The gross short-term rental premium runs 69% for a 3-bed house in Detroit (Wayne County), but after Airbnb fees, insurance, maintenance, utilities, and property tax the picture shifts. This article covers both a 3-bed house and a 2-bed apartment because the cost structures differ: apartments carry lower entry prices but add HOA fees that houses never face.
Detroit's appeal rests on yield, not glamour. With 3-bed houses at a median of $196,500, the city offers some of the lowest entry prices of any major US metro, compared to a national median of $242,500. Gross returns look strong on paper: 7.4% long-term and 12.5% short-term. The question is what survives the cost column.
A 3-Bed House Nets 3.0% Short-Term vs 4.1% Long-Term
Self-managed, a Detroit 3-bed house delivers the following picture across rental strategies. These figures assume the default dashboard settings: no management fee (owner operator), market-average occupancy of 34%, and the current Airbnb host-only fee of 15.5%.
| short-term rental | long-term rental | |
|---|---|---|
| Property price | $196,500 | $196,500 |
| Gross revenue | $24,563 | $14,562 |
| Airbnb fees (15.5%) | $3,807 | — |
| Insurance | $2,876 | $1,376 |
| Maintenance | $4,029 | $1,916 |
| Utilities | $3,180 | $0 |
| Property tax | $3,282 | $3,282 |
| Short-term rental tax | $1,474 | — |
| Total costs | $18,648 | $6,574 |
| Net income | $5,915 | $7,988 |
| Net yield | 3.0% | 4.1% |
Other booking platforms charge differently: Vrbo takes roughly 5% and Booking.com takes around 15%, so a mixed-channel strategy can move the platform-fees line up or down by several hundred dollars a year.
Airbnb Fees and Utilities Eat Most of the House Premium
The short-term rental route grosses 69% more than a long-term lease, but four cost lines close most of that gap. Airbnb fees at 15.5% skim $3,807 straight off gross revenue. Utilities shift from tenant-paid under a standard Michigan lease to host-paid under a nightly booking model, adding $3,180 to the short-term cost column. Insurance roughly doubles, moving from $1,376 for a landlord policy to $2,876 for short-term coverage. Maintenance runs higher too ($4,029 vs $1,916) because linen, furnishing wear, and turnover repairs get priced into the short-term figure.
The net result: on paper the short-term rental looks like the clear winner at 12.5% gross vs 7.4% gross. After costs, the gap narrows sharply, with long-term actually edging ahead at 4.1% net vs 3.0% net. The short-term route can still win on an after-tax or appreciation basis, but on operating cashflow alone the long-term rental is more efficient at Detroit's price points.
A 2-Bed Apartment Costs $133,160 but Adds HOA Fees
Apartments tell a different story. Entry prices are lower, which lifts gross yields, but HOA fees add a fixed annual drag that applies whether the unit sits empty, houses a tenant, or hosts nightly guests.
| short-term rental | long-term rental | |
|---|---|---|
| Property price | $133,160 | $133,160 |
| Gross revenue | $17,726 | $13,257 |
| Airbnb fees (15.5%) | $2,748 | — |
| Insurance | $2,500 | $606 |
| Maintenance | $2,861 | $1,298 |
| Utilities | $2,703 | $541 |
| Property tax | $2,224 | $2,224 |
| Short-term rental tax | $1,064 | — |
| HOA fees | $2,345 | $2,345 |
| Total costs | $16,445 | $7,014 |
| Net income | $1,281 | $6,243 |
| Net yield | 1.0% | 4.7% |
HOA fees appear in both columns because they are a property-level cost that the owner pays regardless of whether the unit rents long-term, short-term, or sits vacant. This is the key structural difference versus the house cost table, where the owner controls all maintenance directly.
The Lower Apartment Entry Price Does Not Always Win
A 2-bed apartment at $133,160 costs roughly two-thirds of a 3-bed house at $196,500, and on a per-dollar-invested basis that lower entry price matters. Apartment short-term net yield comes in at 1.0% versus 3.0% for the house, and on the long-term side apartment nets 4.7% versus 4.1% for the house.
