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By Robin Simon, President, Harpoon Capital · About · LinkedIn · Author, The Book on DSCR Loans (Available on Amazon)
The best Minnesota markets for real estate investors in 2027 pair low entry prices, from about $245,000 in Two Harbors, with strong short-term rental potential, led by a 96 AirDNA score in Rochester and $52,027 in average annual STR revenue in Two Harbors. Minnesota pairs steady job hubs with Lake Superior and lake-country getaways, and its six markets below run from Rochester, home to the Mayo Clinic, and the port city of Duluth to the state capital in St. Paul, the college towns of St. Cloud and Mankato and Two Harbors on the North Shore. Median sale prices run from about $245,000 in Two Harbors to about $360,000 in Rochester (Redfin, 2026), and BiggerPockets puts rent-to-price ratios between 0.38% a month in St. Cloud and 0.45% in the Duluth metro, with rents between about $990 and $1,440. Investors buying here typically finance with Minnesota DSCR loans, which are qualified primarily based on the property rather than the borrower's personal income, and Minnesota's mid-range prices keep the “DSCR Ratio” within reach on long-term rent in most of these markets.
This breakdown uses market data collected as of October 2026, the most current snapshot available heading into next year's buying season. If you're evaluating a purchase in the final months of 2026, keep in mind that your first full year of rental income, appreciation, or short-term rental revenue lands in 2027 regardless of when you close. A deal you underwrite today is already a 2027 investing decision, just one made with the freshest data available right now.
Minnesota has no statewide short-term rental license, but stays under 30 days carry the 6.875% state sales tax plus local sales and lodging taxes (cities can levy up to 3% in lodging tax, more with special legislation), for combined rates from about 10.9% in Mankato to 15.125% in Rochester, and Airbnb collects the state sales tax but not every city's lodging tax, so hosts should verify which taxes Airbnb collects (BNBCalc). Additionally, property tax classification matters, since a homestead or single-unit non-homestead rental is classed at 1.00% on the first $500,000 of value (1.25% above), while a non-homestead property of one to three units, including a qualifying short-term rental, is classed at a flat 1.25%. The local rules vary widely: St. Paul and Rochester require an annual license or certificate, Duluth adopted a ban on new STR licenses for entire single-family homes in September 2026, St. Cloud's zoning does not allow stays under 30 days, and Two Harbors issues new permits only in commercial zones. In practice, i.e. for an investor buying a nightly rental, the local permit typically matters more than the market averages below.
Redfin's “Compete Scores” run from 82 in St. Paul (“very competitive”) down to 45 in Duluth (“somewhat competitive”), and homes in Duluth are selling in a median of just 15 days, so investors in the larger markets should generally be ready to move quickly. Redfin search data shows Chicago (a net 306), Washington, D.C. (148) and San Francisco (79) buyers looking at St. Paul most, while St. Paul's own buyers most often searched toward Brainerd and Duluth, a sign of steady demand for lake-country and North Shore property.
Below, we break down six Minnesota markets worth watching, using current data from Redfin, BiggerPockets, and AirDNA.
Note: Home price appreciation and rent-growth figures below come from Redfin's median sale price data and BiggerPockets' Market Finder, which use different methodologies and can vary from one another, so treat them as directional. BiggerPockets' St. Paul figures cover the full Minneapolis-St. Paul-Bloomington metro and its Duluth figures cover the Duluth, MN-WI metro, while Two Harbors has no BiggerPockets page, so Redfin's figures, which rest on only 11 sales in August, are used for it. Redfin's St. Cloud migration table duplicated St. Paul's and is left out. AirDNA's St. Paul figures cover its Downtown Saint Paul submarket of the Minneapolis market, and Rochester, Duluth, St. Cloud, Mankato and Two Harbors are submarkets of its Minnesota Area market.
Mayo Clinic medicine and the state's busiest STRs
Rochester is home to the Mayo Clinic, which draws patients and their families from around the world, with the fastest rent growth, the highest STR score and the busiest STRs on this list. It is the market in the article where medical travel keeps nightly rentals full year-round.
