Iowa flies under the radar for most Airbnb investors, and that’s exactly why the margins here are so attractive. While operators in Nashville and Austin fight over saturated markets, Iowa hosts quietly pull in strong returns with property costs that are a fraction of coastal prices. Des Moines alone saw a 19% increase in short-term rental bookings between 2023 and 2025, according to AirDNA market data. Iowa City’s game-day weekends command nightly rates that rival mid-tier tourist destinations. And the Field of Dreams movie site in Dyersville? It generated over 115,000 visitors in its inaugural MLB season and continues drawing baseball fans from across the country.
The state’s combination of affordable real estate, growing tourism infrastructure, and business-friendly regulations creates conditions that reward hosts who move quickly. Whether you’re pursuing rental arbitrage with minimal upfront capital or acquiring investment properties outright, Iowa delivers cash flow that many “hot” markets simply can’t match once you factor in acquisition and operating costs.
Why Iowa Is a Top Market for Short-Term Rentals
Three factors separate Iowa from the crowded pack of STR markets: affordability, event-driven demand, and regulatory stability.
Median home prices in Des Moines hover around $235,000 — roughly 40% below the national median. In smaller markets like Cedar Rapids or Davenport, you’ll find properties under $180,000 that cash-flow from month one. That math matters. When your all-in cost is lower, your break-even occupancy drops, and your margin of safety widens considerably.
Demand here is more diversified than people assume. Des Moines hosts the Iowa State Fair (over 1.1 million attendees annually), RAGBRAI cycling event, World Food & Music Festival, and a growing convention scene at the Iowa Events Center. Iowa City brings University of Iowa football weekends where 70,000+ fans flood a city of 75,000 — and most of them need somewhere to stay. The Amana Colonies, Maquoketa Caves, and Pikes Peak State Park drive steady leisure travel from spring through fall.
Business travel shouldn’t be overlooked either. Des Moines is home to Principal Financial Group, Meredith Corporation, and a cluster of insurance and financial services companies. These organizations generate consistent midweek demand that fills the gaps between weekend leisure bookings.
Iowa Short-Term Rental Laws and Regulations
Iowa earned a reputation as one of the more STR-friendly states after passing House File 2641 in 2024, which significantly limited local governments’ ability to impose outright bans on short-term rentals. That legislation classified STRs as a permitted residential use statewide, creating a protective floor for property owners. Understanding the regulatory framework here is straightforward compared to states like New York or California — but you still need to get the details right.
State-Level Requirements
Iowa requires all short-term rental operators to:
- Register for an Iowa sales tax permit through the Iowa Department of Revenue
- Collect and remit state sales tax (currently 6%) plus any applicable local option taxes on stays under 31 consecutive days
- Maintain general liability insurance that covers short-term rental activity
- Comply with state fire safety codes, including working smoke detectors and carbon monoxide detectors on every level
- Report rental income on state and federal tax returns
Airbnb and VRBO collect Iowa state sales tax automatically on behalf of hosts, but local hotel/motel taxes may still require manual collection depending on your municipality. Always verify your specific obligations with the Iowa Department of Revenue rather than relying solely on platform collection.
Key City Regulations
Des Moines: The capital city requires a rental housing license for all short-term rental properties. Hosts must pass a housing inspection that covers safety standards, occupancy limits, and property maintenance. The annual license fee runs approximately $100-$150 depending on property size. Des Moines also enforces nuisance ordinances — three substantiated noise or parking complaints within a 12-month period can trigger a license review.
Iowa City: Home to the University of Iowa, this market has specific zoning considerations. Short-term rentals are permitted in most residential zones, but the city requires registration through its housing inspection services department. Properties within designated historic districts face additional review for exterior modifications. Iowa City enforces a maximum occupancy of two guests per bedroom plus two additional guests, which directly impacts your revenue ceiling — so bedroom count matters here more than square footage.
Cedar Rapids: The state’s second-largest city takes a lighter regulatory approach. STR operators need a standard business license and must comply with local building codes. Cedar Rapids does not currently require a specific short-term rental permit, though operators must register for local hotel/motel tax collection. The city has been proactive about welcoming STRs as part of its post-flood economic recovery and tourism growth strategy.
Dubuque: This Mississippi River city requires short-term rental operators to obtain a conditional use permit in certain residential zones. The permitting process involves a planning commission review, which typically takes 30-45 days. Dubuque also enforces a local lodging tax that hosts must collect and remit quarterly.
Recent Regulatory Changes (2025-2026)
Senate File 341, introduced in the 2025 legislative session, proposed additional protections for STR operators by limiting the types of fees local governments can impose. While the bill underwent amendments during committee review, the overall legislative trend in Iowa continues to favor property owner rights over municipal restrictions. The 2026 session includes continued discussion around standardizing inspection requirements across municipalities, which would simplify compliance for operators running properties in multiple Iowa cities.
