How to Start an Airbnb Business in Indiana

Why Indiana Is a Top Market for Short-Term Rentals

Indiana isn’t on most investors’ shortlists, and that’s exactly why the margins are still strong. While operators flood into Nashville, Austin, and Denver, Indiana offers a combination of massive event-driven demand, affordable property costs, and a regulatory environment that doesn’t punish STR operators. The math here is straightforward and favorable.

Indianapolis anchors the state’s STR market with an event calendar that generates recurring demand spikes throughout the year. The Indianapolis 500 fills every available bed within 50 miles of the Motor Speedway each May. The NFL Combine, Big Ten Championship, NCAA tournament games, Gen Con (the largest tabletop gaming convention in North America with 70,000+ attendees), and a steady stream of conventions at the Indiana Convention Center create demand patterns that most cities can’t match. Indianapolis hosted over 28 million visitors in 2024, generating $6.2 billion in visitor spending.

Beyond Indianapolis, Indiana’s STR market extends to college towns (Bloomington, West Lafayette, South Bend), vacation areas (Brown County, Indiana Dunes), and smaller cities with surprisingly strong demand profiles. The state’s median home price is approximately $230,000 — among the lowest in the Midwest — which means your investment-to-revenue ratio is consistently favorable.

Rental arbitrage thrives in Indiana. Indianapolis lease rates for a two-bedroom apartment average $1,100 to $1,400, while monthly STR revenue from the same property runs $2,400 to $3,800. Bloomington offers similar spreads around the university. These margins give operators a path to profitability without any property ownership — just hustle, systems, and the right strategy.

Indiana Short-Term Rental Laws and Regulations

Indiana’s approach to STR regulation is decentralized — the state doesn’t impose heavy-handed rules, and most regulatory activity happens at the city level. This creates a patchwork that requires market-specific research but generally favors operators.

State-Level Requirements

Indiana requires all STR operators to register with the Indiana Department of Revenue for sales tax purposes. The state’s 7% sales tax applies to all short-term accommodations (rentals of fewer than 30 consecutive days). You’ll also need a standard Indiana business license, and setting up an LLC through the Indiana Secretary of State is recommended for liability protection.

Indiana passed House Enrolled Act 1035 in 2018, which created a statewide framework for short-term rentals. The law allows municipalities to require registration and adopt reasonable regulations related to health, safety, and nuisance issues, but it sets boundaries on how restrictive local rules can be. Crucially, the law prevents cities from imposing outright bans on STRs in residential zones.

All properties must meet Indiana building and fire safety codes — smoke detectors, carbon monoxide detectors, and fire extinguishers are standard requirements. Properties with pools must comply with the state’s pool safety regulations.

Key City Regulations

Indianapolis: Indiana’s capital requires STR operators to obtain a Short-Term Rental Certificate from the Department of Business and Neighborhood Services. The application involves a safety inspection, proof of insurance, and a $150 registration fee (renewed annually). Indianapolis allows both owner-occupied and non-owner-occupied STRs, though non-owner-occupied properties face a slightly more rigorous inspection process. The city collects a 6% Marion County innkeeper’s tax on short-term rentals, in addition to the 7% state sales tax. Total lodging tax in Indianapolis: 13%.

Bloomington: Home to Indiana University, Bloomington has embraced STRs as a way to accommodate surging demand during university events — football weekends, graduation, Little 500 (the famous bicycle race), and Parents’ Weekend. The city requires a business license and lodging tax registration. Bloomington collects a 5% county innkeeper’s tax. The city doesn’t impose STR-specific zoning restrictions, making it one of the more accessible Indiana markets for new operators. Demand is highly event-driven, with significant revenue concentration around the university calendar.

South Bend: The Notre Dame effect makes South Bend a compelling STR market. Fighting Irish home football games (typically seven per season) create extraordinary pricing power — ADRs of $400 to $1,500 per night within five miles of campus. The city requires a business license and collects a 5% county innkeeper’s tax. South Bend has been supportive of STRs as part of its broader economic development strategy, and permitting is relatively straightforward.

Brown County (Nashville, IN): This rural arts and nature community in south-central Indiana draws visitors to Brown County State Park, art galleries, and seasonal festivals. The county requires a business license and collects an innkeeper’s tax. Brown County is one of Indiana’s most established vacation rental markets — the tradition of renting cabins here predates Airbnb by decades. The regulatory environment is welcoming, and the county actively promotes its rental accommodations as part of its tourism marketing.