BiggerPockets points to healthcare, education and technology, with the Mayo Clinic and IBM among the major employers, and the clinic's patients, families and visiting staff keep demand for furnished stays high through the year. However, four in ten listings saw price cuts, so buyers have more room to negotiate than the rent figures suggest. First Street data on Redfin rates the flood risk as “minor” (6% of properties). On the STR side, the city's housing code (Ordinance 4466, adopted April 18, 2022) requires owner-occupied single-family STRs to register ($86 for one unit) and non-owner-occupied STRs to hold a short-term rental certificate and pass an inspection, and stays carry 15.125% in combined taxes, including Rochester's 7% lodging tax, so hosts should verify which taxes Airbnb collects (BNBCalc).
The Rochester submarket posts an AirDNA score of 96/100, the highest in the article, with Seasonality (95), Revenue Growth (88) and Rental Demand (86) leading, and Investability (65) and Regulation (65) the “soft spots.” Annual revenue per listing averages $31,216 (up 3.9% year-over-year), with an average daily rate of $124.65 (up 3.0%) and occupancy of 75% (up 1.3%), the highest on the list. Total active listings sit at 565, up 0.9%, and larger homes carry the top end, such as a five-bedroom retreat seven miles from Mayo ($115K a year at 77% occupancy).
Financing note: Harpoon Capital offers industry leading DSCR Loans for properties in Rochester and all throughout the market area. Check out our full DSCR Loans Program here, or if you want a quote on what terms look like today, fill out this two-minute form!
Sources: Redfin Housing Market↗ · BiggerPockets Market Finder↗ · BNBCalc Rochester STR Guide↗ · AirDNA Market Data↗
Investor Takeaway: Rochester offers the highest STR score and occupancy in Minnesota and the fastest rent and price growth, on the Mayo Clinic's job base. Investors should generally consider furnished mid-term or nightly stays near the clinic, register or certify any STR with the city, and use the high share of price cuts to negotiate.
Lake Superior lift and a capped permit pool
Duluth sits at the western tip of Lake Superior, home to Essentia Health, the University of Minnesota Duluth and the Canal Park waterfront, with the best rent ratio and the fastest-selling homes on this list. It is a tourism and college market where new whole-home STRs are no longer allowed, so long-term rentals carry the case.
BiggerPockets points to healthcare, education and tourism, with Essentia Health and the University of Minnesota Duluth among the major employers, and Canal Park, the Aerial Lift Bridge and the North Shore draw visitors through the summer and fall. However, the population is flat, so investors should generally lean on the medical and university tenant base. First Street data on Redfin rates the flood risk as “minor” (3% of properties). On the STR side, the City of Duluth adopted a new ordinance on September 14, 2026 (taking effect around October 2026) that bans new STR licenses for entire single-family homes and retires the old cap, lottery and permit categories, with existing permits continuing only until the property sells and a moratorium on new permits running through November 10, 2026. Stays carry about 11.875% in combined taxes, including Duluth's 3% lodging tax, which Airbnb collects.
The Duluth submarket posts an AirDNA score of 82/100, with Investability (91) and Rental Demand (87) leading, and Seasonality (63), Regulation (63) and Revenue Growth (61) the “soft spots.” Annual revenue per listing averages $48,005 (up 1.6% year-over-year), with an average daily rate of $278.99 (down 0.9%) and occupancy of 55% (up 0.6%). Total active listings sit at 541, up 6.7%, and waterfront properties carry the top end, such as a Canal Park suite with a pool ($187K a year at 85% occupancy) and a converted pumphouse on Lake Superior ($178K).
Financing note: Harpoon Capital offers industry leading DSCR Loans for properties in Duluth and all throughout the market area. Check out our full DSCR Loans Program here, or if you want a quote on what terms look like today, fill out this two-minute form!
Sources: Redfin Housing Market↗ · BiggerPockets Market Finder↗ · AirDNA Market Data↗
Investor Takeaway: Duluth offers the best rent ratio and fastest-selling homes in Minnesota, on a medical and university job base. Investors should generally buy for the long-term rent, since new whole-home STR licenses are no longer available and existing permits end on sale, and be ready to offer at or above list.
Capital-city depth in the Twin Cities
St. Paul is Minnesota's capital and half of the Twin Cities, home to state government, a cluster of colleges and the Xcel Energy Center, with the deepest and most competitive sales market on this list. It is the big-metro market in the article, where long-term rentals typically carry the case.