The HOA drag of $2,345 per year is the silent variable. In buildings with low HOA (older walk-ups, small condo associations), the apartment math often beats the house on yield. In buildings with high HOA (elevators, gyms, pools, doormen), the drag can wipe out the entry-price advantage entirely. The dashboard applies a city-median HOA estimate; your actual number depends on the specific building, so check the condo declaration before signing.
Short-Term Breaks Even at 20% Occupancy
The 3-bed house short-term model breaks even against the long-term benchmark at roughly 20% occupancy, meaning the property needs to hit that booked-night rate just to match what a simple annual lease would have produced. The Detroit market-wide average sits at 34%, which leaves a thin margin of outperformance over the lease alternative. Individual suburbs vary: tourist-adjacent areas near the riverfront or around entertainment districts run higher, while outer-ring neighborhoods can drop below break-even entirely. These are city medians; individual suburbs diverge significantly.
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Hiring a Manager Drops House Net Yield to 0.3%
The tables above assume self-management. Most Detroit short-term rental owners who do not live locally hand the property to a professional manager, which for a 3-bed house costs roughly $5,404 a year (typically around 22% of gross revenue). That drops short-term net yield from 3.0% to 0.3%.
The long-term equivalent is lighter but still material. A leasing agent typically charges around $1,374 a year in Detroit, trimming long-term net yield from 4.1% to 3.4%. Many owners handle long-term self-managed because the workload (one tenant placement, occasional repair calls) is modest compared to the 50-plus turnovers a year a short-term listing typically generates.
Michigan Taxes and Depreciation Shape After-Tax Returns
Michigan applies a flat state income tax of roughly 4.25% on rental net income, alongside federal rates that vary by bracket. Investors should also factor in 27.5-year straight-line depreciation on the building value of the property, which produces a non-cash deduction that can offset most or all of the taxable income in the early years. The dashboard calculates after-tax returns using these rules; see the market score methodology and data sources pages for the full logic.
The short-term route also triggers a Michigan state use tax of 6% on gross booking revenue, plus a 5% convention tax in some jurisdictions. These are included in the short-term stays tax line of the tables above. Closing costs and transfer taxes apply at purchase too; check with your attorney or closing agent for the exact amounts on a specific property.
Data reflects market conditions as of May 2026.
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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.
Methodology and Assumptions
Defaults used in the figures above. All inputs are adjustable in the dashboard.
How available nights are determined
Available nights default to 330 per year, reflecting an active operator with minimal blocked time. Where local regulations cap whole-home short-term lets (for example London at 90 nights, New South Wales at 180), the cap is applied. In markets where short-term rental requires owner-occupancy or is otherwise prohibited for investment properties, available nights drop to zero.
How occupancy is measured
The percentage of available nights that get booked, drawn from market data. A property listed for 200 nights with 100 bookings shows 50% occupancy. Adjustable in the dashboard.
Long-term rental management default
Defaults to self-managed (zero management fee), reflecting the most common arrangement for US individual investors. The dashboard slider lets you add a property manager fee if you plan to outsource.
Short-term rental management default
Set to self-managed (zero management fee) by default, the most common arrangement for individual investors. Hiring a professional manager typically costs 20-25% of gross revenue and reduces net yield proportionally. Toggle in the dashboard.
How property tax is calculated
Calculated as a percentage of property value, varying by state and county. California properties show lower effective rates due to Proposition 13's 1% cap on assessed value. Property tax sits with the owner; long-term tenants do not pay it.
Local regulations
Permit required ($75) in Detroit. Detroit requires short-term rentals registration. No night cap. Accommodations tax applies.
Sampling and data sources
Short-term rental yield figures reflect properties currently listed on short-term rental platforms. In high-tourism markets, listings tend to concentrate in central postcodes, which can pull city-median yields above what residential areas of the same city would achieve. Yields for any specific suburb may differ significantly from the city-wide median.
For metric definitions and broader methodology, see the About page.