Is Red Lodge a Good Short Term Rental Investment in 2026

Jul 23

14 min read

Updated: Aug 28

Red Lodge, Montana, sits at the foot of the Beartooth Mountains, with a population of a little over 2,300, and it has spent the last several summers on a lot of "hidden gem" lists it didn't ask to be on. That attention shows up in the numbers: short-term rental listings in the area grew roughly 91% year over year even as median home prices climbed to the mid-$500,000s. For anyone weighing a purchase here, the real question isn't whether Red Lodge has tourism demand , it clearly does , it's whether that demand is durable enough, and the regulatory and competitive environment forgiving enough, to make the numbers work in 2026.

This piece lays out the case for Red Lodge as an STR market, then walks through the two things any serious buyer needs to understand before writing an offer: who else is already operating here, and what the city has decided about how many short-term rentals it will allow. The practical implication is not "don't buy here" , it's "the city has drawn a real line, permits aren't unlimited, and buying a property that already carries (or can readily obtain) a valid short-term rental permit is meaningfully more valuable than buying one that would need to compete for a shrinking pool of remaining slots." Confirming permit status and eligibility before closing should be a non-negotiable step in any Red Lodge.

Why Red Lodge Has Real, Multi-Season Demand

A lot of small mountain towns have one good season and a lot of empty months. Red Lodge's advantage is that it has three separate reasons for people to book a stay, and they don't all peak at the same time. Taken together, these three draws are a legitimate case for multi-season demand rather than a single-peak tourist town.

The Beartooth Highway Draws a Distinct Summer Traveler

The Beartooth Highway (U.S. 212) runs 68 miles from Red Lodge to Cooke City, climbing to nearly 11,000 feet at Beartooth Pass before dropping toward Yellowstone's Northeast Entrance. It's a federally designated All-American Road, and it has been drawing road-trippers since it opened to auto traffic in the late 1930s , the highway was largely built to bring tourists through Red Lodge in the first place, back when the town's coal mines were running out, and it needed a new economic base.

The catch, and it matters for revenue modeling, is that the highway is genuinely seasonal. It typically opens Memorial Day weekend and closes by mid-October, weather permitting, which means this particular demand driver is concentrated into about four and a half months. That lines up with the market data: July is consistently the strongest revenue month in Red Lodge, followed by August and June, with a steep drop-off once the pass closes for the season.

Red Lodge Mountain Fills the Winter Calendar

On the other side of the calendar, Red Lodge Mountain ski resort gives the town a legitimate winter season. The resort spans 1,635 skiable acres across two mountains with a 2,400-foot vertical drop, roughly 70 marked runs, and an average of 250 inches of annual snowfall. It's not a Jackson Hole or a Big Sky in scale, but it's a real regional draw for Montana and Wyoming skiers, and it gives owners a second occupancy window that doesn't compete with the summer road-trip crowd.

The Home of Champions Rodeo Adds a Third, Smaller Window

Red Lodge's rodeo tradition goes back to informal exhibition rides among local cowboys in the 1890s, and it became an organized annual event when the Red Lodge Rodeo Association built its arena in 1929 and formed the following year. The "Home of Champions" name was adopted in 1954 after local cowboy Bill Linderman won his third world all-around title , the town has produced a genuinely disproportionate number of rodeo champions relative to its size. The rodeo still runs every July 2-4, which happens to land in the middle of the summer highway season, giving that peak week an extra demand spike rather than a standalone travel window.

Taken together, these three draws are a legitimate case for multi-season demand rather than a single-peak tourist town. But "multi-season demand exists" and "this is a low-risk investment" are two different claims, and the second one depends heavily on two factors the market data doesn't fully capture: who you're competing against, and what the city will let you operate.

Caveat One: You're Not Investing Into a Vacuum , National Brands Are Already Here

If the pitch for a market is "it's still under the radar," Red Lodge doesn't quite qualify anymore. National and regional property management companies are already active locally, and that changes the calculus for a new owner in two ways: it confirms institutional operators see the market as viable, and it means a generic listing competing purely on price or photos is fighting an uphill battle.