BiggerPockets points to healthcare, education and technology across the metro, with Target and the University of Minnesota among the major employers, and Redfin search data (April to June 2026) shows Chicago (a net 306), Washington, D.C. (148) and San Francisco (79) buyers looking at St. Paul most, with only 20% of local buyers searching to leave. However, prices have been flat over the past year. First Street data on Redfin rates the flood risk as “minor” (4% of properties). On the STR side, the City of St. Paul requires an annual short-term rental host license ($45 per unit) for every unit rented for less than 30 days, with $300,000 in liability coverage (or a statement that the host uses only Airbnb, Vrbo or HomeAway), and non-owner-occupied units also need a fire certificate of occupancy. Stays carry about 12.875% in combined taxes, including a 3% lodging tax, so hosts should verify which taxes Airbnb collects.
The Downtown Saint Paul submarket posts an AirDNA score of 67/100, which AirDNA tags as one of its “Best Places to Invest 2026,” with Rental Demand (87) and Seasonality (77) leading, Regulation (61) and Investability (59) next, and Revenue Growth (56) the “soft spot.” Annual revenue per listing averages $30,601 (down 4.2% year-over-year), with an average daily rate of $147.89 (down 1.9%) and occupancy of 63% (down 2.0%). Total active listings sit at 710, down 2.9%, the deepest STR market in the article.
Financing note: Harpoon Capital offers industry leading DSCR Loans for properties in St. Paul and all throughout the market area. Check out our full DSCR Loans Program here, or if you want a quote on what terms look like today, fill out this two-minute form!
Sources: Redfin Housing Market↗ · BiggerPockets Market Finder↗ · City of St. Paul STR Host License↗ · AirDNA Market Data↗
Investor Takeaway: St. Paul offers the deepest sales market and the highest metro rents in Minnesota, with steady inbound buyer interest. Investors should generally be ready to offer at or above list, buy for the long-term rent, and license any STR with the city before listing it.
Thinking About One of These Markets?
Get a same-day DSCR Loan quote for a specific deal, or browse the full Harpoon Capital DSCR Loan Program to see rates, LTV, and qualification details before you keep reading.
Central Minnesota value on the Mississippi
St. Cloud sits on the Mississippi River about an hour northwest of the Twin Cities, home to CentraCare Health and St. Cloud State University, with the lowest prices among the core markets and the fastest population growth on this list. It is the value market in the article, and city zoning does not allow stays under 30 days, so it is a long-term and mid-term rental market.
BiggerPockets points to healthcare, higher education, manufacturing and retail, with CentraCare Health and St. Cloud State University among the major employers, and the metro also takes in Sartell, Waite Park and St. Joseph. However, rent growth (2.06%) is the slowest on this list, so the case here rests on price and population growth. First Street data on Redfin rates the flood risk as “minor” (5% of properties). On the STR side, St. Cloud's zoning does not allow rentals of fewer than 30 days, so investors should plan on long-term leases or furnished 30-day-plus stays for traveling nurses, students and new arrivals.
The Saint Cloud submarket posts an AirDNA score of 62/100, with Rental Demand (90) and Seasonality (78) leading, Regulation (62) and Investability (60) next, and Revenue Growth (43) the “soft spot.” Annual revenue per listing averages $24,243 (down 4.1% year-over-year), the lowest on the list, with an average daily rate of $124.74 (up 4.8%) and occupancy of 59% (down 6.0%). Total active listings sit at only 65, up 16.1%. Note that AirDNA's submarket reaches beyond city limits, so these figures say more about demand in the surrounding towns than about what is allowed in St. Cloud itself.
Financing note: Harpoon Capital offers industry leading DSCR Loans for properties in St. Cloud and all throughout the market area. Check out our full DSCR Loans Program here, or if you want a quote on what terms look like today, fill out this two-minute form!
Sources: Redfin Housing Market↗ · BiggerPockets Market Finder↗ · AirDNA Market Data↗
Investor Takeaway: St. Cloud offers the lowest core-market prices and the fastest population growth in Minnesota, on a healthcare and university job base. Investors should generally buy for the long-term rent or furnished 30-day-plus stays, move quickly in a competitive market, and confirm the zoning before planning any shorter stays.
Minnesota River campus town with lake-cabin upside
Mankato sits on the Minnesota River in south-central Minnesota, home to Minnesota State University, Mankato and a regional medical and manufacturing base, with nearby lakes that power a higher-earning STR market than its size suggests. It is a steady college-town market with lake-country upside.
