Thinking about letting a Somerset home pull double duty as a weekend getaway rental? With the St. Croix River nearby and the Twin Cities a short drive away, demand can look appealing. Still, the right move starts with clear rules, realistic costs, and a simple way to gauge returns. This guide gives you the essentials for short‑term rentals in the Village of Somerset and greater St. Croix County, plus a practical checklist to vet a property before you buy or convert. Let’s dive in.
Somerset STR basics and demand drivers
Short‑term rentals, often called STRs, generally cover stays from a single night up to about 30 days. Local rules set the exact thresholds, so you will want to confirm the definition that applies to your property.
Somerset’s location near the river and regional recreation means demand often tracks warm‑weather months and holiday weekends. Weekenders from the metro, outdoor enthusiasts, and event traffic can drive bookings. You can validate demand by scanning live listings on major platforms in Somerset and nearby St. Croix County, checking seasonality, and noting price ranges and review volume.
For deeper data, many owners review commercial analytics that estimate occupancy and nightly rates. Pair that with local real estate pricing, county records, and tourism calendars to understand both seasonality and competition.
Where to verify rules in Somerset
The most important step is confirming what is allowed at a specific address. Start with three sources: the Village of Somerset municipal code and clerk or administrator, St. Croix County Planning and Zoning, and relevant Wisconsin state rules that touch lodging and taxation.
- Village of Somerset: Ask about registration or permits, occupancy and parking limits, nuisance rules, and any inspection requirements. Request copies of applications and checklists.
- St. Croix County: Verify zoning and any conditional‑use permit needs, especially if you are outside village boundaries or on a property with septic.
- State of Wisconsin: Review state tax and safety requirements that apply to short‑term lodging, and learn how taxes are collected.
Licensing and registration
Many municipalities require hosts to register or obtain a short‑term rental or business license. That can include naming a local contact who can respond to concerns, posting contact info on site, and renewing the license on a schedule. Ask the village staff which forms you need and how long approvals typically take.
Zoning and approvals
Whether an STR is allowed can depend on your zoning district. Some zones allow the use by right, while others require a conditional‑use permit with specific conditions. Confirm the property’s zoning, whether STRs are permitted, and any special requirements before you write an offer or convert a home.
Safety, occupancy, and parking
Expect standards for smoke and carbon‑monoxide detectors, egress, and fire extinguishers. There may be maximum guest counts per bedroom, vehicle limits, and septic capacity rules that cap occupancy. Ask if inspections are required before operations start.
Noise and nuisance rules
Quiet hours, amplified sound, and guest limits often fall under local nuisance ordinances. Understand how complaints are handled and what your responsibilities are for neighbor relations and response times.
HOA and private rules
Even if municipal zoning allows STRs, a homeowners association or recorded covenants can prohibit or restrict them. Review the deed, HOA rules, and any community guidelines for rental use, notice requirements, and fines.
Enforcement and penalties
Enforcement can be complaint‑based or include proactive inspections. Penalties may include fines or orders to cease rentals. Ask the village how enforcement works and what triggers an investigation.
Taxes and reporting in Wisconsin
Short‑term rental income is taxable. At the federal level, you will report income and deduct eligible expenses under the rules in IRS Publication 527. If you provide substantial services, different tax treatment can apply. If you also use the home personally, mixed‑use rules affect deductions.
At the state and local level, confirm which taxes apply to your bookings. Wisconsin sales or lodging taxes can apply to short stays, and some local jurisdictions impose room taxes or tourism assessments. In certain cases, booking platforms may collect and remit some taxes, but you should verify which taxes they remit and which remain your responsibility to register, file, and pay.
You may need to register for the appropriate state tax account or seller’s permit. Keep detailed records of gross receipts by platform and any direct bookings, along with expenses and capital improvements. For property taxes, most homes remain in their standard classification, but it is smart to ask the St. Croix County assessor whether intensive STR use affects assessment practices.
Startup and operating costs to budget
A solid pro forma includes both one‑time setup and ongoing expenses. Build conservative estimates and add a reserve for repairs and vacancy.
- Acquisition: Purchase price, closing costs, inspections, and any upgrades to meet code or guest expectations.
- Permits and compliance: License and application fees, inspection fees, safety upgrades, and any required signage.
- Furnishings and setup: Beds, seating, storage, kitchenware, linens, décor, window coverings, outdoor furniture, and safety signage.
- Insurance: A standard homeowner policy often excludes STR activity. Price a short‑term rental or commercial policy that covers liability, dwelling, contents, and loss of income.
- Operating expenses:
- Utilities: Electric, gas, water, sewer, trash, internet, and TV. Build in higher winter heating costs and freeze protection steps for Wisconsin.
- Cleaning: Turnover cleans, deep cleans, and laundry.
- Consumables: Toiletries, paper goods, coffee, spices, and basic supplies.
- Maintenance: Lawn and snow, HVAC service, minor repairs, and seasonal tasks like winterization.
- Management: If you use a professional manager, fees often scale with revenue or are flat per month.
- Platform and processing: Booking platform fees, marketing, payment processing, and credit card fees.
- Reserves: A percentage of revenue for capital items and vacancy.
