Buying an Algoma, WI Rental: Underwriting the Real $15,882 Year
Updated: Aug 27
A buyer looking at a short-term rental in Algoma, Wisconsin will find plenty of Door County peninsula content online, and almost none of it is priced to this specific pier town. That's a problem, because the number that should anchor an acquisition here isn't a regional average. It's the City of Algoma's own trailing-twelve-month extract: a typical annual gross of $15,882 across 41 active listings.
That figure sits meaningfully below Kewaunee's own extract of $18,551 across 33 listings, a separate city down the shore with its own comp set. The gap matters, because a pro forma that quietly substitutes Kewaunee's higher number, or a Door County-wide comp, for Algoma's actual $15,882 is overstating what this specific parcel is likely to produce.
This piece prices the deal on the number that actually applies to a City of Algoma parcel, walks through what the city desk clerk will require before the property can legally book a stay, and flags where the market is heading so a buyer isn't underwriting a static picture of a market that's actually moving. This is not legal advice.
The Number the Deal Should Be Priced On
The City of Algoma extract covers 41 active listings over the trailing twelve months: a typical annual gross revenue of $15,882, an average daily rate of $244, occupancy of 31.1 percent, and RevPAR of $76. That's the figure a buyer or lender should anchor a DSCR calculation to for a parcel inside Algoma city limits, not a Kewaunee number, not a Door County peninsula average, and not a figure pulled from a general Wisconsin lakeshore report.
The composition of that 41-listing sample also matters for underwriting: it's mostly independent owner-operators, not a corporate-managed portfolio. That's relevant if a lender is comparing this deal to a franchise-managed property elsewhere, since the fee structure, staffing model, and revenue predictability of an owner-operator market differ from a portfolio dominated by a national management brand.
Notice, too, how the individual metrics fit together: a $244 ADR against 31.1 percent occupancy produces the $76 RevPAR, and that RevPAR, applied across a full year, is what actually drives the $15,882 typical gross. A buyer should sanity-check any pro forma against this arithmetic rather than accepting a headline revenue figure in isolation. If a seller's projection assumes materially higher occupancy or a materially higher ADR than the current 41-listing sample supports, ask specifically what's different about this property that would justify the gap, a renovated interior, a larger capacity, a stronger review history, rather than accepting the projection on faith.
Why Kewaunee's $18,551 Doesn't Belong in This File
Kewaunee, the county seat down the shore, is a different city with its own extract entirely: a typical gross of $18,551 on 33 listings, 32.9 percent occupancy, $252 ADR, and $95 RevPAR. Every one of those figures runs higher than Algoma's. That's exactly why blending the two, or quietly substituting Kewaunee's number into an Algoma pro forma, produces an inflated expectation for the parcel actually on the contract.
A related comparison, Algoma versus Kewaunee, two towns, digs further into why the two identities need to stay split, from marketing copy through the T12 that goes into a lender's file. The short version for underwriting purposes: these are two separate cities, two separate licensing desks, and two separate revenue pictures, even though they sit close together on the same shoreline.
It's worth asking, plainly, why a seller or listing agent might reach for Kewaunee's number in the first place: it's the larger figure, and a bigger typical gross makes for a more attractive listing headline. That's precisely the incentive a buyer should watch for. If a marketing packet for an Algoma property leads with a $18,551-range revenue claim, ask directly which city's extract that number came from before it becomes an anchor in your own mental model of the deal.
Licensing at City Desk: What the Clerk Actually Requires
A short-term rental license in Algoma is not automatically inherited at sale. A new owner needs to apply through City Desk, at 416 Fremont Street, (920) 487-5203, pay the $100 fee, and cannot book stays of six or fewer nights until that license is in hand. That's a meaningful timeline consideration for a buyer planning to close and immediately list the property; budget the application and approval time into your closing-to-first-booking calendar rather than assuming the seller's existing license transfers with the deed.
Beyond the city license, the property should also register with DATCP, Wisconsin's Department of Agriculture, Trade and Consumer Protection, whose tourist rooming house line is (608) 224-4923. That's a separate state-level registration, not a substitute for the city license or a piece already covered by the $100 fee.
Buyers planning a fast turnaround, closing and listing within weeks, should call the City Desk desk before writing an offer, not after, to ask directly how long license approval is currently taking. A licensing delay of even a few weeks can push a purchase's first-booking date into a slower shoulder-season window, which changes the early cash-flow picture for the acquisition.
