Ely MN Short Term Rental Regulations: Complete Airbnb Host Guide

Thinking About Starting an Airbnb in Ely?

🔥 Join 110,000+ real estate investors getting the most unique & profitable short-term rental investment opportunities delivered to your inbox, 6x/week. Subscribe Now

Disclaimer: This article is for informational purposes only and not legal advice. Regulations may have changed since publication. Always check with local authorities and consult a legal professional before making investment decisions.

Introduction to Short-Term Rentals in Ely

Nestled at the edge of Minnesota’s legendary Boundary Waters Canoe Area Wilderness (BWCA), Ely has emerged as one of the state’s premier destinations for outdoor enthusiasts and nature lovers. This gateway city of approximately 3,400 residents transforms into a bustling hub during peak seasons, drawing hundreds of thousands of annual visitors seeking wilderness adventures, pristine lakes, and the authentic Northwoods experience.

For savvy real estate investors, Ely presents a unique opportunity in the short-term rental market. The city’s strategic location as the last major outpost before entering the BWCA creates consistent demand for quality accommodations year-round—from summer paddlers and hikers to winter dog sledders and northern lights seekers. With over one million acres of wilderness at its doorstep and world-class attractions like the International Wolf Center and North American Bear Center, Ely offers something special that keeps visitors coming back.

What makes Ely particularly interesting for STR investors is its relatively recent entry into formal vacation rental regulation. After years of debate, the city approved its first comprehensive short-term rental ordinance in December 2020, creating a clear framework that balances tourism growth with community preservation. This regulatory clarity, combined with the city’s commitment to maintaining high-quality lodging standards through its joint standards initiative with surrounding townships, creates an environment where responsible STR operators can thrive.

Whether you’re considering a cozy cabin on the shores of Shagawa Lake or a downtown property within walking distance of Ely’s charming shops and restaurants, this guide will walk you through everything you need to know about operating a legal and profitable short-term rental in Minnesota’s premier wilderness gateway.

Current Short-Term Rental Permit Requirements in Ely

Ely’s short-term rental regulations, approved after extensive community input and multiple revisions, establish clear requirements for operating vacation rentals within city limits:

City of Ely Requirements

1. Short-Term Rental License: All STR operators must obtain a specific license from the City of Ely.
   • Application packet available at City Hall or online
   • Annual renewal required
   • Properties must meet all safety and zoning requirements
   • Contact: City Clerk’s Office, (218) 365-3224
2. Business License: May be required in addition to STR license.
   • Check with City Hall for current requirements
   • Annual renewal typically required
3. Long-Term Rental License: If you operate both short-term and long-term rentals in the same property, separate licenses are required.
   • Available through the same application process
   • Different inspection and compliance standards may apply

State and County Requirements

1. Minnesota Department of Health (MDH) Lodging License: May be required for certain STR operations.
   • Check MDH requirements for properties with multiple units
   • Contact MDH Metro at (651) 201-4500 for guidance
2. St. Louis County Requirements: While Ely operates within St. Louis County, city regulations typically supersede county requirements within city limits.
   • Verify any additional county requirements
   • Tax registration may be required at county level

Property-Specific Requirements

The ordinance includes several important operational requirements:

• Occupancy Limits: Specific limits based on property size and configuration
• Local Contact: Designation of a responsible party who can respond to issues
• Parking Requirements: Adequate off-street parking for guests
• Quiet Hours: Enforcement of community noise standards

Zoning Regulations for STRs in Ely

Understanding where you can legally operate an STR in Ely is crucial for investment success:

Permitted Zones

Following significant debate, Ely allows short-term rentals in multiple zoning districts:

• Commercial Districts: Generally permitted with proper licensing
• Mixed-Use Areas: Allowed with appropriate permits
• R-1 Residential Districts: Permitted but with specific limitations and neighbor considerations
• R-2 and R-3 Districts: Generally allowed with proper licensing

Zoning Restrictions and Limitations

The city has implemented several measures to maintain neighborhood character:

• Permit Caps: Limits on the number of STR permits in certain residential zones
• Percentage Limits: Based on the total number of households in each district
• Density Controls: Preventing oversaturation in residential neighborhoods

Grandfathered Properties

Properties operating as STRs before the ordinance adoption may have different requirements:

• Existing operators were required to obtain permits under the new system
• Some properties may have been operating in areas now restricted
• Documentation of prior operation may be required

Special Considerations

Certain types of properties have unique requirements:

• Rooming Houses/Bunkhouses: Associated with wilderness outfitting businesses may be exempt
• Multi-Unit Buildings: May have percentage limits on STR units
• Waterfront Properties: Additional environmental considerations may apply

Required Documentation for Ely Short-Term Rentals

To operate legally in Ely, maintain these essential documents:

1. City of Ely STR License: Must be current and properly displayed
2. Business License (if required): Keep both physical and digital copies
3. Minnesota Tax Identification Number: For proper tax collection and remittance
4. Liability Insurance Policy: Proof of adequate coverage
   • Minimum coverage amounts as specified by city ordinance
   • Must cover short-term rental activities
5. Safety Inspection Records: Documentation of required safety features
   • Smoke detector compliance
   • Carbon monoxide detector installation
   • Fire extinguisher placement
6. Guest Registration Records: Required by ordinance
   • Names and contact information of guests
   • Dates of stay
   • Number of occupants
7. Neighbor Notification Documentation: Proof of required notifications to adjacent property owners
8. Property Management Plan: Addressing noise, parking, trash, and maintenance
9. Emergency Contact Information: Local contact who can respond to issues
10. Tax Registration Documentation: State and local tax accounts

Professional STR operators in Ely recommend maintaining organized records both physically and digitally, as the city actively monitors compliance with its relatively new regulations.

Ely Short-Term Rental Taxes

The tax structure for STRs in Ely involves multiple layers of taxation that hosts must understand:

State Taxes

• Minnesota Sales Tax: 6.875% base rate on all lodging
• Additional State Taxes: May apply to lodging services

Local Taxes

• City of Ely Lodging Tax: Check with City Hall for current rates
• St. Louis County Taxes: May apply to properties within county jurisdiction

Tax Collection Methods

While platforms like Airbnb collect and remit some taxes automatically, they don’t cover all obligations:

• Verify which taxes are collected by your booking platform
• Register for accounts to remit any uncollected taxes
• Maintain detailed records of all transactions

Tax Filing Requirements

• Monthly or Quarterly Filing: Depending on revenue volume
• Annual Reconciliation: Required for all operators
• Registration Requirements: Must register before first rental

Many Ely STR operators work with local accountants familiar with lodging tax requirements, particularly given the complexity of operating in a tourist-dependent economy.

Safety Requirements and Inspections

Ely prioritizes guest safety with comprehensive requirements:

Required Safety Equipment

• Smoke detectors in all sleeping areas and common spaces
• Carbon monoxide detectors on each level
• Fire extinguishers readily accessible
• Emergency exit signage
• Adequate lighting for all exits
• First aid kit availability

Inspection Process

The city has established inspection protocols:

• Initial inspection before permit issuance
• Potential periodic re-inspections
• Complaint-based inspections as needed
• Compliance verification for renewals

Northwoods-Specific Safety Considerations

Ely’s wilderness location creates unique safety needs:

• Wildlife Safety: Information about bear safety and food storage
• Water Safety: Guidelines for properties with lake access
• Winter Conditions: Snow removal and heating system maintenance
• Emergency Access: Clear address marking for emergency services
• Wilderness Preparedness: Guest education about outdoor safety

Building Code Compliance

All STR properties must meet current building codes:

• Proper egress from all sleeping areas
• Adequate electrical systems
• Functional plumbing and septic systems
• Structural integrity verification

Ely vs. Surrounding Areas: Regulation Comparison

How do Ely’s regulations compare to other popular Northern Minnesota destinations?

Grand Marais

• Similar gateway community to BWCA
• More established STR market
• Comparable permit structure
• Higher tourist volume

Tower/Lake Vermilion Area

• Less formal regulation structure
• Growing STR market
• Focus on lake-based recreation
• Different seasonal patterns

Duluth

• Much more complex regulations
• Higher permit fees
• Stricter enforcement
• Urban vs. wilderness market

Unincorporated St. Louis County

• Generally less restrictive
• County-level regulations only
• Different tax structure
• More rural properties available

Ely offers a balance between regulatory clarity and operational flexibility, making it attractive for investors who value both structure and opportunity.

Enforcement of STR Rules in Ely

Understanding enforcement patterns helps ensure compliance:

Compliance Monitoring

Ely uses multiple enforcement mechanisms:

• Regular review of online listings
• Complaint-based investigations
• Permit renewal reviews
• Tax compliance audits

Common Violations

Based on council discussions and enforcement patterns:

• Operating without proper permits
• Exceeding occupancy limits
• Noise and disturbance complaints
• Parking violations
• Tax collection failures
• Failure to maintain required safety equipment

Penalties

The ordinance includes graduated penalties:

• Warning for first violations
• Fines for repeated violations
• Permit suspension or revocation
• Prohibition from future permits

Community Relations

Given Ely’s small-town nature, maintaining good relationships is essential:

• Provide neighbors with contact information
• Respond promptly to concerns
• Educate guests about community standards
• Support local businesses and events

The city has shown commitment to fair enforcement while working with operators to ensure compliance.