Evolve currently lists 21 properties in Red Lodge under its half-service, lower-fee model. Vacasa built a Montana-wide portfolio and, as of an April 2025 shareholder-approved merger, now operates as part of Casago's franchise network rather than as a fully independent brand , worth knowing if you see "Vacasa" mentioned in older market Keep-ups, since the company you'd actually be contracting with today is Casago. Grand Welcome also shows up as an active full-service manager in local fee comparisons, alongside smaller regional players like Fairly. On the ground, locally based managers , AAA Red Lodge Rentals and Red Lodge Reservations among them , appear to hold a meaningful share of the highest-ranked listings, which suggests local presence and guest experience still count for a lot even with national brands in the market.

The honest takeaway: this is not an underserved market where any listing will do fine on autopilot. Full-service national managers here typically charge somewhere in the 18-35% range of gross bookings, and market-wide occupancy sits around 25% , well below Montana's statewide average of roughly 47% , even as average daily rates run below the state average too. That combination points to a market where returns depend more on how well a property is marketed, priced, and positioned than on simply being present in a hot destination. A generic listing handed to a national manager and left alone is competing against operators who are actively optimizing; a well-marketed, well-differentiated listing has real room to outperform the market averages.

Caveat Two: The City Has Already Set , and Is Not Currently Reopening , a Hard Cap on STR Growth

The second thing every prospective buyer needs to understand is regulatory, and it's more settled than a lot of secondhand market chatter suggests. In 2023, the Red Lodge City Council took up a proposal to cap short-term rentals rather than let the sector grow unchecked, in direct response to concerns about housing availability for full-time residents. The council vote , reported at the time as allowing roughly 50% growth above the roughly 180 short-term rentals then operating, translating to a cap of about 270 units , was ultimately formalized as a cap set at 20% of the city's total housing stock, codified that August as city ordinance. If the cap is reached, the ordinance establishes a waiting list so new permits become available only as existing ones expire and aren't renewed.

That vote already happened, and the ordinance has been in effect for roughly three years as of 2026 , this is not an open question currently before the council. As of an October 2025 KTVQ report quoting Mayor Dave Westwood, Red Lodge sat at about 200 registered short-term rentals, representing roughly 11% of the city's housing stock , comfortably under the 20% ceiling, meaning new permits were still available and no waiting list is currently active, though that headroom will keep shrinking as the market's rapid recent listing growth continues. Any buyer should independently confirm the current permit count and remaining headroom directly with the City of Red Lodge before purchasing, since a fast-growing market can close that gap faster than annual reporting captures.

The practical implication is not "don't buy here" , it's "the city has drawn a real line, permits aren't unlimited, and buying a property that already carries (or can readily obtain) a valid short-term rental permit is meaningfully more valuable than buying one that would need to compete for a shrinking pool of remaining slots." Confirming permit status and eligibility before closing should be a non-negotiable step in any Red Lodge purchase, alongside the separate state licensing requirements , a Montana Public Accommodations License through the Carbon County Sanitarian, a city business license renewed annually, an annual fire inspection, and quarterly payment of the state's 4% resort tax.

What This Means for Ownership Economics

A few additional data points matter for anyone underwriting a Red Lodge purchase in 2026. Montana's new homestead-based property tax structure, enacted via HB 231 and SB 542, taxes short-term rentals and other non-homestead residential property , including second homes , at a flat 1.90% rate. Primary residences and qualifying long-term rentals, by contrast, get a tiered rate that starts at 0.76% on value up to the statewide median home value and only climbs to that same 1.90% ceiling on the portion of a property's value above roughly four times the statewide median. In practice, that means an unpermitted vacation home is taxed at close to the top marginal rate across its full value, while a comparable owner-occupied home next door is taxed at a meaningfully lower blended rate unless it's an unusually high-value property. That's a real operating-cost line that didn't exist in the same form even two or three years ago, and it should be modeled explicitly rather than assumed away.