One change worth monitoring: several Iowa counties are exploring dedicated STR registry programs that would create a centralized database of operators. These registries would streamline tax collection but also increase transparency about who’s operating and where. If you’re running a compliant operation, this works in your favor — it raises the bar for unlicensed competitors.
Tax Obligations for Iowa Airbnb Hosts
Iowa’s tax structure for short-term rental operators involves three layers, and missing any of them creates problems you don’t want.
State Sales Tax: Iowa charges 6% on all lodging stays under 31 days. Airbnb and VRBO collect this automatically in most Iowa jurisdictions, but always confirm your specific listing is covered under the platform’s tax collection agreement.
Local Hotel/Motel Tax: Most Iowa cities and some counties levy an additional hotel/motel tax ranging from 5% to 7%. Des Moines charges 7%, Iowa City 7%, and Cedar Rapids 7%. Not all platforms collect local taxes automatically — you may need to collect and remit these directly. Check with your city’s finance department.
State and Federal Income Tax: All rental income must be reported. Iowa’s state income tax rate ranges from 4.4% to 5.7% (2025 rates, with planned reductions phasing in through 2026). Deductible expenses include cleaning fees, supplies, insurance, mortgage interest on the rental portion, utilities, property management software, and depreciation. Hosts operating as a business should consider forming an LLC for liability protection and potential tax advantages — consult a CPA familiar with Iowa rental property taxation.
One tax strategy that experienced Iowa hosts use: if you materially participate in managing your STR (which most hands-on hosts do), you may qualify to deduct losses against other income rather than being limited by passive activity rules. This distinction can save thousands annually, especially during your first year when startup costs are highest.
Best Cities for Airbnb in Iowa
Iowa’s STR opportunity isn’t concentrated in a single metro. Each market has distinct demand drivers, guest profiles, and revenue potential. Here’s what the numbers actually look like across the state’s top markets.
Des Moines
Iowa’s capital and largest city is the state’s top STR market by volume and revenue. Des Moines benefits from a diverse demand base: corporate travelers during the week, event attendees on weekends, and leisure visitors exploring the East Village, Pappajohn Sculpture Park, and Greater Des Moines Botanical Garden. The city’s food scene — recognized by national outlets including Bon Appetit — adds another draw.
Average daily rates for well-optimized listings in Des Moines run $130-$175, with occupancy rates between 62% and 72% depending on property type and season. Two-bedroom properties in the downtown core and East Village consistently outperform, generating $2,800-$3,600 per month in gross revenue. The Iowa State Fair in August creates a two-week spike where nightly rates can jump 40-60% above baseline.
Iowa City
This is a textbook college-town STR market. The University of Iowa’s 30,000+ enrollment drives demand around football weekends (seven home games per season), graduation, parents’ weekends, and orientation periods. A well-positioned property near Kinnick Stadium or the Pedestrian Mall can generate 30-40% of its annual revenue during football season alone.
Average daily rates in Iowa City sit around $115-$155 for standard listings, but football weekends push rates to $250-$400+ depending on the opponent and proximity to campus. Annual occupancy averages 55-65%, lower than Des Moines due to the academic calendar creating true off-season periods in December-January and May-June. Smart hosts offset this by targeting visiting professors, medical professionals at University of Iowa Hospitals, and summer workshop attendees.
Cedar Rapids
Eastern Iowa’s largest city offers solid fundamentals at lower price points. Cedar Rapids draws visitors for the Paramount Theatre, NewBo Market, and its role as a regional business hub for Collins Aerospace and other manufacturers. The city’s ongoing riverfront redevelopment is adding attractions that should boost tourism traffic through 2027.
ADR in Cedar Rapids ranges from $95-$130, with occupancy between 55% and 65%. The lower rate is offset by significantly cheaper property costs — median home prices under $175,000 mean better cash-on-cash returns for investors. Monthly gross revenue for a two-bedroom typically runs $1,800-$2,500.
Dubuque
Positioned on the Mississippi River bluffs, Dubuque is Iowa’s dark horse STR market. The city’s mix of casino tourism (Diamond Jo Casino, Q Casino), river cruises, and outdoor recreation at Mines of Spain State Recreation Area creates year-round demand. The National Mississippi River Museum & Aquarium draws over 250,000 visitors annually.
ADR here ranges from $110-$150, and occupancy runs 50-60%. Seasonal variation is more pronounced than in Des Moines, with summer and fall being peak periods. Properties with river views command premium rates — sometimes 30-40% above comparable listings without views.
| City | Avg Daily Rate | Occupancy Rate | Monthly Revenue (2BR) | Median Home Price |
|---|---|---|---|---|
| Des Moines | $130-$175 | 62-72% | $2,800-$3,600 | ~$235,000 |
| Iowa City | $115-$155 | 55-65% | $2,200-$3,200 | ~$260,000 |
| Cedar Rapids | $95-$130 | 55-65% | $1,800-$2,500 | ~$175,000 |
| Dubuque | $110-$150 | 50-60% | $1,900-$2,700 | ~$180,000 |
How Much Do Airbnbs Make in Iowa?