Recent Regulatory Changes (2025-2026)

Indianapolis updated its STR ordinance in 2025 to include a “responsible party” requirement — every non-owner-occupied STR must designate a local contact person who can respond to issues within 60 minutes. This addresses neighborhood concerns about absentee operators and unresponsive property managers. If you’re managing an Indianapolis property remotely, you need a local co-host or property manager who can fill this role.

Indiana’s state legislature considered a bill in early 2026 that would standardize innkeeper’s tax collection through platforms like Airbnb and VRBO statewide. As of early 2026, the bill is pending. If passed, it would simplify tax compliance significantly by having platforms collect and remit both state and local taxes automatically. Currently, the state sales tax is collected by platforms, but innkeeper’s taxes often require manual filing.

Tax Obligations for Indiana Airbnb Hosts

Indiana’s combined tax burden on STRs is moderate — higher than some Southern states but lower than most coastal markets. Understanding the two-layer structure prevents filing errors.

Layer one: Indiana’s 7% state sales tax applies to all short-term rental revenue. Airbnb and VRBO collect and remit this automatically.

Layer two: County innkeeper’s taxes vary by location. Marion County (Indianapolis) charges 6%. Monroe County (Bloomington) charges 5%. St. Joseph County (South Bend) charges 5%. Brown County charges 5%. These local taxes may or may not be collected automatically by platforms — verify with your county’s tax authority. If manual filing is required, it’s typically done monthly or quarterly.

Your total combined lodging tax rate in Indianapolis is 13% (7% state + 6% Marion County). In Bloomington: 12%. In South Bend: 12%. In Brown County: 12%. These rates are competitive with — and often lower than — hotel tax rates in the same areas.

Indiana state income tax applies to net rental profits at a flat rate of 3.05% (one of the lowest in the country). County income tax rates add another 1% to 3% depending on your county of residence. All standard business deductions apply: mortgage interest, lease payments, insurance, utilities, cleaning, supplies, depreciation, and property management expenses.

One tax advantage specific to Indiana: the state offers a Small Business Income Tax Credit for qualified small businesses, which may apply to STR operations depending on your structure and revenue level. Consult an Indiana CPA to determine eligibility — the credit can offset 5% to 10% of your state income tax liability.

Best Cities for Airbnb in Indiana

Indiana’s STR markets each have a distinctive character and demand profile. The state’s strength is the diversity of its opportunities — from event-driven urban markets to year-round vacation destinations.

Indianapolis

Indy is a convention and event city first, and everything about its STR market reflects that. The Indiana Convention Center, Lucas Oil Stadium (Colts and Big Ten Championship), Gainbridge Fieldhouse (Pacers and events), and the Indianapolis Motor Speedway create a demand calendar that produces reliably strong booking periods throughout the year.

The Indianapolis 500 is the crown jewel. During the week surrounding the race (late May), ADRs within 10 miles of the Speedway surge to $250 to $600+ per night. Gen Con (August) produces similar spikes in downtown properties. NFL Sundays, Big Ten football championship weekend, and NCAA tournament games create smaller but significant peaks.

Regular (non-event) ADRs in Indianapolis range from $90 to $180 for one- to three-bedroom properties. Annual occupancy averages 60% to 70%, with event weeks pushing to 90%+. Gross annual revenue: $28,000 to $52,000 for standard properties, with strategically located and well-managed units hitting $60,000+ by capturing every event premium.

The best locations are near downtown (convention center access), Speedway (Indy 500), and Broad Ripple/Mass Ave (dining and entertainment districts). For making money without owning property, Indianapolis offers strong arbitrage margins — the gap between lease rates and STR revenue is among the widest in the Midwest.

Bloomington

Indiana University drives Bloomington’s STR market with an intensity that surprises operators who haven’t experienced a Big Ten college town. Football Saturdays bring 50,000+ fans to Memorial Stadium in a city of 85,000. Little 500 (the bicycle race immortalized in “Breaking Away”) draws thousands. Graduation, Parents’ Weekend, and orientation weekends create additional surge opportunities.

Event ADRs hit $200 to $500 per night. Regular ADRs run $80 to $150. Annual occupancy: 52% to 64%. Gross annual revenue: $22,000 to $40,000. The seasonal pattern follows the academic calendar closely — summer months (June through mid-August) are the slowest period, while September through May provides steady demand supplemented by event surges.

