has limited the number of vacation rental permits in parts of the city. Check the county and township, any lake association covenants, and septic capacity limits before you rely on nightly income. Our Minnesota short-term rental page covers the statewide picture.
Short-term stays in Minnesota are subject to state sales tax and, in Minneapolis and many other cities, local lodging taxes. Platforms such as Airbnb collect and remit some of these taxes automatically, but not always every local tax, and direct bookings are your responsibility. Ask a Minnesota tax adviser which taxes apply to your listing.
Licensing fees, required inspections and smoke and carbon monoxide detector rules add small but real costs. None of these show up in the DSCR ratio itself, but they belong in your own cash flow plan.
On some programs, the loan can qualify on a third-party short-term rental revenue projection for the address instead of a 12-month lease. The ratio compares that projected monthly revenue to the full monthly payment: principal and interest, property taxes, insurance and any HOA dues.
Because Minneapolis winters pull down occupancy, it pays to test the deal at a lower revenue figure as well. If the property only clears 1.0x at the full projection, a slow season could leave you covering the gap. Programs may also apply their own adjustments to projected revenue, so ask how your file will be read. If a projection comes in lower than you expected, see our guide to low revenue projections.
This example is illustrative and not a quote. An investor buys a single-family home in Longfellow for $425,000 and plans to run it as a licensed short-term rental. A third-party projection estimates $48,000 a year in revenue, or $4,000 a month.
At 75% LTV the loan is $318,750. Estimated principal and interest is about $2,174. Non-homestead property taxes are budgeted at $500 a month and insurance at $150, for a total payment of about $2,824. DSCR on the full projection is about 1.42x. If revenue comes in 20% lower, at $3,200 a month, DSCR is still about 1.13x.
| Item | Full projection | Projection less 20% |
|---|---|---|
| Purchase price | $425,000 | $425,000 |
| Loan amount (75% LTV) | $318,750 | $318,750 |
| Estimated principal and interest | $2,174 | $2,174 |
| Property taxes | $500 | $500 |
| Insurance | $150 | $150 |
| Total monthly payment | $2,824 | $2,824 |
| Monthly revenue used | $4,000 | $3,200 |
| DSCR | 1.42x | 1.13x |
Hennepin and Ramsey counties assess property every year, and investment property is taxed at non-homestead class rates, which are higher than the homestead rates a seller who lived in the home may have paid. Use the non-homestead figure when you run your numbers.
Winter also drives operating costs: heat, snow removal, ice dam prevention and furnace maintenance. Minneapolis requires sidewalks to be cleared after snowfall, and guests expect a shoveled walk and driveway. Cleaning, supplies and platform fees are not in the DSCR ratio, but they decide whether the property actually makes money.
Send the address, price and your plan, and the team will tell you how the file is likely to be read. Have these items ready.
Our investor loans are business-purpose loans on non-owner-occupied property. We finance short-term rentals across the Twin Cities and Minnesota lake country, as well as long-term rentals, duplexes and portfolios. Call (877) 298-1001 or use the form below to get a quote.
The city licenses short-term rentals and has revised its rules over time. Confirm current licensing requirements, zoning and any building or HOA restrictions for the exact address before you buy.
On some programs, yes. The loan can qualify on a third-party projection of short-term rental revenue instead of a long-term lease, as long as the property can legally operate as a nightly rental.
Purchases go up to 80% LTV on DSCR programs, though short-term rental files and larger balances can carry lower maximums depending on the program.
Often not. Many condo associations prohibit stays under 30 days. Read the bylaws and rules before you rely on nightly income.
We can finance vacation rentals outside the metro. Local permits, township rules, septic limits and lake association covenants decide whether a cabin can operate, so check them first.
The projection reflects seasonality, but it helps to test the deal at a lower revenue figure. A property that only clears 1.0x at the full projection leaves little room for a slow January.
Yes. Rate-and-term and cash-out refinances are available, and your actual operating history can support the revenue figure on some programs.
No. Our loans are business-purpose loans on non-owner-occupied investment property.
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