On the revenue side, market data shows active Red Lodge listings averaging roughly $33,269 in annual revenue at an average daily rate around $281, with the strongest individual months , July, August, and June, in that order , each capable of generating several thousand dollars in a single month for a well-positioned property. Larger homes (six or more bedrooms) are earning meaningfully more, north of $130,000 annually in some reporting, reflecting group travel tied to the rodeo, ski trips, and multi-generational Yellowstone road trips. Median home sale prices in the mid-$500,000s, combined with days-on-market that have compressed significantly over the past year, point to a market where competition for well-located inventory is increasing , another reason a permitted property with an established booking history commands a premium over an unpermitted one.

None of this makes Red Lodge a slam dunk or a pass. It makes it a market where the fundamentals , three distinct demand seasons, genuine Yellowstone-gateway positioning, and real rate strength in peak months , are backed by real numbers, but where the difference between an average return and a strong one increasingly comes down to permit status, property differentiation, and marketing execution rather than simply owning something in a scenic town.

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Frequently Asked Questions

Is Red Lodge, Montana a good place to buy a short-term rental in 2026?

It has real multi-season demand, summer Beartooth Highway traffic, winter skiing at Red Lodge Mountain, and the annual Home of Champions Rodeo, but it's also a market with an active city-imposed cap on STR permits and established national property management competition. Buyers who confirm permit availability and plan a differentiated marketing strategy are better positioned than buyers assuming the market is wide open.

Does Red Lodge have a cap on short-term rentals?

The city council capped short-term rentals at 20% of total housing stock via Ordinance 963, formalized in August 2023. As of an October 2025 KTVQ report, the city was at roughly 200 registered STRs, or about 11% of housing stock, meaning permits were still available and no waiting list was active, but buyers should verify current headroom with the City of Red Lodge before purchasing.

What license and permits do I need to legally operate an STR in Red Lodge?

Operators need a Montana Public Accommodations License (submitted through the Carbon County Sanitarian), an annual city business license, an annual fire inspection from the Red Lodge Fire Department, and must collect and remit Montana's 4% resort tax quarterly. New hosts are also generally required to post a compliance bond.

Which property management companies already operate in Red Lodge?

Evolve, Casago (which completed its acquisition of Vacasa on April 30, 2025), and Grand Welcome all have a confirmed active presence, alongside locally based managers like AAA Red Lodge Rentals and Red Lodge Reservations. Full-service management fees locally typically range from roughly 18% to 35% of gross bookings.

How seasonal is the Red Lodge rental market?

Quite seasonal, but not single-peak. The Beartooth Highway is typically open late May through mid-October, driving the strongest revenue months, July, August, then June. Red Lodge Mountain ski resort creates a separate winter demand window roughly December through early spring, and the Home of Champions Rodeo (July 2-4 annually) adds a concentrated demand spike within the summer peak.

What's driving Red Lodge real estate prices right now?

Limited housing inventory combined with strong tourism-driven demand has pushed median sale prices into the mid-$500,000s as of mid-2026, with year-over-year appreciation in the double digits and days-on-market compressing significantly, a sign of an increasingly competitive buyer's environment where a permitted property with booking history commands a premium over an unpermitted one.

Is Red Lodge considered a Yellowstone gateway town?

Yes. Red Lodge sits at the start of the Beartooth Highway (US-212), roughly 68-69 miles and about 2 to 2.5 hours of scenic driving, climbing to nearly 11,000 feet at Beartooth Pass, from Yellowstone's Northeast Entrance near Cooke City. It markets itself explicitly around that positioning, though the highway's seasonal closure limits this demand driver to late spring through mid-fall.

Are property taxes a significant cost consideration for Red Lodge STR owners?

Yes. Under Montana's new homestead-based property tax structure (HB 231/SB 542), short-term rentals and other non-homestead residential property are taxed at a flat 1.90% rate, while primary residences and qualifying long-term rentals get a tiered rate starting at 0.76%, a meaningfully higher effective rate for STR owners than for owner-occupied neighbors.