BiggerPockets points to healthcare, education and manufacturing, with Minnesota State University, Mankato among the major employers, which keeps the rental pool full through the school year. However, homes are taking longer to sell than a year ago. First Street data on Redfin rates the flood risk as “minor” (4% of properties). On the STR side, Mankato has no STR-specific city ordinance, and stays carry about 10.875% in combined taxes, including a 3% lodging tax, so hosts should verify which taxes Airbnb collects (BNBCalc), while lake properties outside city limits fall under county rules.
The Mankato submarket posts an AirDNA score of 60/100, the lowest in the article, with Revenue Growth (79), Rental Demand (70) and Investability (68) leading, Seasonality (59) next, and Regulation (53) the “soft spot.” Annual revenue per listing averages $35,212 (up 2.9% year-over-year), with an average daily rate of $239.01 (down 3.7%) and occupancy of 48% (up 6.5%). Total active listings sit at 138, up 2.2%, and large lake homes carry the top end, such as a lakeside cabin that sleeps 20 or more ($145K a year) and a 10-bedroom mansion ($127K).
Financing note: Harpoon Capital offers industry leading DSCR Loans for properties in Mankato and all throughout the market area. Check out our full DSCR Loans Program here, or if you want a quote on what terms look like today, fill out this two-minute form!
Sources: Redfin Housing Market↗ · BiggerPockets Market Finder↗ · BNBCalc Minnesota STR Guide↗ · AirDNA Market Data↗
Investor Takeaway: Mankato offers steady university demand and rising rents, with lake homes at the top of the STR market. Investors should generally buy near campus for the long-term rent, look to the surrounding lakes rather than town for nightly stays, and confirm city or county rules for each address.
North Shore lodges and a limited permit list
Two Harbors sits on Lake Superior's North Shore about 25 miles northeast of Duluth, the gateway to Gooseberry Falls, Split Rock Lighthouse and the Superior Hiking Trail, with the highest STR revenue on this list. It is the classic Minnesota vacation market – where saunas, lake views and log homes fetch top dollar!
The case for the North Shore rests on Lake Superior tourism, with state parks, waterfalls, hiking and fall colors drawing visitors from the Twin Cities and beyond, and on revenue per listing that leads the state. However, the City of Two Harbors limits new STR permits to its B1 and B2 commercial districts and the Burlington Bay PUD, caps permits at 3% of the city's housing stock (with B1 properties on 7th Avenue and the Burlington Bay PUD exempt), requires existing residential permits to renew by November 1 and ends permits when a property sells. Every permit ($125 a year) also requires a Lake County lodging license, a local agent within 30 miles, two off-street parking spaces and the permit number in all ads, and stays carry about 13.375% in combined taxes, including a 1% city tax and Lake County's 4% lodging tax. Note that AirDNA's Two Harbors submarket reaches well up the North Shore, where Lake County's rules rather than the city's apply.
The Two Harbors submarket posts an AirDNA score of 88/100, with Investability (100) and Rental Demand (94) leading, and Revenue Growth (62), Regulation (62) and Seasonality (60) the “soft spots.” Annual revenue per listing averages $52,027 (up 3.5% year-over-year), the highest in the article, with an average daily rate of $318.76 (down 0.8%), also the highest, and occupancy of 56% (up 3.4%). Total active listings sit at 375, up 18.7%, and lakefront homes with saunas carry the top end, such as a Lake Superior log home ($175K a year at 66% occupancy).
Financing note: Two Harbors deals often qualify on TTM actuals or STR revenue projections given the seasonal revenue base, and Harpoon Capital offers industry leading DSCR Loans for properties throughout the market area. Check out our full DSCR Loans Program here, or if you want a quote on what terms look like today, fill out this two-minute form!
Sources: Redfin Housing Market↗ · STR Profit Map: Two Harbors Rules↗ · AirDNA Market Data↗
Investor Takeaway: Two Harbors offers the highest STR revenue and nightly rates in Minnesota on Lake Superior's North Shore, but new city permits are limited to commercial zones. Investors should generally buy in the commercial districts or the Burlington Bay PUD, or outside city limits under Lake County's rules, keeping in mind that city permits end on sale, and underwrite on trailing twelve-month actuals that reflect the long winter.
