Lesson #9 (section 1) Can you even operate a vacation home there?
When people think about short-term rentals, they often jump right to revenue projections, amenities, design, and marketing. But there is a step that arguably should come before anything else:
Can you legally operate a short-term rental there in the first place?
This lesson is one of the most important in the entire training series, because the STR landscape in Minnesota has become politically charged, highly regulated, and extremely inconsistent from county to county—and even township to township.
If you’re considering buying a vacation home, converting a property you already own, or investing from out of state, this is required reading.
Why This Lesson Matters
I get three to four calls a week from people who are shocked to learn that:
- Their area has strict caps on how many times per year they can rent.
- Their city requires licensing they didn’t know about.
- Their county has rules that their REALTOR never mentioned.
- Their property cannot meet new requirements—like ADA compliance—making it ineligible for STR licensing.
This topic isn’t just confusing—it’s politically heated and changing constantly.
- Licensing & Zoning: The First Question to Ask
Before you buy—or develop—a short-term rental, you must confirm whether the property is allowed to operate as one.
Some examples:
Mille Lacs County (2023 Rule Change)
I recently received a call from a property owner on Mille Lacs who bought a Mille Lacs lake home intending to do STR. My first question was:
“Is your property ADA compliant?”
It wasn’t.
And it couldn’t be.
Because Mille Lacs now requires ADA compliance for STR licensing.
Result: She cannot legally obtain a license.
Shockingly, I also know of another property on Mille Lacs that was sold as an “active and profitable” STR earlier this year—despite being non-compliant. The buyer purchased it under false pretenses.
This is why buyers need to vet zoning and licensing rules before relying on a listing agent or seller.
- Don’t Assume Your Agent Understands STR Regulations
Many REALTORS—even experienced ones—are simply unaware of:
- Township-level licensing
- County-level restrictions
- City-specific caps
- HOA prohibitions
- ADA compliance requirements
- Parking mandates
- Inspection standards
- State lodging permits
I’ve been involved in STR licensing discussions since the earliest days of the Crow Wing County program. I attend township meetings, follow policy changes, and track the political shifts. Most agents do not.
Never assume your agent understands STR rules.
- The Rules Vary Wildly Between Cities, Townships & Counties
Here’s what makes this so complicated:
In Minnesota, STR rules can be controlled by:
- The county
- The city
- The township
- The HOA
- Covenants
- The state lodging license
In some areas, the county handles everything.
In others, the township controls everything.
In others, the city has its own overlay requiring a separate license.
I’ve had heartbreaking calls from people who bought homes assuming STR was allowed—only to discover:
- Some towns only allow six rentals per year
- Some only allow four per year
- Some require expensive updates
- Some have moratoriums
- Some are considering future restrictions
My argument is always the same:
“What’s the point of doing STR if you can only rent six times a year?”
- The Future of STR Regulation (Where Things Are Trending)
Some cities are handling STRs in ways I believe reflect where things are going statewide:
Crosslake – Strong enforcement + balanced, realistic rules
Brainerd & Baxter – Taking back control and setting clearer guidelines
These cities are trying to balance:
- Protecting property rights
- Preventing party houses
- Preserving quiet neighborhoods
- Supporting tourism
- Maintaining fairness
Whether you agree with all their decisions or not, they are examples of municipalities proactively managing STRs.
- Covenants, HOAs & Neighborhood Dynamics Matter
Even if a city allows STRs, you still need to check:
- HOA bylaws
- Covenant restrictions
- Private road agreements
- Shoreline rules
We constantly receive calls from people wanting to start a VRBO—only for us to pull covenants and find out STRs are forbidden.
Also consider:
What is the neighborhood like?
How do neighbors feel?
Is there a history of issues in that area?
I’ve had upset neighbors calm down instantly after I showed them my five pages of house rules and invited them to add their own suggestions.
We also offer “neighbor perks,” like discounts for their friends and family, to build goodwill.
Happy neighbors = fewer headaches = long-term success.
- Parking, Access & Traffic: The Most Overlooked Rule
Nearly every city and county follows this baseline rule:
“One vehicle per bedroom.”
No yard parking.
No street parking.
This becomes a major problem when:
- Guests bring boat trailers
- The driveway is small
- Vehicles exceed the limit
- There’s no overflow option
If guests are forced to park on the road, you will get complaints—and enough complaints can get your license suspended or revoked.
Boat trailer parking is a big deal in lake country.
Be proactive.
- Understanding Noise, Behavior & the “One Out of 20” Rule
We do not run party houses.
We never have and never will.
19 out of 20 guests are wonderful.
1 out of 20 is a challenge.
1 out of 50 can cause real damage or neighbor issues.
I strongly support policies like Crosslake’s three-strikes-and-you’re-out rule. STRs must operate in a way that respects the quiet enjoyment of neighbors.
Remember:
“The neighbors didn’t choose to live next to a rental.”
If STR operators don’t self-police, the regulations will only get stricter.
- STR Investing Comes With Risk — Be Financially Prepared
Before you invest, ask yourself:
- What if STR rules change?
- What if a moratorium hits your area?
- What if we have a bad winter with no snow or ice?
- What if licensing gets more expensive or more strict?
Like any investment, you must be able to weather uncertainty.
I’ve had many calls over the years from owners who bought properties assuming STR was allowed—only to discover they could not legally rent them.
This is a very costly mistake.
- Your Action Plan Before Moving Forward
Before you buy—or convert—any property for STR use:
✔ Call the city
✔ Call the county
✔ Call the township
✔ Review covenants
✔ Confirm HOA rules
✔ Understand parking requirements
✔ Verify noise rules
✔ Know guest caps
✔ Check boat trailer allowances
✔ Confirm state lodging license requirements
✔ Look for any pending rule changes
✔ Contact a broker who understands STRs (like me)
Final Thoughts
The biggest mistake I see people make is assuming:
“If I buy a lake house, I can automatically do a VRBO.”
That is simply not true.
Licensing, zoning, covenants, and political pressures all play major roles. You must understand them before spending money on a property or investing in development.
If you have questions or want help researching a property, I’m happy to assist.
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We are producing multiple STR training modules—all free to the public—and we’d love the opportunity to earn your trust and your business.
Thank you for reading —
Mike Fish
Minnesota Real Estate & Management