Revenue varies significantly based on market, property type, and how well you optimize your listing and pricing strategy. But here’s the reality: Iowa STRs won’t generate the eye-popping nightly rates you see in Maui or Park City. What they will generate is consistent, reliable income with margins that often beat those flashier markets once you account for total costs.
A well-managed two-bedroom in Des Moines grossing $3,200/month with a $1,400 mortgage payment, $400 in operating costs, and $300 in platform fees nets roughly $1,100/month in profit — a 34% operating margin. Scale that to three or four properties through rental arbitrage (where you don’t even need a mortgage), and the numbers stack up fast.
Hosts using dynamic pricing tools report 15-22% higher annual revenue compared to static pricing. In Iowa specifically, the biggest revenue lever is capturing event-driven demand spikes. A property near Kinnick Stadium in Iowa City that charges $150/night normally can command $350+ on a rivalry football weekend. Missing those pricing windows leaves thousands on the table each year.
Annual gross revenue benchmarks for Iowa STR operators:
- Budget properties (1BR, smaller markets): $18,000-$26,000
- Mid-range (2BR, Des Moines/Iowa City): $32,000-$42,000
- Premium (3BR+, prime locations): $45,000-$65,000
- Luxury/unique stays (cabins, riverfront): $55,000-$85,000+
These numbers assume competent management, professional photos, optimized listings, and dynamic pricing. Underperforming listings in the same markets might generate 30-50% less — which is exactly why education and systems matter.
How to Start Your Iowa Airbnb Business
Turning Iowa’s STR opportunity into actual income requires a specific sequence of steps. Skip any of them, and you’ll either lose money or run into compliance issues that could shut you down.
Step 1: Choose Your Business Model. Decide between property ownership, rental arbitrage, or co-hosting. Ownership builds equity but requires capital. Arbitrage lets you start with minimal upfront investment — you lease a property, furnish it, and list it on Airbnb at a markup. Co-hosting means managing someone else’s property for a percentage of revenue. Each model works in Iowa, but arbitrage is the fastest path to cash flow for most new operators.
Step 2: Select Your Market. Use the city breakdowns above to identify where your budget and risk tolerance align. Des Moines offers the most consistent demand. Iowa City delivers seasonal spikes that can accelerate your returns. Cedar Rapids and Dubuque offer lower barriers to entry with less competition.
Step 3: Analyze Specific Properties. Run the numbers before signing anything. Calculate projected gross revenue using AirDNA or Mashvisor data, subtract all expenses (rent/mortgage, utilities, cleaning, supplies, insurance, platform fees, taxes), and verify that your projected occupancy rate at your target ADR produces positive cash flow. A safe rule of thumb: your monthly gross revenue should be at least 2.5x your monthly rent or mortgage payment.
Step 4: Set Up Your Legal Structure. Register an Iowa LLC ($50 filing fee through the Iowa Secretary of State). Obtain your sales tax permit from the Iowa Department of Revenue. Check with your city for any local business licenses or STR-specific permits required.
Step 5: Prepare and Furnish the Property. Iowa guests expect clean, comfortable spaces with functional kitchens and reliable Wi-Fi. Budget $3,000-$6,000 to furnish a two-bedroom unit for STR use. Focus on durable furniture, quality linens, and smart home features (keyless entry, smart thermostat) that reduce your management overhead.
Step 6: Create and Optimize Your Listings. Professional photography is non-negotiable — listings with pro photos generate 24% more bookings on average. Write descriptions that highlight proximity to specific attractions (“8-minute walk to Kinnick Stadium” beats “close to campus”). Set competitive initial pricing to generate reviews quickly, then adjust upward as your rating builds.
Step 7: Automate Operations. Implement automated messaging for check-in instructions, house rules, and check-out reminders. Use a channel manager if listing on multiple platforms. Hire reliable cleaners with a turnaround time under four hours. Build systems now so scaling from one to multiple properties doesn’t require proportionally more of your time.
Iowa STR Insurance and Liability
Standard homeowner’s or renter’s insurance policies typically exclude short-term rental activity. Operating without proper coverage is one of the fastest ways to destroy your business — a single guest injury or property damage claim can wipe out years of profits.
Iowa STR operators need coverage in three areas:
Commercial Liability Insurance: Covers injuries to guests on your property. A standard $1 million policy costs $800-$1,500 annually per property in Iowa, depending on property type and location. Some carriers offer portfolio discounts for operators with multiple listings.