How to Start a Short-Term Rental Business in Ely

Follow this roadmap to launch your Ely STR:

Step 1: Market Research & Property Selection

• Research seasonal demand patterns (summer peak, winter recreation)
• Consider proximity to BWCA entry points
• Evaluate lake access vs. in-town convenience
• Analyze competition and pricing strategies

Step 2: Zoning & Permit Verification

• Confirm property is in an allowed zone
• Check for any permit caps in your area
• Review neighbor notification requirements
• Understand occupancy limitations

Step 3: Property Acquisition & Preparation

• Purchase property or secure owner authorization
• Complete necessary renovations
• Install all required safety equipment
• Create Northwoods-authentic atmosphere

Step 4: Licensing & Registration

• Apply for City of Ely STR license
• Obtain business license if required
• Register for all tax accounts
• Complete MDH registration if applicable
• Schedule required inspections

Step 5: Operations Setup

• Create compelling listings highlighting wilderness access
• Develop comprehensive house manual
• Establish cleaning and maintenance protocols
• Build relationships with local service providers
• Install reliable internet (crucial for remote workers)
• Create wildlife safety protocols

Step 6: Marketing & Guest Experience

• Highlight proximity to BWCA and attractions
• Partner with local outfitters and guides
• Develop seasonal activity guides
• Create memorable Northwoods experiences

Step 7: Ongoing Compliance

• Maintain all required documentation
• File taxes timely
• Renew permits annually
• Stay informed about regulation changes
• Participate in community initiatives

Advice from Successful Ely STR Operators

Insights from experienced Ely vacation rental owners:

“Location matters, but so does the experience. Properties near the lakes book solid, but even in-town places do well if you create that authentic Northwoods feel—think log furniture, local art, and a good sauna.” – Ely property manager

“The shoulder seasons are gold here. Market to photographers in fall, northern lights seekers in winter, and spring paddlers. Don’t just focus on summer—that’s when everyone’s competing.” – 5-year STR operator

“Partner with the outfitters. Guests love packages that include guided trips or gear rental. It sets you apart and supports local businesses, which matters in a town this size.” – Multi-property investor

“Be bear aware and make your guests bear aware. Proper garbage management isn’t just good practice—it’s essential. One bear incident can ruin your reputation and your relationship with neighbors.” – Longtime Ely host

The consensus is clear: success in Ely comes from embracing the wilderness experience while maintaining strong community connections.

Who to Contact About Ely STR Regulations

For official information and assistance:

City of Ely

• City Hall: 209 E Chapman Street, Ely, MN 55731
• Phone: (218) 365-3224
• Website: www.ely.mn.us
• Clerk’s Office: (218) 365-3224 Ext 1
• Email: deputyclerk@ely.mn.us
• Office Hours: 8:00 AM – 4:30 PM, Monday – Friday

St. Louis County Planning & Zoning

• Phone: (218) 749-7100
• Website: www.stlouiscountymn.gov

Minnesota Department of Health – Lodging

• Phone: (651) 201-4500
• MDH Lodging Information

Ely Chamber of Commerce

• Phone: (218) 365-6123
• Website: www.ely.org
• Tourism and business support

Ely Area Short-Term Rental Standards Program

• Joint initiative with surrounding townships
• Contact through City of Ely

Future Outlook for Ely STR Regulations

What to expect for Ely STR regulations going forward:

• Permit Cap Adjustments: Ongoing evaluation of limits based on community impact
• Enhanced Standards Program: Expansion of the joint standards initiative with neighboring townships
• Technology Integration: Potential online licensing and compliance monitoring
• Seasonal Considerations: Possible adjustments for winter vs. summer operations
• Environmental Protections: Increased focus on wilderness preservation and sustainable tourism
• Workforce Housing Balance: Continued monitoring of housing availability for local workers

Despite being relatively new to formal STR regulation, Ely has shown a commitment to balanced growth that supports both tourism and community needs. The city’s unique position as a wilderness gateway, combined with its clear regulatory framework, positions it as an attractive market for responsible STR investment.

Ready to Invest in Ely Short-Term Rentals?

Ely offers exceptional potential for STR investors who appreciate wilderness tourism and small-town community values. With its unparalleled access to the Boundary Waters, year-round outdoor recreation, world-class wildlife centers, and authentic Northwoods charm, this gateway city provides a unique investment opportunity in Minnesota’s vacation rental market.

🔥 Ready to find the best STR deals in Ely and beyond? Subscribe to The Offer Sheet and join 150,000+ investors getting curated, profitable short-term rental opportunities delivered directly to their inbox 6x/week.

⭐️ Already a subscriber? Upgrade to Pro to get access to 40+ properties daily, exclusive off-market deals, and premium analysis tools to maximize your STR investment returns.

Remember: Always consult with local legal and tax professionals before making investment decisions.