Short answer: Yes, short-term rentals (STRs) are allowed in Grafton, IL. The Grafton market is relatively permissive (“Low” regulation level per AirROI), but operators still must meet state requirements and any local licensing, safety, and tax rules. Where Grafton specifics are unclear in the provided material, we highlight the gap and reference the applicable state-level framework in Illinois.

1) Allowability and market overview

• Are STRs allowed? Explicitly: Yes. The market data (AirROI) indicates Grafton has active listings and classifies its STR regulation level as “Low.” As in most Illinois municipalities, local zoning and licensing rules still apply.
• Market fit: Grafton is a scenic river town at the confluence of the Mississippi and Illinois Rivers. Demand is driven by wineries, state parks, river recreation, and proximity to St. Louis. The market is competitive but not oversaturated, with seasonal peaks in summer and fall foliage.
• Performance snapshot (past 12 months): 59 active listings; ADR ≈ $266; Occupancy ≈ 29.4%; Median annual revenue ≈ $25,984; YoY revenue growth ≈ 21.7%; peak month: July; low month: February. Investors should plan for pronounced seasonality.
• Implication: A professionally managed, well-located property near Pere Marquette State Park or the riverfront tends to outperform, especially during peak months.

Sources: AirROI market analysis; GoSummer market overview.

2) How to start a short-term rental in Grafton (step-by-step)

• Confirm zoning and neighborhood fit
  • Verify your property is in a zone that permits short-term rentals. Listings near the Grafton Riverfront, downtown, and Pere Marquette State Park tend to attract stronger demand.
  • Check HOA/condo bylaws if applicable. Hosts have reported restrictions in some associations.
• Choose your operating model
  • Entire home; private room within your primary residence; or accessory dwelling unit (ADU). Illinois defines STRs as rentals ≤ 31 days.
• Prepare the property and safety essentials
  • Essential amenities: reliable Wi‑Fi, functional smoke/CO detectors, safe egress, secure locks, and clear house rules. Property managers emphasize rustic charm plus modern reliability (cleanliness, fast response, and guest guidance).
• Register and license as required
  • State registration is required for most short-term rentals.
  • A state lodging license from the Illinois Department of Public Health (IDPH) is required if renting two or more units in a building with four or more units; single-unit or small-scale rentals typically only require registration (no IDPH license) but must meet local requirements.
• Pass inspections and safety checks
  • Expect state licensing inspections (IDPH) for qualifying properties and local safety/occupancy inspections for city permits.
• Set up tax compliance and filings
  • Register with the Illinois Department of Revenue (IDOR) for Hotel Operators’ Occupation Tax and applicable local lodging taxes.
  • Collect taxes from guests and remit per filing cadence.
• List and optimize
  • Professional photos, dynamic pricing, clear house rules, fast guest communication, and proactive cleanliness standards. AirROI shows strong returns for top-performing listings that align with seasonality (pricing up in peak; promotions in low season).

Sources: Hostaway (registration/licensing/inspection process, tax registration); AirROI (market performance and seasonality); GoSummer (local permitting notes and safety/zoning considerations).

3) Required documents, permits, licenses, and guidelines

State-level (Illinois)

• IDPH Lodging License (if renting two or more units in a building with four or more units)
  • Application, fees, inspections, and periodic renewals
  • Not required for a single unit or small-scale rentals (but registration still applies)
• IDOR Registration for Hotel Operators’ Occupation Tax
  • Obtain a Certificate of Registration and taxpayer ID; file and remit lodging taxes
  • Online registration; ongoing filing per assigned frequency (often monthly)
• Contracts, house rules, insurance, and tax records
  • Rental agreements, occupancy limits, house rules, proof of insurance, records to support tax filings

Local (Grafton, IL)

• Grafton STR permit (license) and annual renewal
  • “The city requires that all short-term rental properties be licensed, with the license renewed annually. This includes passing a safety inspection and paying a licensing fee.”
• Local safety/occupancy inspection
• Zoning confirmation that STRs are permitted at the subject property
• Hotel/Motel Tax Collection (claimed 5% by third-party source)
  • Hosts “are required to collect a 5% hotel/motel tax from guests, which must be remitted to the city on a monthly basis.”
  • Note: The 5% rate and monthly remittance cadence are reported by GoSummer; confirm the exact local rate and filing process with Grafton authorities.
• License cap (reported by third-party source)
  • “The city has a limit on the number of short-term rental licenses it issues each year.” This is asserted by GoSummer, but we did not find direct confirmation in the provided content. Verify with Grafton.