Room Tax Is a Separate Line, Split Between City and Chamber
Room tax in Algoma runs 6 percent under Chapter 40-24, Ordinance 856, and it's split 70 percent to the chamber of commerce and 30 percent to the city. That split is worth knowing not because it changes what an operator owes, the 6 percent obligation is the same regardless of how the city allocates it afterward, but because it explains why both the chamber and the city treasurer's office may show up in correspondence about the tax over time.
Budget the 6 percent as a recurring quarterly filing obligation tied to actual collected revenue, not a one-time closing cost, and set up the tracking system before the first guest checks in rather than after.
A buyer taking over an existing operation should also confirm, in writing from the city, that the room tax account is current as of closing. An unpaid balance on the prior owner's account is the kind of loose end that's far easier to resolve as a closing condition than as a surprise after the deed transfers.
Reading the Minus 21.8 Percent Correctly
The City of Algoma's year-over-year performance shows a decline of 21.8 percent alongside supply growth of 36.7 percent across the 41-listing sample. Read together, that pairing tells a specific story: a meaningfully larger number of listings competing for a guest pool that hasn't grown proportionally, which pushes typical per-listing revenue down even if total market demand is roughly stable. That's a materially different situation than a market shrinking because demand itself is falling, and it changes how a buyer should think about future performance.
A buyer underwriting this deal should model the possibility that supply growth continues to outpace demand in the near term, rather than assuming the current $15,882 figure represents a floor. It's also worth asking a listing agent or property manager directly how the specific unit being purchased has performed relative to this citywide average, since 41 listings is a small enough sample that individual property characteristics, view, capacity, walkability to the pier, can meaningfully move an individual listing's results away from the typical figure.
A conservative underwriting approach here treats the $15,882 figure as a current snapshot rather than a guaranteed baseline, and builds in a downside scenario where occupancy softens further if the 36.7 percent supply growth rate continues. That's not a reason to walk away from a deal in this market; it's a reason to price the acquisition, and any renovation or improvement plan, with enough margin that a modest further softening in occupancy doesn't break the debt service coverage math.
Who's Booking, and Why the Comp Set Skews Owner-Operator
The 41-listing City of Algoma sample is composed mostly of independent owner-operators rather than a corporate-managed franchise portfolio. That composition affects underwriting in a specific way: a management fee percentage or staffing model borrowed from a heavily corporate-managed comp set elsewhere would not accurately reflect what's typical here. A buyer weighing whether to self-manage a purchase in this market should factor in that the existing comp set is already dominated by owners doing exactly that, which is one reason a DIY-versus-hiring-a-manager comparison is a useful next step for a buyer this far into underwriting.
For an out-of-town buyer who can't self-manage day to day, that same owner-operator-heavy composition means the local hiring pool for a property manager is likely to be smaller than in a market with an established franchise presence. Start that conversation early in due diligence rather than after closing, since finding the right local caretaker or manager can take longer in a market where most operators handle their own properties directly.
Kewaunee's Own Decline Isn't Algoma's Story
It's worth noting explicitly that Kewaunee's higher $18,551 figure doesn't mean Kewaunee is the stronger long-term bet either; it's simply a different market with its own trajectory, and its own city desk governs its own licensing and tax questions. The point of separating the two isn't to declare one market better than the other. It's to make sure a buyer's underwriting file, and the pro forma a lender receives, reflects the actual city where the parcel sits rather than an averaged or borrowed number from the town down the shore.
For a buyer actively choosing between an Algoma parcel and a Kewaunee parcel, the honest comparison isn't which single headline number is bigger. It's which city's licensing timeline, room tax structure, and comp set composition fits the buyer's own management plan and risk tolerance. A larger typical gross with a smaller sample size and a different occupancy profile isn't automatically the better deal once financing costs, licensing timelines, and management logistics are all priced in.
What the Buyer Packet Should Carry
A complete file for a City of Algoma short-term rental acquisition should carry the parcel address confirmed against the city's tax map, the $15,882 typical gross figure labeled explicitly as the City of Algoma extract, and a clearly separate labeled line for Kewaunee's $18,551 so no one downstream confuses the two. It should carry the City Desk address and phone number, the $100 license fee, confirmation of DATCP registration status, and the 6 percent room tax obligation under Ordinance 856. It should note the minus 21.8 percent year-over-year performance alongside the 36.7 percent supply growth figure so the trend, not just a single snapshot, is part of the underwriting conversation. And it should flag, honestly, that this is a 41-listing sample, small enough that the specific unit's characteristics deserve direct diligence rather than an assumption that it will simply track the citywide average.