About the Authors

Crest & Cove Creative is a short-term rental marketing agency founded by Thomas Garner and Jacob Mishalanie. We build direct-booking brands, listing optimization systems, and market-specific content strategies for independent STR operators nationwide, including emerging corridors like Red Lodge, Montana. This piece lays out the case for Red Lodge as an STR market, then walks through the two things any serious buyer needs to understand before writing an offer: who else is already operating here, and what the city has decided about how many short-term rentals it will allow.

Sources

KTVQ, "Red Lodge looking at possible cap on short-term rentals" (reporting dated June 2023 based on article imagery/metadata; describes the council vote proposing a cap allowing 50% growth above ~180 then-existing STRs, i.e., up to ~270 units) , https://www.ktvq.com/news/local-news/red-lodge-looking-at-possible-cap-on-short-term-rentals ,correction to brief:this vote and cap decision occurred in 2023, not June 2026; as of this writing there is no evidence of an active or pending 2026 council vote reopening the cap.
City of Red Lodge Ordinance 963 (short-term rental cap): passed first reading July 25, 2023 and second reading/final approval August 22, 2023 (per City of Red Lodge council meeting minutes, cityofredlodge.net/media/8561). Caps STRs at 20% of total dwelling units citywide, calculated from the city's 911 address list by city staff each June, with a waiting list established once the cap is reached. This mechanism is corroborated across multiple secondary sources and city meeting-minutes references confirmed during this fact-check; the primary ordinance PDF (cityofredlodge.net) returned a 403 error on direct fetch and was not read in full , confirm exact statutory language directly before publishing precise legal citations.
KTVQ, "Red Lodge motel turns from traditional operations to owner-operated" (dated approximately October 23, 2025) , https://www.ktvq.com/news/local-news/red-lodge-motel-turns-from-traditional-operations-to-owner-operated , quotes Mayor Dave Westwood confirming Red Lodge at approximately 200 registered short-term rentals, or roughly 11% of housing stock, against the 20% cap.Independently verified via direct fetch of the article during this fact-check, no longer flagged as unconfirmed. Figure is directionally consistent with the 20%-cap ordinance and 2023 baseline of ~180 units.
City of Red Lodge, "Short Term Rental Compliance" page (cityofredlodge.net) , permit, license, fire inspection, and resort tax requirements; page returned an access error (403) on direct fetch during this research and requirements were cross-verified via secondary sources (Hostaway, Red Awning Montana STR guides) instead. Recommend the agency verify directly against the live city page before publishing exact procedural steps.
Mayoral timeline: Kristen Cogswell served as mayor through the 2023 cap vote (confirmed via direct quote in KTVQ's June 2023 STR cap article). Dave Westwood is the current mayor, confirmed via direct quote in the October 2025 KTVQ article on the Chateau Rouge motel conversion. Both mayoral attributions independently confirmed via direct article fetch during this fact-check; his 2025 re-election status was not independently re-verified and should be confirmed before citing.
Red Lodge Rodeo Association / Home of Champions Rodeo history (redlodgerodeo.com, Raised in the West Magazine, Montana Circuit Pro Rodeos): informal rides from the 1890s; arena built and Association formed 1929-1930; "Home of Champions" name adopted 1954 after Bill Linderman's third world title; 96th annual rodeo held July 2-4, 2025.Correction to brief:the rodeo tradition is approaching, but is not yet, a full century old as an organized annual event (roughly 96 years as of 2025, dating from the 1929/1930 organized rodeo) , described in this piece as tracing back to the 1890s with an organized annual tradition since 1929 rather than flatly "century-old."
Beartooth Scenic Byway / Custer Gallatin National Forest, MDT Travel Info: 68-mile route Red Lodge to Cooke City, construction completed 1936, open to auto traffic since 1937, National Scenic Byway All-American Road designation, seasonal Memorial Day-mid-October operation.