- Taxes: Income taxes plus sales or room taxes where applicable.
ROI basics and quick formulas
Use straightforward metrics to compare a potential STR to other options.
- Gross Rental Revenue: Average Daily Rate (ADR) × Occupied Nights.
- Net Operating Income (NOI): Gross Revenue − Operating Expenses (before mortgage, depreciation, and income taxes).
- Cap Rate: NOI ÷ Purchase Price.
- Cash‑on‑Cash Return: Annual pre‑tax cash flow ÷ Total cash invested (down payment, closing, setup).
- Break‑even Occupancy: (Fixed Costs + Debt Service) ÷ (ADR − Variable Cost per Booking).
Model at least three scenarios with different occupancy and ADR: a conservative low season, a baseline, and a high season case. Run a sensitivity check that nudges occupancy up or down to see how cash flow moves. Include platform fees, management, cleaning, and a vacancy and maintenance reserve. If you plan to grow direct bookings, adjust for lower platform fees but add marketing and admin time.
Somerset due diligence checklist
Use this step‑by‑step list before you buy or convert a home in the Village of Somerset or nearby St. Croix County.
- Confirm zoning and whether an STR is allowed at the property address with the Village of Somerset and St. Croix County.
- Request copies of any STR ordinance, license application, and conditional‑use checklists from the village and county.
- Review the deed, HOA, and any recorded covenants for rental restrictions or notification rules.
- Ask Wisconsin’s tax authority which sales, lodging, or room taxes apply and how to register and remit.
- Verify what taxes, if any, your chosen booking platform collects and remits for this location.
- Obtain insurance quotes for STR‑specific coverage, including liability and loss of income.
- Price out furnishings, safety upgrades, locks, signage, and initial supplies.
- Pull market comps: active listings, estimated ADR, occupancy patterns, review counts, and seasonality for Somerset and nearby towns.
- Interview at least two local property managers about fees, service levels, guest screening, and typical monthly expenses.
- Build a 3‑year model with seasonality, management fees, repairs, taxes, debt service, and a contingency reserve.
- Plan for neighbor communication, noise controls, and a local emergency contact with 24/7 availability.
- Ask local officials about complaint processes and enforcement history for short‑term rentals in the area.
Local pricing and service quotes
Costs vary by home size and service level. Cleaning fees depend on square footage, laundry needs, and outdoor maintenance. Management fees are often a percentage of booking revenue or a flat monthly rate. Ask potential managers how they handle dynamic pricing, turnovers, guest vetting, and after‑hours support, then compare those practices to your financial model.
For ongoing utilities, account for winter heating and smart thermostats that protect pipes without overspending. Request off‑season pricing from vendors for things like deep cleans and maintenance so you can schedule cost‑efficient work when occupancy is lower.
Risk management and guest relations
Clear house rules, a robust booking agreement, and transparent communication go a long way. Use smart locks, require age‑verified bookings, and consider a security deposit or damage waiver. If you accept pets, add fees and cleaning protocols.
Prepare an emergency plan with posted instructions, local contacts, and shut‑off locations. Keep the home stocked with fire extinguishers, a first‑aid kit, and weather‑appropriate supplies. In winter, add driveway snow plans and guidance for guests on cold‑weather use.
When an STR may not fit
Some homes simply pencil out better as long‑term rentals or as personal use with occasional hosting. If zoning is restrictive, HOA rules are tight, or management options are limited, compare a long‑term lease scenario to your STR model. Run a side‑by‑side cash‑on‑cash comparison before deciding.
Work with a local advisor
If you are weighing a Somerset purchase for dual use, you want clarity on rules, returns, and resale value. Our team can help you identify properties that fit likely demand patterns, understand local nuances, and connect you with the right local resources for permits, insurance, and operations. You will also get guidance on pricing, presentation, and exit strategy if you plan to sell in the future.
Have questions or want property options that match your STR goals? Reach out to the Platinum Real Estate Team to talk through your plan or Request Your Complimentary Home Valuation.
FAQs
What is a short‑term rental in Somerset, WI?
- Typically, it is a residential rental for short stays up to about 30 days, but you should confirm the exact definition and thresholds with the Village of Somerset.
Do I need a Village of Somerset permit to host an STR?
- Many municipalities require registration or a permit; contact the Village of Somerset clerk or administrator to learn what applies at your property address.
What Wisconsin taxes apply to STR income and stays?
- Expect income tax on earnings and confirm sales or room taxes that apply to short stays, plus who collects and remits them for your bookings in this location.
How do I estimate ROI for a Somerset short‑term rental?
- Calculate gross revenue from ADR and occupancy, subtract operating costs to get NOI, then run cap rate and cash‑on‑cash returns across conservative, baseline, and optimistic scenarios.
Are STRs allowed in every Somerset neighborhood or condo?
- No; zoning and private rules vary, so you need to check both municipal zoning for the address and any HOA or covenant restrictions.
Do Airbnb or VRBO collect lodging taxes for Wisconsin bookings?
- Platforms may collect and remit some taxes in certain jurisdictions, but you must verify which taxes they handle and register for any that remain your responsibility.
