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Redwood Falls

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Redwood Falls, MN

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STR Regulations for Redwood Falls, Minnesota

Overview: Are Short-Term Rentals Allowed?

Short-term rentals (STRs)—generally rentals of 30 days or less—are allowed in Redwood Falls, MN. The city’s Unified Development Ordinance (UDO) regulates lodging uses (including hotels, motels, bed-and-breakfast inns, boardinghouses/lodging houses) through zoning, building, and site standards. There is no citywide ban on STRs in the materials reviewed. You must ensure your STR is a permitted or conditionally permitted use in the zoning district where the property sits, secure any required city approvals (e.g., Conditional Use Permit, site plan, zoning certificate), and meet all state and local licensing, safety, and tax obligations.

  • Typical STR structures in Redwood Falls fall under “lodging” rather than “residential” tenancy. “Lodging” is regulated via Business zoning districts (B‑1, B‑2, B‑3, B‑4) and may also be treated as a conditional use in some residential contexts (e.g., bed-and-breakfast). Check the specific district for permitted/conditional uses and the UDO for site, parking, and building requirements.
  • Minnesota does not have a statewide STR statute; most rules are local, while taxation and health/safety are governed by state agencies. Redwood Falls’ zoning, permitting, and building codes shape whether and how an STR can operate.

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What do Airbnb hosts actually earn in Redwood Falls?

Redwood Falls hosts earn a median $20,145/year with $135 ADR and 65% occupancy.

Top performers pull in $32,111+ per year.

See the full Redwood Falls market breakdown

How to Start a Short-Term Rental Business in Redwood Falls

  1. Confirm zoning and land-use eligibility
  • Identify your property’s zoning district (R‑R, R‑1, R‑2, R‑3, R‑4, R‑M, R‑B, B‑1, B‑2, B‑3, B‑4, I‑1, I‑2).
  • Determine if “lodging” (hotel/motel/inn/boardinghouse) is permitted or requires a Conditional Use Permit (CUP) in that district. The UDO lists principal uses for each district and requires CUPs for certain lodging uses.
  • If in a residential district (e.g., R‑B Residential–Business), a bed-and-breakfast lodging may be allowed only via CUP and subject to performance standards. Plan accordingly.
  1. Pursue development approvals
  • If a CUP is required, prepare and submit the application, attend a hearing, and comply with conditions of approval (UDO Article 7).
  • Prepare and submit a Site Plan for review (Chapter 5), especially for lodging/visitor-serving operations.
  • Obtain a Zoning Certificate (Chapter 3, Article 6) before any building permits or occupancy approvals.
  • Obtain building permits and a Certificate of Occupancy (Chapter 3, Article 11) prior to operating.
  1. Ensure on-site compliance and safety
  • Meet building and fire safety standards; install smoke/CO detectors and required egress.
  • Confirm parking and access standards per Chapter 9, and any landscaping/screening per Chapter 5.
  • Comply with noise, lighting, and general performance standards (Chapter 7, Article 8).
  1. Licensing and registration
  • Register your lodging business with Redwood County (Business Office). Minnesota requires a state tax ID for lodging tax collection.
  • If you also intend to sell tangible goods or prepared foods on-site, consult Minnesota Department of Revenue for sales tax registration and nexus considerations.
  1. Taxes and reporting
  • Collect and remit Minnesota state sales tax and lodging taxes (state and local) as applicable.
  • File returns and remit taxes to the Minnesota Department of Revenue according to the filing cadence assigned to your account.
  • Monitor any city or county lodging taxes that may apply to Redwood Falls and ensure your tax rate set-up reflects all applicable local taxes.
  1. Ongoing operations
  • Maintain records of guest registrations, incidents, and compliance inspections.
  • Monitor CUP conditions (e.g., occupancy caps, signage, parking) and renew any local registrations/permits as required.

Sources:

Required Documents, Permits, Licenses, and Guidelines

  • Zoning determination and confirmation of permitted/conditional lodging uses (UDO Chapter 6; Chapter 11/12)
  • Conditional Use Permit (CUP) if required by district (UDO Chapter 3, Article 7)
  • Site Plan Review approval (UDO Chapter 5)
  • Zoning Certificate (UDO Chapter 3, Article 6)
  • Building Permit(s) and plans/specs (UDO Chapter 3, Article 11)
  • Certificate of Occupancy (UDO Chapter 3, Article 11)
  • Business registration/license with Redwood County (local business office)
  • Minnesota Department of Revenue registration for sales/lodging taxes (state)
  • Insurance (recommended): general liability and property; confirm with your carrier
  • Fire and life safety compliance documentation (as required by state/local code officials)

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Specific Regulations: Redwood Falls (City), Redwood County, and Minnesota (State)

City of Redwood Falls (Local Zoning and Development)

  • STRs are treated as lodging uses (hotels/motels/inns/boarding houses) and are regulated through zoning. Whether an STR is allowed depends on the district:
    • In Business districts (B‑1, B‑2, B‑3, B‑4), lodging uses are typically principal uses; consult district listings for details.
    • In certain residential contexts (e.g., R‑B Residential–Business), lodging (such as a bed‑and‑breakfast) may be allowed only as a conditional use.
  • Conditional Use Permit (CUP)
    • If your STR use is not expressly permitted in your zoning district, a CUP is required (UDO Article 7). The City Council reviews applications; you must demonstrate compatibility with the surrounding area and compliance with performance standards.
  • Site Plan and Design Standards
    • Lodging uses are subject to site plan review (Chapter 5), including layout, landscaping, screening, access, and design guidelines.
  • Zoning Certificate and Certificate of Occupancy
    • A Zoning Certificate is required before building permits (UDO Chapter 3, Article 6). A Certificate of Occupancy must be obtained before operation (Chapter 3, Article 11).
  • Parking and Loading
    • Off-street parking requirements apply to lodging uses (Chapter 9). Specific counts vary by lodging type; consult the UDO’s parking table and district provisions.
  • Performance Standards
    • Noise, glare, vibration, odor, lighting, and other impacts must meet performance standards (Chapter 7, Article 8).
  • Signs
    • Signage for lodging must comply with Chapter 10 standards (district rules, types, permits, and restrictions).

