Steps to Launch an Airbnb Business in Chicago

Steps to Launch an Airbnb Business in Chicago

Discover how to launch a successful Airbnb business in Chicago, from understanding the city’s unique regulatory environment, zoning laws, and building codes to leveraging high-demand periods for maximum revenue. Get informed and start your lucrative hosting journey today.

Understanding the Airbnb Market

An Overview of the Airbnb Market in Chicago

The city of Chicago, lovingly dubbed the ‘Windy City,’ presents an enticing opportunity for prospective Airbnb hosts. As of 2023, there are over 6,000 active rentals in Chicago, generating an average annual revenue of $35,500 per listing. With over 58 million tourists visiting annually, it’s no wonder Chicago is one of the top-earning cities for Airbnb hosts.

Why Chicago is a Lucrative Airbnb Market

Chicago’s allure lies in its 77 vibrant and diverse neighborhoods. From the art scene in Pilsen to the indie coffee shops in Wicker Park, the city is a tapestry of unique experiences. Plus, with an average nightly rate of $209 for an Airbnb listing, Chicago is certainly a lucrative option for hosts.

Steps to Launch an Airbnb Business in Chicago

Airbnb Regulatory Environment in Chicago

Understanding Chicago’s Airbnb Regulations

The Shared Housing Ordinance, which regulates short-term rentals in Chicago, has been in effect since 2017. Hosts must obtain a shared housing unit operator license, a process that requires a background check, and proof of insurance. 

Furthermore, Chicago implements specific tax regulations for short-term rentals. As of December 1, 2018, there’s a base rate of 4.5% of the gross rental or leasing charge. Additionally, for vacation rentals and shared housing units, a 6% surcharge is added to the base rate, culminating in a total city tax rate of 10.5% of the gross rental or leasing charge.

Check out the City of Chicago: Hotel Accommodations Tax AND Vacation Rental and Shared Housing Surcharge.

These taxes are applied to reservations that last 29 nights or less and encompass the listing price, including any cleaning fee. To simplify this process for hosts, Airbnb automatically collects and remits these taxes and fees.

Beyond this, Chicago has developed a unique feature known as the Prohibited Buildings List. This is a running list of residential buildings where short-term rentals are not allowed. As a host, it is essential to ensure your property is not on this list before initiating business.

In addition, the Department of Business Affairs and Consumer Protection (BACP) implemented an online system for license applications in 2021, further simplifying the process. Nevertheless, the city continues to enhance enforcement measures to address illegal short-term rentals.

Compliance with Zoning Laws and Building Codes

Adherence to zoning laws and building codes is critical for Airbnb hosts in Chicago. These laws regulate the types of activities that can occur in specific geographic areas and the structural integrity of properties.

The penalties for violating these laws can be severe. Fines range from $1,500 to $3,000 per day of violation. Moreover, hosts may face additional penalties, including legal action and the revocation of their license.

Moreover, properties that have a history of violations may be added to the Prohibited Buildings List, barring them from hosting short-term rentals. This emphasizes the importance of complying with all local laws and ordinances when running an Airbnb in Chicago.

As a host, it’s crucial to understand and stay up-to-date with all the regulatory changes to operate a legal and successful Airbnb business in the Windy City. An in-depth understanding of these regulations will not only keep you out of trouble but also pave the way for a prosperous Airbnb venture.

Setting up Your Airbnb Business

Finding the Right Property

The median home price in Chicago is approximately $286,000, making property investment a considerable, but often lucrative, step. Key factors include proximity to tourist attractions, safety, and neighborhood appeal.

Getting the Necessary Licenses and Permits

Acquiring a shared housing unit operator license costs $250 for two years. However, keep in mind that certain buildings in Chicago are deemed “prohibited buildings” and cannot host short-term rentals.

Designing and Listing Your Airbnb Property

Setting Up and Designing Your Space

Consider investing in sustainable and energy-efficient modifications, as over 70% of travelers are likely to book an eco-friendly rental. Furnishing a two-bedroom property in Chicago can cost around $6,000 to $10,000, depending on the quality and style of furnishings.

Creating a Compelling Listing

The key to a compelling listing is professional photography. Homes with professional photos tend to earn 40% more, receive 24% more bookings, and can charge a 26% higher nightly price.

Steps to Launch an Airbnb Business in Chicago

Managing Your Airbnb Business

Strategies for Successful Guest Management

Successful hosts use automated tools for efficient communication, achieving a 5% higher chance of obtaining a 5-star rating. Additionally, consider employing a cleaning service, as cleanliness is the top factor affecting Airbnb reviews.

Maximizing Your Airbnb Revenue

Understanding the seasonality of bookings can go a long way in maximizing your Airbnb revenue. In high-demand periods, such as the summer or during significant city events, you can increase prices by up to 35%.

Some of the notable events in Chicago include the Lollapalooza music festival, the Chicago Marathon, the Chicago Air and Water Show, and the Taste of Chicago food festival. These events draw massive crowds, and the demand for short-term rentals skyrockets. By adjusting your rates to reflect this increased demand, you can significantly boost your earnings.


Starting an Airbnb business in Chicago is a journey that can lead to a fruitful destination. Armed with knowledge about the local market, regulatory compliance, and effective business strategies, you are well on your way to launching a successful Airbnb venture in Chicago.

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