Property/Contents Coverage: Protects your furnishings, appliances, and the structure itself (if you own it) against guest damage, theft, or natural disasters. Iowa’s tornado and severe storm exposure makes this particularly important — verify that your policy covers wind and hail damage without excessive deductibles.
Business Interruption Coverage: Compensates for lost revenue if your property becomes uninhabitable due to a covered event. Given Iowa’s severe weather season from May through August, this coverage prevents a tornado or flood from simultaneously destroying your property and your income stream.
Airbnb’s AirCover for Hosts provides some protection, but it’s not a substitute for your own policy. AirCover has exclusions, caps, and a claims process that many hosts find frustrating. For a deeper look at coverage options, see our guide on whether standard insurance covers Airbnb.
Recommended Iowa STR insurance providers include Proper Insurance, CBIZ (which has a strong Midwest presence), and Safely. Get quotes from at least three providers and compare not just premiums but coverage limits, deductibles, and exclusion lists.
Why 10XBNB Gives You the Edge in Iowa
Iowa’s STR market rewards operators who have systems — not just enthusiasm. The difference between a property that nets $1,100/month and one that barely breaks even often comes down to pricing strategy, listing optimization, and operational efficiency. Those aren’t skills you develop through trial and error without burning through cash first.
10XBNB’s system was built by hosts who’ve scaled to millions in STR revenue. The training covers everything from market analysis and property selection to dynamic pricing calibration and guest experience automation. For Iowa specifically, the rental arbitrage module is particularly relevant — it shows you how to launch an Airbnb business without owning property, which removes the biggest barrier to entry in any market.
Operators who go through the program typically compress what would be 12-18 months of learning curve into weeks. In a market like Iowa where first-mover advantages still exist in several cities, that speed matters. Every month you spend figuring things out on your own is a month a more prepared competitor could be locking up the best properties and building reviews that will be hard to catch.
The community aspect matters too. 10XBNB connects you with operators across the country, including hosts already running profitable STRs in the Midwest. That network provides real-time insights on market conditions, vendor recommendations, and deal analysis that you simply can’t get from YouTube videos or blog posts.
Ready to Launch Your Iowa Airbnb Business?
Learn the exact system successful hosts use to build profitable rentals.
Frequently Asked Questions
Do I need a permit to run an Airbnb in Iowa?
Iowa does not require a statewide STR permit, but individual cities may have their own licensing requirements. Des Moines requires a rental housing license, Iowa City requires registration through housing inspection services, and Dubuque requires a conditional use permit in certain zones. Always check your specific city’s requirements before listing a property.
How much tax do Iowa Airbnb hosts pay?
Iowa Airbnb hosts owe 6% state sales tax on stays under 31 days, plus local hotel/motel taxes that typically range from 5-7% depending on the city. Airbnb collects state sales tax automatically in most Iowa jurisdictions, but local taxes may require manual collection and remittance. Additionally, all rental income is subject to state income tax (4.4-5.7%) and federal income tax.
Can Iowa cities ban short-term rentals?
No. Iowa’s House File 2641 (passed in 2024) classifies short-term rentals as a permitted residential use statewide, which prevents cities from imposing outright bans. However, local governments can still enforce reasonable regulations such as licensing requirements, safety inspections, occupancy limits, and nuisance ordinances. This makes Iowa one of the more STR-friendly states in the country.
What’s the best Iowa city for Airbnb beginners?
Cedar Rapids offers the lowest barrier to entry for new Iowa hosts. Median home prices under $175,000 and relatively light regulations make it accessible, while steady demand from business travelers and regional events provides consistent bookings. Des Moines is the top choice for operators willing to invest more upfront, offering the highest revenue potential and most diversified demand base in the state.
Is rental arbitrage legal in Iowa?
Yes, rental arbitrage is legal in Iowa. There are no state laws prohibiting tenants from subletting properties as short-term rentals, though your lease agreement must explicitly permit it. The key is obtaining written landlord approval and ensuring the property meets all local STR requirements. Many Iowa landlords are open to arbitrage arrangements because it typically results in better property maintenance and higher-than-market rent payments.
When is peak season for Iowa Airbnbs?
Iowa’s peak STR season runs from May through October, with the highest demand during the Iowa State Fair (August), university football season (September-November), and summer festival season. Des Moines sees its strongest bookings from June through September. Iowa City’s peak aligns with the University of Iowa football schedule. Winter months (December-February) represent the slowest period statewide, though business travel in Des Moines helps maintain midweek occupancy year-round.
Iowa’s short-term rental market is growing, but it won’t stay undervalued forever. The operators who establish themselves now — building reviews, refining systems, and locking up the best properties — will have a significant competitive advantage as the market matures. Whether you’re starting with a single rental arbitrage property or planning a multi-unit portfolio, the fundamentals of Iowa’s market support profitable STR operations for hosts who approach it with the right strategy and pick the right state for their business.