| MARKET | AIRDNA SCORE | ANNUAL REVENUE | AVG. DAILY RATE | OCCUPANCY | YOY LISTING GROWTH |
|---|---|---|---|---|---|
| Rochester | 96 | $31,216 (+3.9%) | $124.65 (+3.0%) | 75% (+1.3%) | +0.9% (565 listings) |
| Two Harbors | 88 | $52,027 (+3.5%) | $318.76 (-0.8%) | 56% (+3.4%) | +18.7% (375 listings) |
| Duluth | 82 | $48,005 (+1.6%) | $278.99 (-0.9%) | 55% (+0.6%) | +6.7% (541 listings) |
| St. Paul (Downtown) | 67 | $30,601 (-4.2%) | $147.89 (-1.9%) | 63% (-2.0%) | -2.9% (710 listings) |
| St. Cloud | 62 | $24,243 (-4.1%) | $124.74 (+4.8%) | 59% (-6.0%) | +16.1% (65 listings) |
| Mankato | 60 | $35,212 (+2.9%) | $239.01 (-3.7%) | 48% (+6.5%) | +2.2% (138 listings) |
Source: AirDNA, current as of 2026. Scores and figures reflect each market or submarket as defined by AirDNA and may not correspond 1:1 with city or county boundaries. As of October 2026
A few patterns stand out. The two Lake Superior markets, Two Harbors and Duluth, earn the most per listing (near or above $48,000 a year) on the highest nightly rates, but both run near 55% occupancy. Rochester scores highest of all on a modest nightly rate, because Mayo Clinic visitors keep three of every four nights booked. Additionally, nightly rates fell in four of the six markets, while listings grew fastest in Two Harbors (18.7%) and St. Cloud (16.1%), i.e. new supply is arriving in both.
Minnesota's real estate landscape offers a strategy for nearly every type of investor:
Market-level data is a starting point, not a substitute for underwriting the specific property, neighborhood and rental strategy in front of you. Minnesota leaves STR rules to its cities and counties, which range from St. Paul's and Rochester's annual licenses to Duluth's new ban on whole-home STRs, St. Cloud's 30-day minimum and Two Harbors' commercial-zone limit, so investors should confirm what is allowed at a specific address before they close and check how the property will be classified for property tax.
If you are ready to invest in one of these markets, start with our Minnesota DSCR loans page.
Sources: Redfin housing market data, BiggerPockets Market Finder, AirDNA market and submarket data (airdna.co), BNBCalc Minnesota STR guide, BNBCalc Rochester STR guide, the City of St. Paul and STR Profit Map. Data collected as of October 2026, ahead of the 2027 investing season.
There is no statewide STR license, but stays under 30 days carry the 6.875% state sales tax plus local sales and lodging taxes, and many cities add their own rules, e.g. St. Paul requires a $45 annual host license per unit, Rochester a registration or certificate, and Two Harbors a $125 annual permit plus a Lake County lodging license, while Duluth no longer issues new STR licenses for entire single-family homes and St. Cloud's zoning does not allow stays under 30 days.
No. Out-of-state and first-time investors can buy investment property in Minnesota without any license. A DSCR loan qualifies you primarily based on the property itself rather than your personal income or professional credentials, which is part of why it's such a common financing tool for out-of-state buyers.
A DSCR (Debt Service Coverage Ratio) loan qualifies a property primarily based on the property (its rent, value and location) relative to its mortgage payment, rather than the borrower's personal income or tax returns. If the property's projected or actual rent covers the mortgage payment (a DSCR of 1.00x or higher), it's generally easier to qualify, and Harpoon Capital also offers options for deals below 1.00x.
Generally not in an entire single-family home. Duluth adopted an ordinance on September 14, 2026 that bans new STR licenses for entire single-family homes, with existing permits continuing only until the property sells and a moratorium on new permits through November 10, 2026. Investors buying in Duluth should typically plan on a long-term rental and confirm any other options with the city.
Harpoon Capital's DSCR loan program allows as little as 15% down on qualifying purchases, up to 85% LTV, with cash-out refinances available up to 80% LTV. Exact terms depend on the property, credit profile, and DSCR ratio. Fill out our DSCR Loan Application to see specific numbers for your deal.
Ready to Run the Numbers on a Minnesota Deal?
Whether you're eyeing a furnished rental near Mayo or a North Shore cabin in Two Harbors, get a same-day rate and terms with our two-minute DSCR quote form, or explore the full Minnesota DSCR Loans Program to see how we qualify the property, not just the borrower.
This article is for informational purposes only and does not constitute investment, legal, or financial advice. Harpoon Capital encourages investors to conduct independent due diligence before making any real estate investment decision.