The Question Everyone Asks Before They Do the Math
Every property investor eventually asks this question, and the answer they usually get is incomplete. "Airbnb makes 2–3× more than long-term rental" is a claim you see frequently in STR marketing content. It's often true. It's also sometimes false, and in some markets it's significantly false. The difference depends on variables that aggregate claims can't capture: your specific market, your property type, your management capacity, and your local regulatory environment.
This guide runs the comparison honestly, with complete expense models for both approaches. The goal is not to advocate for one model over the other — it's to give you a framework for making the right decision for your specific situation.
The Revenue Difference: What the Numbers Actually Show
The gross revenue premium for STR over LTR averages 2.1× — meaning a property that rents long-term for $2,000/month might generate $4,200/month as an Airbnb. But gross revenue isn't net income. Once you account for STR-specific expenses, the net income premium narrows to roughly 1.3× on average. In some markets, particularly urban markets with high cleaning costs and competition, the premium is lower. In leisure markets with strong seasonal demand, it can be substantially higher.
The Full Expense Comparison
The expense categories that most investors underestimate for STR are furnishings depreciation and management time. A furnished property requires periodic replacement of linens, towels, small appliances, and furniture. At typical STR usage rates, expect to budget $1,500–3,000 annually for a 2-bedroom property. And management time — even for a "passive" STR — is real. Conservative estimates put it at 8–12 hours per month per property for a self-managed listing. At any reasonable hourly value, that's $500–900/month in opportunity cost that most models ignore.
A Side-by-Side Case Study: Same Property, Both Models
Consider a 2-bedroom property in a mid-tier leisure market acquired for $380,000 with a $2,800/month mortgage (20% down, 7% rate).
Long-term rental scenario: Market rent $2,200/month. Annual gross: $26,400. Expenses: property management (8%) $2,112, maintenance reserve $3,800, insurance $1,200, vacancy reserve (5%) $1,320. Total expenses: $8,432. NOI: $17,968. Annual cash flow after mortgage: $17,968 – $33,600 = -$15,632 (negative — this property loses money as a long-term rental before appreciation is considered).
STR scenario: Market median annual revenue: $48,000. Expenses: platform fees (10%) $4,800, cleaning (80 turnovers × $100) $8,000, supplies $1,200, furnishings depreciation $2,000, insurance add-on $1,800, maintenance reserve $3,800. Total expenses: $21,600. NOI: $26,400. Annual cash flow after mortgage: $26,400 – $33,600 = -$7,200 (negative — but $8,432 less negative than LTR).
In this case study, both models produce negative cash flow on this acquisition at current financing rates — but STR produces a meaningfully better outcome. The property makes sense as an investment only if you're underwriting appreciation alongside cash flow, or if you use a lower leverage ratio.
When LTR Wins
There are genuine scenarios where long-term rental produces better risk-adjusted returns than STR. They cluster around three conditions:
Urban markets with high STR operating costs and strong LTR demand. In New York, San Francisco, or Boston, long-term rents are extremely high ($3,000–5,000+/month for a 2-bedroom) while STR faces regulatory constraints, high cleaning costs, and fierce competition. The LTR premium over other markets narrows the STR advantage significantly.
Markets with STR regulatory risk. If your market is trending toward the NYC Local Law 18 model — host presence requirements or outright restrictions — LTR eliminates that regulatory risk entirely. A property that can reliably generate $2,500/month long-term is preferable to one that might generate $4,000/month as an STR but faces a 40% probability of regulatory shutdown in three years.
Investors who cannot or will not manage an STR operation. An unmanaged or poorly managed STR produces worse results than a professionally managed LTR. If you're hiring full-service STR management (20–25% of revenue) and the market premium doesn't justify the additional cost and risk, LTR may be the correct choice.
The Hybrid Model: Medium-Term Rentals
A growing number of investors are finding a third option — medium-term rentals (30+ days) through platforms like Furnished Finder or direct corporate housing channels — that occupies interesting territory between LTR and STR. Medium-term rentals typically earn 40–80% more than long-term rents, require significantly fewer turnovers than STR (reducing cleaning costs), and face less regulatory scrutiny in most markets (many STR regulations exempt 30+ day stays).
For properties in markets with strong corporate, medical, or relocation demand, the medium-term model deserves serious evaluation as part of any LTR vs. STR analysis. Read our dynamic pricing guide for how to integrate medium-term availability into a multi-channel revenue strategy.
The Bottom Line
STR outperforms LTR on net income in most markets — but the margin is smaller than gross revenue comparisons suggest, and the operational complexity is genuinely higher. In strong leisure markets with manageable regulation, STR typically produces 30–80% higher net income than LTR for the same property. In urban markets with regulatory risk or high operating costs, the advantage narrows to 10–20% or disappears entirely. Run the complete model with both gross revenue projections and full expense accounting for your specific market before deciding. The right answer is market-specific and property-specific — and it's worth finding it before you commit.
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