Zoning/HOA/condo requirements

• Review HOA/condo bylaws for STR restrictions; violations can trigger fines or legal action.
• Ensure your property’s zoning classification permits transient lodging.

Operational paperwork

• Post or provide emergency contact info, quiet hours, parking rules, occupancy limits, and local tax receipts.

Sources: Hostaway (state licensing/registration requirements, inspections, paperwork, IDOR registration); GoSummer (Grafton permit, renewal, safety inspection, zoning, local tax collection, reported license cap).

4) Specific regulations: City (Grafton), County (Jersey County), State (Illinois)

City of Grafton (as reported by GoSummer)

• Licensing: An annual Grafton STR permit/license is required, including a safety inspection and license fee.
• Local tax: Hosts must collect a 5% hotel/motel tax and remit monthly to the city (confirm exact rate and process with Grafton).
• Zoning: Confirm STRs are allowed on your property and comply with all local standards.
• License cap: A reported limit exists on the number of licenses; verify directly with the city.

County (Jersey County)

• The provided sources do not specify Jersey County–level STR licensing. Assume county-level taxes and rules may apply alongside state and city requirements; confirm locally.

State of Illinois

• Definition: A short-term rental is the rental of a residential dwelling (or portion thereof) for 31 days or less.
• Licensing: IDPH lodging license is required if renting two or more units in buildings with four or more units. Smaller operations require registration but not the IDPH license.
• Inspections: IDPH licensing inspections for qualifying properties; local safety inspections for permits.
• Taxes:
  • Hotel Operators’ Occupation Tax (HOT): Approximately 5.98–6.17% for stays ≤ 29 nights
  • Chicago-area additional taxes (e.g., Sports Facilities Hotel Tax 5.73%, Metropolitan Pier & Exposition Authority) do not apply in Grafton unless you have Chicago properties
  • Local municipal/county lodging taxes may also apply and must be collected and remitted
• Registration: IDOR registration is mandatory before collecting taxes
• Filing cadence: Typically monthly returns; annually due by January 31; “zero-dollar” returns are required even if no tax was collected in a period
• Penalties: Fines and interest for late or non-compliance; a Voluntary Disclosure Agreement (VDA) may reduce penalties for prior non-compliance

Sources: Hostaway (Illinois statutes, licensing, inspections, tax rates, IDOR registration, penalties); AirROI (regulation level context); GoSummer (Grafton-specific permit, inspection, tax, cap claim).

5) Contact information for local authority in charge of STRs

The provided sources do not include direct phone/email/website for Grafton’s short-term rental authority. In most Illinois cities, this function is handled by City Hall or a Community Development/Code Enforcement department.

Action plan to obtain contacts:

• Visit the official City of Grafton website and look for “Short-Term Rental,” “Business Licensing,” “Code Enforcement,” or “Community Development.”
• Call the main City Hall number and ask for the STR permit office.
• Request the short-term rental application, fee schedule, inspection checklist, and local lodging tax remittance instructions.
• Ask whether a license cap exists and how many permits are currently issued.

If you share the city’s contact details, we can update this section accordingly.

6) Compliance checklist for Grafton investors

• Confirm zoning allows STRs at the property address
• Apply for the annual Grafton STR permit; pass the safety inspection; pay the fee
• Register with IDOR; set up Hotel Operators’ Occupation Tax filings
• Set up local hotel/motel tax collection (5% reported by third-party source) and monthly remittance; confirm exact rate with the city
• If your property is in a 4+ unit building and you rent two or more units, obtain the IDPH lodging license
• Implement essential safety amenities and occupancy limits
• Draft house rules and rental agreements; add emergency contacts and local guidelines
• Establish clean, reliable operations and guest communication processes aligned with seasonality

7) Sources

• State-level rules, licensing, inspections, and taxes: www.hostaway.com/blog/airbnb-rules-in-illinois/
• Grafton local requirements (permit, inspection, zoning, 5% hotel/motel tax, license cap assertion) and market context: www.gosummer.com/vacation-rental-management/grafton-illinois
• Market performance, regulation level, and seasonality data: www.airroi.com/report/world/united-states/illinois/grafton

Notes and uncertainties to verify locally

• The 5% Grafton hotel/motel tax rate and the “monthly remittance” requirement are reported by GoSummer; confirm with Grafton.
• The reported limit on the number of STR licenses issued annually should be verified directly with the city.
• Obtain official Grafton contact information for permitting and tax remittance.

This guide is based solely on the provided content. Where the sources do not include city contact details or definitive local tax rates, those items are clearly flagged as items to confirm with Grafton authorities.