Red Lodge Mountain ski resort listings (Yodeler Motel guide, On The Snow, Ski Central): 1,635 skiable acres, 2,400-foot vertical drop, approximately 70 runs, 250 inches average annual snowfall. Specific current ownership entity and season-by-season skier visit counts were not confirmed in this research and should be verified directly with the resort before citing ownership specifics.
Property management fee and presence data (TIDY affordable-vacation-property-management Red Lodge page; Evolve.com Red Lodge listings page; Awning.com manager comparison pages): Evolve , 21 Red Lodge listings; Vacasa/Casago, Grand Welcome, Fairly fee ranges 18-35% of gross bookings; AAA Red Lodge Rentals and Red Lodge Reservations cited as leading local managers by listing count.Avant Stay caveat:Awning.com's Red Lodge-specific fee-comparison page does list an "Avant Stay charges up to 35%" line item, but this reads as boilerplate from a templated, market-agnostic competitor table used across many city pages on that site rather than confirmed evidence of an actual Avant Stay-managed listing in Red Lodge , no independent confirmation of Avant Stay operating in Red Lodge, or anywhere in Montana, was found. Avant Stay was therefore removed from this post's list of active local competitors; verify directly with Avant Stay before reinstating.
Vacasa-Casago merger: agreement announced December 30, 2024; shareholder vote approved and merger completed at 11:59 PM ET on April 30, 2025 (Vacasa became a wholly owned subsidiary of Casago Holdings, LLC in a transaction valued at approximately $130 million), per Vacasa SEC filings (DEFM14A) and Rental Scale-Up/Price Labs, Short Term Rentalz, and Tip Ranks industry reporting.Correction to brief:prior draft cited April 29, 2025 , corrected to April 30, 2025.
STR market performance data (Rabbu Red Lodge Airbnb market data page): 256 listings (AirROI Red Lodge as of 2026-07-31), ~91% year-over-year listing growth, average annual revenue ~$33,269, ~25% average occupancy versus ~47% Montana statewide average, average daily rate ~$281 versus ~$437 statewide average, July/August/June as top revenue months, 6+ bedroom homes earning $130K+ annually. This is third-party aggregated market data (not a primary government or MLS source) and should be treated as directional rather than exact.
Red Lodge real estate data (Redfin Red Lodge housing market page, data as of approximately May 2026): median sale price ~$565,562-$566K, up roughly 11.8% year-over-year; average days on market down to 93 from 209 the prior year.
Montana HB 231 and SB 542 property tax reform, effective 2026 (Montana State University Ag EconMT unpacking-reforms series; Montana Legislature interim committee summary, archive.legmt.gov; Montana Association of Counties summary; Montana Realtors 2026 property tax member brief): confirmed 2026 rate structure is a flat 1.90% rate for non-homestead residential property (second homes, short-term rentals), versus a tiered rate for qualifying primary residences and long-term rentals , 0.76% up to the statewide median residential value, 0.9% from 1x-2x median, 1.10% from 2x-4x median, and 1.90% only above 4x median. Long-term rental owners must apply for homestead-qualifying status between December 1, 2025 and March 1, 2026. This structure is independently confirmed across multiple primary/quasi-primary legislative and university sources and replaces the prior draft's vaguer "roughly two-thirds average increase" framing, which was directionally consistent but imprecise.
Yellowstone Northeast Entrance distance (Roaming Montana, We're in the Rockies, All Trips Cody Wyoming guides): approximately 68-69 miles and 2-2.5 hours of driving from Red Lodge via the Beartooth Highway through Cooke City.

Work with Crest & Cove Creative

Red Lodge listings that lean on generic 'mountain town near Yellowstone' copy miss the two distinct seasons actually driving bookings — the Beartooth Highway's summer road-trippers and Red Lodge Mountain's winter skiers.

We build listing calendars and copy around both demand windows instead of a single vague ski-town pitch.

Reach out at crestcove.co or (256) 998-7502.