Edwardsville, Illinois

Edwardsville, located in Madison County, Illinois, has emerged as an appealing location for short-term rental investments due to its proximity to St. Louis and a range of local attractions. With a population of around 25,000, the community blends suburban living with easy access to urban amenities and recreational activities. As a college town, home to Southern Illinois University Edwardsville (SIUE), the area attracts both leisure and business travelers, creating a consistent demand for short-term rental properties.

The current average daily rate (ADR) for short-term rentals in Edwardsville is $178.28, reflective of the balance between affordability and quality that appeals to visitors. The presence of natural attractions, historical sites, and a growing dining scene further contribute to the area's attractiveness for short-term stays.

Key performance indicators (KPIs) are essential in evaluating the health of the short-term rental market in Edwardsville. The following metrics are noteworthy:

• Average Daily Rate (ADR): Currently standing at $178.28.
• Occupancy Rate: Typically ranges between 65%-75% in peak months, demonstrating solid demand.
• Revenue per Available Room (RevPAR): With an ADR of $178.28 and an average occupancy rate of approximately 70%, the RevPAR is estimated at $124.80.
• Length of Stay: Average stays tend to be around 3-4 days, catering to both leisure and business travelers.

These indicators signify a stable market with opportunities for both new and existing investors within the short-term rental sector.

The short-term rental market in Edwardsville has shown steady growth over the past decade. This growth has been driven by several factors:

1. Increased Tourism: Edwardsville has seen a rising trend in tourism, primarily due to events at SIUE, local festivals, and convenient access to larger city attractions in St. Louis.

2. Rising Property Values: Property values in Edwardsville have appreciated over the past ten years, partly due to the ongoing development projects in the area. This enhances the investment appeal for short-term rentals.

3. Adaptation to Market Changes: Local property managers and owners have increasingly adopted technology and marketing strategies (through platforms like Airbnb and Vrbo) to attract guests effectively.

Overall, the combination of growing tourism, property value appreciation, and improved utilization of short-term rental platforms suggests a welcoming climate for continued growth in this sector.

The investment landscape in Edwardsville for short-term rentals is quite favorable. With an ADR of $178.28 and an estimated occupancy rate of 70%, potential investors can anticipate a decent return on investment (ROI). Let’s break down the figures:

• Monthly Revenue Estimate: Assuming 70% occupancy, the monthly revenue can be calculated as follows:

  [
  Monthly Revenue = ADR \times Occupied Nights = 178.28 \times (30 \times 0.7) \approx $3,742.31
  ]

• Yearly Revenue Estimate:
  [
  Yearly Revenue = Monthly Revenue \times 12 \approx 3,742.31 \times 12 = $44,907.72
  ]

• Costs of Operation: Typical expenses include management fees (usually around 20%), maintenance costs, cleaning fees, utility expenses, and property taxes. For a rough estimate:

  • Management fees: approximately $8,981.54
  • Maintenance and cleaning: $5,000
  • Utilities: $2,000
  • Property tax: $3,000

  Total Operating Costs:
  [
  8,981.54 + 5,000 + 2,000 + 3,000 \approx $18,981.54
  ]

• Net Operating Income (NOI):
  [
  NOI = Yearly Revenue – Operating Costs \approx 44,907.72 – 18,981.54 = $25,926.18
  ]

Given these estimates, ROI can be calculated assuming an initial investment of $250,000:
[
ROI = \left(\frac{NOI}{Investment} \times 100\right) \approx \left(\frac{25,926.18}{250,000} \times 100\right) \approx 10.37%
]

This indicates a healthy investment if managed effectively.

Edwardsville experiences notable seasonal fluctuations in tourism, which can impact short-term rental occupancy rates.

• Peak Season: The summer months, particularly June through August, witness a spike in bookings due to university-related events, outdoor activities, and local festivals.

• Shoulder Season: Spring (March-May) and Fall (September-November) show moderate demand, aligning with school calendars and behavior of travelers.

• Off-Peak: Winter (December-February) often reflects lower occupancy rates, attributed to colder weather and fewer local events. Strategies to attract winter guests might include promoting unique amenities or holiday events.

Understanding these seasonal dynamics allows property owners to set competitive pricing and marketing strategies.

Different property types within the market perform variably based on demand and location:

• Single-Family Homes: These often attract families or groups seeking multi-room accommodations. They generally see higher occupancy rates during peak travel seasons.

• Condos and Apartments: Typically cater to couples and business travelers, offering more affordable options. Performance can be stable throughout the year due to their appeal in both leisure and business segments.

• Luxury Listings: While they cater to a niche market, luxury rentals in prime locations yield a higher ADR but may experience longer vacancy periods.

Understanding property type performance can guide prospective investors in selecting the right type of listing for their investment strategy.

Understanding guest preferences is vital when setting up or improving a short-term rental property in Edwardsville:

• Preferred Amenities: High-speed Wi-Fi, kitchen facilities, parking availability, and clean laundry facilities tend to be top requirements for guests.

• Technology Integration: Guests increasingly expect smart home features such as keyless entry and smart thermostats for added convenience and security.

• Outdoor Spaces: Access to outdoor areas for relaxation, such as patios or gardens, contributes significantly to guest satisfaction, especially in warmer months.

Fulfilling these preferences can lead to better ratings and increased occupancy.

As short-term rentals have gained popularity, understanding local regulations is crucial for compliance and sustainability:

• Licensing Requirements: Edwardsville currently requires short-term rental homeowners to register their property with the city and may need to comply with hospitality laws.

• Zoning Laws: Certain zoning regulations may restrict rental operations in specific areas of the city, so investors should consult local zoning maps and regulations.

• Taxation: Property owners must be aware of the requirements for collecting and remitting hotel taxes applicable in the region.

Potential investors should keep informed about these factors to ensure compliance and avoid potential fines.

Edwardsville is comprised of several neighborhoods, each catering to various demographics. Here are a few key neighborhoods relevant to short-term rental investors:

• Downtown Edwardsville: This area offers proximity to shops, restaurants, and SIUE, making it a relatively desirable location with tourist foot traffic.

• Woods Estates: Known for spacious properties, this neighborhood appeals to families and groups, particularly during peak travel times.

• Parks and Recreational Areas: Locations near parks or lakes, like the Edwardsville Watershed Nature Center, provide attractive features for guests seeking downtime in nature.

Conducting a thorough neighborhood analysis enables investors to identify the most lucrative areas for their rental investments.

The outlook for Edwardsville's short-term rental market is cautiously optimistic. Key trends affecting the market include:

1. Increasing Popularity of Remote Work: With the rise of remote work, short-term rentals may attract more professionals looking for temporary accommodations as they seek work-life balance in suburban environments.

2. Sustainability Practices: Eco-conscious travelers are becoming more prevalent, leading to a growing interest in sustainable practices within rentals (i.e., energy-saving appliances, recycling, etc.).

3. Enhanced Guest Services: Offering personalized services (such as local tours, curated dining experiences) can help property owners differentiate their offerings.

Overall, these trends provide opportunities for property owners to adapt and enhance their market position.