After All Costs, Dallas Airbnb Beats Long-Term Rentals

Dallas short-term rentals gross 98% more than long-term rentals on a 3-bed house, but after Airbnb fees, insurance, utilities, maintenance, property tax and the 6.0% hotel occupancy tax, the net advantage shrinks substantially. This article works the after-cost picture for both a 3-bed house AND a 2-bed apartment in Dallas (Dallas County), because the cost structures diverge in ways the gross numbers hide. Apartments enter at a fraction of the price but carry HOA fees that houses never pay.

The 3-Bed House: Short-Term Rental Nets Roughly 3.3%, Long-Term Nets 2.1%

A median Dallas 3-bed house sells for around $350,000 and rents for $1,778/month, producing an annual gross rent of $19,437 after the 91% tenanted-occupancy haircut. Run the same property as an Airbnb at the city-average occupancy of 44% and $263/night, and gross revenue rises to $38,428. The cost stack is what eats the difference.

Warning: short-term rental figures assume operation continues during the 2023 Dallas zoning ordinance court injunction. Enforcement is currently blocked, with the appeal pending at the Texas Supreme Court. Hotel occupancy tax collection is required regardless. Verify status before purchase.

Airbnb Fees, Utilities and Lodging Tax Account for the Bulk of the Premium Erosion

Airbnb fees alone strip $5,956 from gross revenue at the 15.5% host-only rate, and other booking platforms charge differently: Vrbo runs around 5% and Booking.com around 15%. Utilities add $2,640 on the short-term side because guests aren't paying their own bills, where long-term tenants typically cover utilities themselves. Insurance rises by roughly 40% from $3,500 to $5,000 once a property is run as a commercial accommodation. Maintenance jumps from $3,413 to $5,889 because short-term maintenance includes furnishing replacement (linens, kitchenware, paint, broken items) on top of routine repairs.

The Dallas-specific drag is the 6.0% Hotel Occupancy Tax, which adds $2,306 to the cost stack with no equivalent on the long-term side. Property tax of $5,115 (at the 1.5% rate) hits both strategies equally, so it doesn't change the comparison. The combined effect: total costs of $26,906 for short-term versus $12,028 for long-term, which means the gross premium of 98% compresses to a net yield gap between 3.3% and 2.1%.

The 2-Bed Apartment: Lower Entry Price, But HOA Fees Reshape the Math

A median Dallas 2-bed apartment sells for around $163,092, less than half the price of a median 3-bed house. The trade-off is HOA fees of $2,549/year, which apply whether the apartment is rented short-term or long-term, and gross revenue is also lower because both nightly rates ($157) and monthly rents ($1,124) trend below house equivalents.

The HOA row appears in both columns because it is a property-level cost that applies regardless of rental strategy. Many HOAs in Dallas also restrict short-term letting independently of the city's zoning ordinance, so check the bylaws before buying for Airbnb use.

House vs Apartment: Which Property Type Actually Pays Better in Dallas

The 3-bed house enters at $350,000 versus the 2-bed apartment's $163,092, a difference that frees up substantial capital. The apartment carries an HOA bill of $2,549 that the house doesn't pay, but it also carries lower absolute costs across insurance, utilities and maintenance because the unit is smaller. The interesting result is in the net yield columns: the apartment's short-term net yield of 3.3% compares to 3.3% for the house, and the long-term comparison sits at 5.1% versus 2.1%.

The choice depends on how much capital you have to deploy and what you're optimizing for. Apartments let you enter the market with less, and percentage yields can land favorably because the denominator (price) is so much smaller. Houses produce higher absolute dollar returns and avoid HOA boards that may restrict short-term use. These are city medians: individual Dallas neighborhoods diverge significantly, and ZIP-level data is the only way to pick the right property in the right area. The dashboard shows every Dallas ZIP across both bedroom counts and both property types.

View Dallas in the dashboard → Free preview · every bedroom count and property type

Gross Break-Even Sits at 22% Occupancy, Well Below the Market Median

Short-term gross revenue equals long-term annual rent for a 3-bed Dallas house at 22% occupancy. The current market median is 44%, so the typical Dallas operator clears the gross break-even by a wide margin. Treat 22% as the floor (the point below which short-term doesn't even match long-term gross), not as a target. Targets should sit much closer to the 44% city average, with adjustments for property type and neighborhood.

Hiring a Manager Drops the 3-Bed House Net Yield to 0.5%

The tables above assume self-management, which is how the Dallas dashboard defaults are calibrated. If you outsource the work, a typical Dallas short-term manager charges around 25% of gross revenue, which works out to roughly $9,607/year on the 3-bed house and drops the net yield from 3.3% to 0.5%. Long-term agents typically charge less, around 11% of rent collected, adding around $2,240 on the long-term side and dropping the long-term net yield to 1.5%.

Self-management on a short-term rental in Dallas is realistic for owner-occupiers or owners within driving distance, but it isn't passive: it requires guest communication, cleaner coordination, restocking, repairs and review management. Owners with one property within 30 minutes typically self-manage; owners with multiple properties, out-of-state owners, or those wanting genuinely passive income should price the management fee in from day one.

Tax Treatment: No Texas State Income Tax, Plus 27.5-Year Federal Depreciation

Texas charges no state income tax, so rental income flows straight into the federal calculation. On the federal side, residential investment property qualifies for 27.5-year straight-line depreciation on the building portion (not land), which on a $350,000 Dallas house with a 80% building allocation produces a depreciable base of $280,000 and an annual deduction of around $10,182. This deduction is what often turns a modest cash-flow positive property into a tax-loss-generating one on paper. Short-term rentals reported on Schedule C (with material participation) or Schedule E (more passive) are treated differently, and the IRS's 7-day average stay rule reclassifies many short-term rentals as non-residential for tax purposes.

The Dallas Hotel Occupancy Tax of 6.0% (plus 6.25% state sales tax on accommodations) is added to the guest's bill, but most operators absorb it within their advertised nightly rate to stay competitive on listings, which is why the cost stack above deducts it from gross revenue rather than treating it as a pass-through. The dashboard calculates after-tax positions for every Dallas ZIP, but consult a local tax professional for your specific federal bracket and entity structure. Data reflects market conditions as of May 2026.

This information is for educational purposes only and should not be considered financial or legal advice. Regulations and market conditions change frequently. Verify current rules with local authorities before making investment decisions.