# Airbnb vs Long-Term Rental: Which Makes More Money in 2026? > A data-driven comparison of short-term vs long-term rental returns — revenue, expenses, risk, and how to underwrite both strategies before you buy. Canonical: https://www.underwriteapp.com/blog/airbnb-vs-long-term-rental Every real estate investor eventually faces the same fork in the road: Airbnb or long-term lease? The honest answer is that neither strategy wins universally — but one will almost always win for a specific property in a specific market. The goal of this guide is to give you the framework to figure out which one that is. --- ## Why Investors Ask This Question Short-term rentals have dominated real estate investing headlines for the last five years. The promise: charge $300/night instead of $2,000/month, earn 2–3x the gross revenue, and build a hospitality business instead of a passive income stream. But STRs also come with real costs — platforms take 3%, cleaning is $150–$250 per turnover, furnishing runs $15,000–$30,000, and regulation risk can shut a property down overnight. Long-term rentals, meanwhile, offer stability. Lease income is predictable, expenses are lower, and management is simpler. But the returns are often thinner, especially in expensive markets. Neither is automatically better. Let's run the actual numbers. --- ## Revenue Comparison: STR vs LTR The most common mistake investors make is comparing gross STR revenue to net LTR income. That's not an apples-to-apples comparison. Here's a concrete example using a 3-bedroom property in a mid-tier STR market (think Asheville, Scottsdale, or Chattanooga): **Property:** 3-bedroom, 2-bath, purchased at $450,000 | Metric | Long-Term Rental | Short-Term Rental | |--------|-----------------|------------------| | Monthly income | $2,400 | $5,200 (est.) | | Occupancy rate | ~95% (lease) | ~68% | | Annual gross revenue | $28,800 | $62,400 | | Platform/management fee | $0–$2,400 (PM) | $6,240 (3% + 7% PM) | | Effective annual revenue | $26,400–$28,800 | $56,160 | The STR earns roughly twice the gross revenue in this example. But revenue is only half the equation. --- ## Expense Comparison: Where STR Costs Bite The expense structure of STRs and LTRs is fundamentally different. STRs have higher operating costs because you're running a hospitality business, not a residential tenancy. | Expense Category | Long-Term Rental | Short-Term Rental | |-----------------|-----------------|------------------| | Cleaning (per turnover) | $0 | $150–$250 | | Annual cleaning cost | $0 | $4,500–$9,000 | | Furnishing amortized (10 yr) | $0 | $2,000–$3,000/yr | | Utilities | Tenant-paid | $200–$400/mo | | Insurance | $1,200–$1,800/yr | $2,500–$4,000/yr | | Property management | 8–10% of rent | 20–30% of revenue | | Maintenance/repairs | $2,000–$3,500/yr | $3,500–$6,000/yr | | Platform fees | $0 | 3% of bookings | | Licensing/permits | $0–$500 | $500–$2,000/yr | | **Total annual OpEx** | **$6,000–$9,000** | **$22,000–$32,000** | Using our 3-bedroom example: - **LTR net operating income:** $28,800 − $8,000 = **$20,800** - **STR net operating income:** $62,400 − $27,000 = **$35,400** The STR still wins on NOI — but the margin has compressed significantly from the revenue comparison. And this is before accounting for financing, taxes, or the time investment. --- ## Risk Comparison Revenue and expenses tell you the expected case. Risk tells you the downside. **STR-specific risks:** - **Regulatory risk** — Cities including New York, Santa Monica, and Denver have implemented strict STR licensing caps or outright bans. A property that pencils as an STR may be worthless as one if local rules change. Always check current and pending ordinances before buying. - **Platform dependency** — Airbnb and Vrbo control distribution. Policy changes, algorithm shifts, or account suspensions can cut revenue overnight. - **Seasonal vacancy** — In most markets, December–February occupancy drops to 40–55%. Your mortgage still comes due every month. - **Higher maintenance velocity** — More turnovers means faster wear on appliances, fixtures, and furniture. Budget accordingly. **LTR-specific risks:** - **Tenant credit and payment risk** — A bad tenant can cost 3–6 months of lost rent plus legal fees in some jurisdictions. - **Lower upside** — Rents are contractually fixed for 12 months at a time. STRs can dynamically price up during peak demand. - **Vacancy between tenants** — Turnover can cost 4–8 weeks of income per event. On a pure risk-adjusted basis, LTRs offer more predictable cash flow with lower operational complexity. STRs offer higher potential returns with more variables and more things that can go wrong. --- ## When STR Wins Short-term rental is the stronger strategy when: 1. **The market supports strong ADR and occupancy year-round.** Mountain markets, beach towns, and tourism-driven destinations with 12-month demand are ideal. Avoid seasonal-only markets unless you can absorb 4–6 months of minimal income. 2. **The LTR rent-to-price ratio is weak.** If a $500,000 property only rents for $2,200/month LTR, the cap rate is anemic (~5%). STR may be the only way to make the asset work financially. 3. **Local regulation is stable and permissive.** Markets that have established STR licensing regimes (rather than pending bans) are lower regulatory risk. 4. **You or a PM can actively manage it.** STR is a business. If you're treating it like a passive investment, the numbers rarely work as advertised. --- ## When LTR Wins Long-term rental is the stronger strategy when: 1. **The market has strong LTR fundamentals.** Midwest markets with rent-to-price ratios above 1% monthly often pencil better as LTR than STR because ADR is low relative to purchase prices. 2. **STR regulation is restrictive or uncertain.** If local rules could shut down your STR operation, don't underwrite to STR revenue. 3. **You want truly passive income.** A well-screened tenant in a well-maintained property requires a few hours per month. A high-volume STR can require 20+ hours per week without a property manager. 4. **You're using DSCR financing.** Many DSCR lenders use long-term market rents to qualify the loan, not STR projections. If your LTR income supports the debt, the financing is cleaner. --- ## How to Underwrite Both Strategies Before committing to either path, model both scenarios with real numbers for the specific property. **For STR underwriting:** - Pull 5–10 active comparable listings using Airbnb's search or a tool like Rabbu - Apply a conservative occupancy rate (65–70% for most markets) - Budget cleaning at average stays ÷ 365 × annual cleaning cost - Include platform fees, PM fees, and a utilities estimate - Calculate NOI = Gross Revenue − Total OpEx - Calculate cash-on-cash = Annual Cash Flow ÷ Total Cash Invested **For LTR underwriting:** - Pull current rental comps from Zillow, Rentometer, or a local PM - Use 95% occupancy (one month vacancy per year) - Budget 8–10% PM fee if you're not self-managing - Calculate NOI = Annual Rent × 0.95 − Total OpEx Run [both scenarios through Underwrite's calculator](/calculator) before committing. The calculator pulls live STR comp data, models your debt service based on current rates, and outputs cash-on-cash and DSCR for both strategies — so you're comparing real projected returns, not best-case assumptions. --- ## Bottom Line There is no universal winner between Airbnb and long-term rental. The right choice depends on the market, the property, the regulatory environment, and how much operational involvement you're willing to take on. What you should never do is assume one strategy is obviously better without running the numbers. The properties that look best as STRs on paper — high ADR, tourism-driven markets — often have the highest expenses, most regulatory risk, and most competition. The boring LTR in a landlord-friendly Midwest city with a 1.1% rent-to-price ratio can outperform it on a risk-adjusted basis. Model both. Buy the one that pencils with conservative assumptions.