None of this is meant to talk a buyer out of an Algoma acquisition. It's meant to make sure the number that lands on a term sheet is the number this specific city actually produces, confirmed against the desks that actually govern the parcel, so the deal that closes matches the deal that was underwritten.
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Frequently Asked Questions
What is the correct typical annual gross figure to underwrite for a City of Algoma short-term rental?
$15,882, based on the current City of Algoma extract covering 41 active listings over the trailing twelve months, with an average daily rate of $244, occupancy of 31.1 percent, and RevPAR of $76. This is the figure to anchor a DSCR calculation to for a parcel inside Algoma city limits, not Kewaunee's separate $18,551 figure.
Why is Kewaunee's $18,551 figure higher, and can I use it for an Algoma property?
Kewaunee is a separate city down the shore with its own 33-listing sample, its own licensing desk, and its own performance, running 32.9 percent occupancy, $252 ADR, and $95 RevPAR. Its higher figure reflects a different market, not a benchmark for an Algoma parcel, and substituting it into an Algoma pro forma overstates the deal's likely performance.
Does a short-term rental license transfer automatically when I buy a property in Algoma?
No. A new owner must apply through City Hall at 416 Fremont Street, (920) 487-5203, pay the $100 fee, and cannot book stays of six or fewer nights until the new license is approved. Budget this application timeline into your closing-to-first-booking plan rather than assuming the seller's license carries over.
Do I need to register with DATCP in addition to the city license?
Yes. DATCP, Wisconsin's Department of Agriculture, Trade and Consumer Protection, requires a separate tourist rooming house registration, reachable at (608) 224-4923. This is in addition to, not a replacement for, the city's $100 license and $15,882-anchored market picture.
How does Algoma's room tax work, and who collects it?
Room tax is 6 percent under Chapter 40-24, Ordinance 856, split 70 percent to the chamber of commerce and 30 percent to the city. The operator's obligation is the full 6 percent regardless of that internal split; it's a recurring filing tied to actual collected revenue, not a one-time cost at closing.
What does the minus 21.8 percent year-over-year figure actually mean for a buyer?
It reflects declining typical per-listing revenue alongside 36.7 percent supply growth across the 41-listing sample, meaning more listings are competing for a guest pool that hasn't grown proportionally. A buyer should model the possibility that this trend continues in the near term rather than assuming $15,882 is a stable floor.
Is the Algoma comp set mostly professionally managed or owner-operated?
Mostly independent owner-operators rather than a corporate-managed franchise portfolio. That matters for underwriting because a management fee percentage or staffing assumption borrowed from a heavily corporate-managed market elsewhere wouldn't accurately reflect the typical cost structure in this specific comp set.
Should I read the Algoma vs. Kewaunee comparison before making an offer?
Yes, if you want the fuller picture of why the two cities' identities, licensing desks, and T12 financials need to stay separated rather than blended, since they're a few miles apart but functionally distinct markets.
Is 41 listings a large enough sample to trust the $15,882 figure?
It's a workable sample for a citywide typical figure, but it's small enough that an individual unit's characteristics, capacity, view, proximity to the pier, can meaningfully move that specific listing's results away from the average. Ask for the specific property's own performance history in addition to relying on the citywide figure.
Should I plan to self-manage or hire a property manager for an Algoma acquisition?
That decision depends on your own bandwidth and goals, but it's worth knowing the existing comp set here already skews toward owner-operators rather than corporate management, which suggests self-management is a well-trodden path in this specific market. A dedicated DIY-versus-hiring-a-manager comparison is a useful next step once you're this far into underwriting.
Work with Crest & Cove Creative
A buyer pricing an Algoma acquisition off Kewaunee's numbers is underwriting a $2,669-a-year gap they didn't know existed until the appraisal came back short. Name the failure mode the guest can check on the listing.
If you want the Algoma acquisition underwritten against the correct $15,882 extract, with the licensing timeline and room tax obligations confirmed before you make an offer, reach Crest & Cove Creative at crestcove.co or (256) 998-7502. Name the failure mode the guest can check on the listing.
Reach out at crestcove.co or (256) 998-7502.
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