Airbnb vs Long-Term Rental: Which Makes More Money as a Landlord in 2024?

The short-term rental market is valued at $94.45 billion in 2024 and expected to exceed $134.26 billion by 2034, while demand for short-term rentals is up 7.2% year-over-year with occupancy rising to 43.5% in January 2025. However, new listings are growing faster than demand, leading to lower occupancy rates despite hosts compensating with higher nightly rates.

Long-term rent growth has cooled from recent peaks, but prices continue rising 3.5% year-over-year, signaling consistent demand. The fundamental trade-off remains: higher income versus greater stability, with location playing a major role in determining which strategy works best.

Regulations are the biggest risk factor for Airbnb because a single city ordinance can wipe out your revenue model overnight. Many cities including Barcelona, Amsterdam, Paris, Venice and San Francisco have enacted regulations specifically targeted at the short-term rental market.

Operating costs for short-term rentals can reach around 50% of revenue compared to 35% for long-term rentals. The gap is wider than most realize because of hidden expenses: Airbnb Hidden Costs: - Furnishing and decor: $15,000-$25,000 ($50,000+ for larger properties) - Platform fees: 3% basic service, up to 14-16% for professional hosts - Occupancy taxes: up to 14% on reservations under 30 nights (San Francisco example) - Specialized STR insurance: $2,800-$3,900 annually - Professional cleaning after every guest - Constant restocking of supplies and amenities Long-Term Rental Advantages: The tenant is responsible for their own utilities and brings their own furniture, which immediately removes two major expense categories from your plate.

Traditional rentals incur tenant turnover costs, but have minimum ongoing expenses. Less upfront costs, less advertising costs, minimum utility and other ongoing costs. An Airbnb's operating expenses can easily eat up over 25% of your income, whereas costs for a long-term rental often stay around a much more manageable 8%.

This gap in ongoing costs is a huge factor.

The time commitment difference is dramatic. On average, STR hosts spend 2-3 hours daily booking and managing properties, while LTR landlords spend 2–4 hours per month after securing a tenant.

Airbnb Performs Best In: - Tourist destinations with year-round demand - Business travel hubs with consistent corporate bookings - Cities where vacation rentals outperformed long-term leases in 64% of cases for three-bedroom units due to increased demand for larger properties - Markets where STR premium exceeds 75% and local regulations allow whole-home STRs Long-Term Rentals Excel In: - Residential neighborhoods with limited tourism - Markets with low STR premium (under 50%), STR restrictions, or where you need predictable monthly cash flow to service debt - Areas with strong rental demand and housing shortages - Markets where housing demand is high, making long-term rentals a safer bet for consistent returns Current Market Dynamics: Vacation rentals were more lucrative in only 18 out of 50 cities, led by Milwaukee, Virginia Beach, and Memphis. Property owners in Milwaukee charge an average of $141.62 per night leading to yearly net rental income of $10,862.16.

Most experienced investors eventually run some units as STR and keep others long-term. The hybrid approach reduces regulation risk while capturing the STR premium in the best-performing units.

The data is clear: Airbnb earns 2-3x more per month than long-term rental in most U.S. markets but requires more active management. However, if the STR premium is below 50%, long-term rental is usually the smarter pick.