Properties near campus, the downtown square, or the B-Line Trail perform best. The Bloomington guest is often a parent visiting their student, an alumni returning for events, or a prospective student family on a campus tour. Furnish accordingly — comfortable, clean, and warm beats trendy or hip in this market. One-bedroom and two-bedroom properties are the sweet spot for most Bloomington stays.

South Bend / Notre Dame Area

South Bend’s STR market is dominated by the University of Notre Dame in a way that’s even more concentrated than Bloomington. Notre Dame football home games (typically seven per season) create pricing power that few markets in the country can match — loyal Notre Dame fans pay premium rates without hesitation, and many book 6 to 12 months in advance.

Game-day ADRs within five miles of campus: $400 to $1,500 per night, depending on the opponent and property quality. A single Notre Dame home football game weekend can generate $800 to $4,000 in gross revenue. Seven home games means $5,600 to $28,000 from football alone. Regular (non-game) ADRs: $75 to $130. Annual occupancy: 45% to 58%. Gross annual revenue: $22,000 to $50,000, with the upper end requiring aggressive event pricing and strong off-season performance.

Properties within walking distance or a short drive of campus command the highest event premiums. The best South Bend strategy combines aggressive game-day pricing with steady mid-week rates targeting business travelers and Notre Dame visitors (prospective students, conference attendees). South Bend’s ongoing downtown revitalization is also creating non-university demand that’s slowly improving off-season occupancy.

Brown County

Brown County is Indiana’s year-round vacation market. Brown County State Park — the state’s largest and most visited — draws hikers, mountain bikers, and nature lovers. Nashville, Indiana (the county seat) is a quirky arts town with galleries, shops, and restaurants that attract weekend visitors from Indianapolis, Louisville, and Cincinnati.

ADRs run $130 to $280 for standard properties, with premium cabins (hot tub, fireplace, wooded seclusion) hitting $300 to $500. Peak season is October (fall foliage draws massive crowds) and weekends year-round. Annual occupancy: 52% to 65%. Gross annual revenue: $28,000 to $55,000.

Brown County rewards operators who invest in the cabin experience. Guests come here to disconnect — wood-burning fireplaces, hot tubs on private decks, screened porches with forest views, and game rooms for rainy days. The more immersive the nature experience, the higher the nightly rate and the stronger the reviews. Generic vacation rentals struggle to compete with properties that deliver a true Brown County retreat.

Indiana Dunes

Indiana Dunes National Park (elevated from a lakeshore to a national park in 2019) sits along Lake Michigan’s southern shore, approximately 50 miles from downtown Chicago. The park’s proximity to Chicago creates a demand base of millions of potential visitors, and national park designation has boosted awareness and attendance.

ADRs run $120 to $250, with lakefront or lake-view properties commanding $280 to $450+. The market is summer-dominant (June through September) with strong fall weekends. Annual occupancy: 48% to 60%. Gross annual revenue: $24,000 to $48,000. This market is still relatively undersupplied compared to demand, making it an emerging opportunity for operators who move quickly.

How Much Do Airbnbs Make in Indiana?

Indiana’s STR revenue varies dramatically based on how effectively operators capture event-driven demand. Here’s the breakdown across key markets.

*Upper ADR ranges reflect event pricing (Indy 500, Notre Dame football, IU events).

Event pricing discipline is what separates high-earning Indiana operators from average ones. An Indianapolis property that prices the Indy 500 weekend at $150 instead of $400 leaves thousands of dollars on the table in a single weekend. Use dynamic pricing tools and manually set minimum rates for known high-demand events. Build an event calendar for your market and program rate floors for every major event at least three months in advance.

How to Start Your Indiana Airbnb Business

Indiana’s accessible price points and strong demand fundamentals make it one of the best states for new STR operators. Here’s your launch path.

Step 1: Choose Your Demand Driver. Indianapolis for conventions and events. Bloomington for university-driven demand. South Bend for Notre Dame premium. Brown County for year-round vacation rentals. Indiana Dunes for summer lake tourism. Each market has a different risk profile and operational rhythm. Match your choice to your availability, location, and comfort with seasonality.

Step 2: Study the Event Calendar. Indiana’s STR profitability depends heavily on capturing event premiums. Before committing to any market, map out every significant event for the year — sporting events, conventions, festivals, university events, races. Calculate the additional revenue from event pricing versus baseline rates. In Indianapolis, event weekends alone can add $15,000 to $25,000 in annual revenue if priced correctly.