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Redwood County (Local Business Registration and Taxes)

  • Business registration and local taxes may apply at the county level. Register your lodging business with the Redwood County Business Office.
  • Minnesota’s lodging tax regime is administered by the Minnesota Department of Revenue; local jurisdictions can impose additional lodging taxes. Confirm current county lodging tax rates and reporting processes directly with Redwood County.
  • The county page in our materials is a non-public overview; follow the link below and confirm current requirements with the county business office.

Source:

Minnesota (State-Level)

  • Legal Framework
    • Minnesota does not have a statewide STR licensing statute. Regulation is primarily local (city/county), while the state oversees taxation and certain health/safety codes.
  • Definition and Length of Stay
    • STRs are commonly defined as rentals of 30 consecutive days or less. Rentals of 30+ days may still be considered “short-term” if no enforceable written lease exists and the tenant can terminate without notice.
  • Statewide Tax Requirements
    • State sales tax and state-administered lodging taxes apply to short-term rentals, along with any applicable local lodging taxes.
    • You must register with the Minnesota Department of Revenue prior to collecting taxes. All lodging-related services (cleaning fees, extra-person fees, pet fees, etc.) are generally taxable.
    • File returns and remit taxes per your assigned cadence.
  • Health and Safety
    • Comply with state life-safety and building codes administered locally through city/county inspectors.

Source:

Contacts (Phone, Email, Website)

Note: Contact details are provided as available in the materials reviewed. Confirm department extensions, addresses, and current processes directly via the websites above.

Source Links

Investor Checklist (Actionable Next Steps)

  • Verify your property’s zoning district and whether lodging is a permitted/conditional use. If conditional, initiate a CUP with a complete application and exhibit set.
  • Submit site plan and zoning certificate applications; obtain building permits as applicable; secure a Certificate of Occupancy.
  • Register your business with Redwood County; obtain a Minnesota tax ID and set up sales/lodging tax collection.
  • Design for compliance with parking, landscaping, lighting, signage, and performance standards.
  • Build a compliance file: CUP conditions, CO, insurance, tax registrations, and operating SOPs.

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Redwood Falls

Market Saturation Score

036912
Mild Saturation
4/ 12
months with declining YoY revenue
2–4 declining months: early saturation pressure - watch for trend persistence.
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Photos of Redwood Falls

Overview of Redwood Falls

Redwood Falls is a small city of roughly 5,000 people that serves as the county seat of Redwood County in southwestern Minnesota. It sits along the Redwood River near its confluence with the Minnesota River, giving the town a setting defined by wooded river bluffs, limestone outcrops, and the kind of big-sky prairie landscape that characterizes the region. The community has a quiet, lived-in character with a traditional Midwestern downtown, and it functions as a service hub for the surrounding agricultural region as well as a gateway to one of Minnesota's most scenic riverside parks. Redwood Falls lies about 130 miles southwest of the Twin Cities, a drive of roughly two and a half hours, making it within an easy weekend's reach of the Minneapolis–Saint Paul metro area.

Just outside the city center, Alexander Ramsey Park sprawls across hundreds of acres of wooded river bluffs and is widely considered one of the largest municipal parks in the state. The park is known for its dramatic stone overlooks above the Redwood River, a series of waterfalls and cascades, miles of hiking trails, picnic areas, and a historic bandshell that hosts summer "Theater in the Park" performances. It is only a few minutes from downtown Redwood Falls and draws visitors year-round for hiking, sightseeing, and seasonal events.

A short drive north of town, the Lower Sioux Agency Historic Site preserves the location of the nineteenth-century federal agency established for the Dakota people and now interprets the lead-up to the U.S.–Dakota War of 1862. Operated as a historic site with a visitor center and interpretive trails, it offers a thoughtful counterpoint to the outdoor recreation in the area and is one of the region's most significant cultural landmarks. The site lies only a few miles from Redwood Falls along the Minnesota River.

Nearby, the Lower Sioux Indian Community operates Jackpot Junction Casino Hotel, a large gaming and entertainment complex that includes hotel rooms, restaurants, a concert venue, and an RV park. The property functions as both a regional entertainment draw and a practical overnight option, and it sits just minutes from the historic site and a short drive from the heart of Redwood Falls.

Redwood Falls offers short-term rental investors a combination of natural scenery, cultural history, and gaming-driven travel demand in a small-town setting. Its proximity to a major municipal park, a state-recognized historic site, and a busy regional casino, paired with its location within a half-day's drive of the Twin Cities, gives the town a steady flow of visitors who need overnight accommodations but have few hotel alternatives. That mix of year-round outdoor tourism and event-driven weekend traffic is what makes Redwood Falls a quietly appealing base for a well-placed rental property.

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