Step 3: Secure Your Property. For purchases, target locations near your market’s primary demand generators — the convention center in Indy, campuses in Bloomington and South Bend, state parks in Brown County. For rental arbitrage, Indianapolis and Bloomington offer the best lease-to-revenue ratios. Approach landlords with a professional proposal that emphasizes above-market rent, property care, and liability insurance. Many Indiana landlords have never heard of rental arbitrage, so expect to educate them on the model.

Step 4: Register and Comply. Register with the Indiana Department of Revenue for sales tax collection. Get your Short-Term Rental Certificate in Indianapolis (or equivalent permits in other cities). Set up your LLC and business bank account. Register for county innkeeper’s tax. This administrative stack takes about a week to complete if you handle everything concurrently.

Step 5: Furnish for Your Guest Profile. Indianapolis convention attendees want a clean, modern space with a workspace, fast WiFi, and proximity to downtown. Bloomington parents want a comfortable home base with extra towels and a kitchen. South Bend football fans want space to gather before and after the game. Brown County visitors want a rustic retreat with a hot tub. Every furnishing decision should answer: what does my specific guest need to have a five-star experience?

Step 6: Build Your Event Pricing Strategy. Use PriceLabs, Beyond Pricing, or Wheelhouse for baseline dynamic pricing. Then overlay manual event adjustments — set rate floors for the Indy 500, Gen Con, Big Ten Championship, and other major events at least 90 days in advance. Many guests book event travel months ahead, and they’re willing to pay premium rates. Set minimum-night requirements during major events (2 to 3 nights) to capture full event revenue rather than one-night stays. Your co-hosting partner can help manage turnovers during high-volume event weekends.

Step 7: Launch and Build Reviews Fast. List on Airbnb and VRBO simultaneously. Price 10% to 15% below comparable listings for your first 10 to 15 bookings to build review momentum. After reaching Superhost-eligible status, raise rates to market level. Automate guest communication. Respond to all inquiries within 30 minutes. The first 90 days determine your listing’s long-term visibility on Airbnb — invest disproportionate energy into this launch period.

Indiana STR Insurance and Liability

Indiana’s affordable property costs don’t mean you can afford cheap insurance. The liability exposure from STR operations is the same in Indianapolis as it is in Miami — one serious guest injury claim can exceed $100,000 in legal and medical costs.

Dedicated STR insurance in Indiana typically costs $1,000 to $2,500 annually for standard properties. Properties with pools, hot tubs (common in Brown County cabins), or high-occupancy group configurations cost more. Proper Insurance, CBIZ, and SafelyStay all serve the Indiana market.

Event weekends present elevated risk. Large groups of fans celebrating after a game or convention attendees socializing create scenarios that increase the likelihood of property damage and liability incidents. Consider per-booking damage protection (available through platforms like Autohost or Guest Ranger) in addition to your annual policy. Some operators also implement a security deposit or damage waiver fee during high-risk event periods.

If your property is in a flood-prone area (parts of Indianapolis along the White River, some Indiana Dunes properties near Lake Michigan), flood insurance is a separate essential purchase. Standard STR policies exclude flood damage. NFIP policies start around $600 annually.

Airbnb’s Host Protection Insurance provides a liability backstop but has the same limitations everywhere — it doesn’t cover your property damage, lost income, or every liability scenario. Read our comprehensive guide on whether insurance covers Airbnb to understand exactly what’s protected and what isn’t.

Why 10XBNB Gives You the Edge in Indiana

Indiana’s STR market is forgiving enough for new operators to succeed but competitive enough that systems and strategy make a massive difference in outcomes. The gap between an operator earning $28,000 per year and one earning $55,000 from a comparable Indianapolis property comes down to execution — event pricing, listing optimization, guest experience, and operational efficiency.

10XBNB delivers the operational playbooks that turn that gap into your advantage. The system teaches pricing strategy that captures every event premium, listing techniques that push your property to the top of search results, and operational frameworks that let you manage multiple properties without it consuming your life. Students in Indiana have used these strategies to build portfolios spanning Indianapolis, Bloomington, and Brown County.

The community provides ongoing value beyond the initial learning curve. Indiana operators share real-time data on event pricing benchmarks, regulatory updates, and market shifts. Knowing that Gen Con attendees have shifted their booking patterns, or that a new convention has been announced for Lucas Oil Stadium, gives you an advantage that generic Airbnb advice simply can’t provide. Explore where Indiana fits among top STR markets in our best states for Airbnb guide.

Frequently Asked Questions