The gross short-term rental premium is 98% for a 3-bed house in Los Angeles (Los Angeles County), but after every cost is paid the picture flattens substantially. This article walks through the after-costs reality for both a 3-bed house and a 2-bed apartment, because the cost structures differ: apartments carry HOA fees that houses do not, but their entry prices are lower (see the apartment table below). The two property types reach different verdicts on net yield.
Regulatory warning. Los Angeles only permits short-term lettings on a host's primary residence. Investment properties are not eligible for unhosted short-term letting. Owner-occupants are capped at 120 unhosted nights per year unless they hold an Extended Home-Sharing permit (about $1,100). The Home-Sharing application fee is about $200 and a 12.0% Transient Occupancy Tax applies. The cost models below describe the economics where short-term letting is legally permitted; investors should treat long-term letting as the realistic strategy for non-primary residences.
The 3-Bed House: Net Yield Lands at 1.7% on Short-Term, 1.2% on Long-Term
The numbers below assume self-management on both columns. They reflect the dashboard defaults, including the 1.2% property tax rate and the 12.0% short-term lodging tax (Transient Occupancy Tax).
| Short-term rental | Long-term rental | |
|---|---|---|
| Property price | $945,000 | $945,000 |
| Gross revenue | $67,000 | $34,000 |
| Airbnb fees (15.5%) | $10,000 | — |
| Insurance | $3,400 | $1,900 |
| Maintenance | $13,000 | $9,300 |
| Utilities | $4,800 | $0 |
| Property tax | $11,000 | $11,000 |
| Short-term rental tax | $8,000 | — |
| Total costs | $50,000 | $22,000 |
| Net income | $16,000 | $12,000 |
| Net yield | 1.7% | 1.2% |
Note that Airbnb's host fee is 15.5%; other platforms charge differently (Vrbo around 5%, Booking.com around 15%), and direct bookings carry no platform fee at all. Switching booking channels is one of the few cost factors an operator can adjust without changing pricing.
What Eats the House Premium: Platform Fees, Lodging Tax, and Higher Insurance
Three line items account for most of the gap between gross and net on the short-term column. Airbnb fees of about $10,000 consume 15.5% of gross revenue before any operating expense is paid. The 12.0% Transient Occupancy Tax adds another layer that long-term lettings simply do not face. And short-term insurance (about $3,400) runs nearly double long-term landlord cover (about $1,900) because insurers price guest turnover and commercial-use exposure higher than a 12-month tenancy.
Maintenance is the other major divergence. Short-term maintenance (about $13,000) is higher than long-term maintenance (about $9,300) because the short-term figure includes furnishing replacement (mattresses, linen, appliances, decor all wear faster with weekly turnover). The result: the 98% gross premium narrows to a far smaller net advantage once these costs are paid.
The 2-Bed Apartment: HOA Adds a Cost Houses Don't Pay
Apartments enter the market at a lower price point (about $613,000 versus about $945,000 for a 3-bed house), but they carry an HOA fee that applies regardless of whether the unit is let short-term or long-term. The HOA is a property-level cost: it appears in both columns below.
| Short-term rental | Long-term rental | |
|---|---|---|
| Property price | $613,000 | $613,000 |
| Gross revenue | $38,000 | $27,000 |
| Airbnb fees (15.5%) | $6,000 | — |
| Insurance | $2,500 | $800 |
| Maintenance | $8,500 | $6,000 |
| Utilities | $4,100 | $810 |
| Property tax | $7,000 | $7,000 |
| Short-term rental tax | $4,600 | — |
| HOA fees | $5,600 | $5,600 |
| Total costs | $38,000 | $20,000 |
| Net income | $160 | $7,200 |
| Net yield | 0.0% | 1.2% |
House vs Apartment: The Yield Verdict Depends on Strategy
The entry price gap is significant. A 2-bed apartment at about $613,000 costs less than a 3-bed house at about $945,000, lowering the capital required for a Los Angeles deposit. But apartments inherit an HOA bill of about $5,600 per year that houses do not pay, and that cost sits in both the short-term and long-term columns. HOA in Los Angeles typically covers building insurance for the structure, common-area maintenance, elevators, and security; the line item is not optional.
On net yield, the comparison is direct. The 3-bed house produces 1.7% short-term and 1.2% long-term. The 2-bed apartment produces 0.0% short-term and 1.2% long-term. The lower entry price gives the apartment a denominator advantage on yield calculations, but the HOA drag and a smaller revenue base (a 2-bed sleeps fewer guests than a 3-bed) determine which property type wins on net cash. These are city medians; individual neighborhoods differ. The dashboard shows neighborhood-level data for every bedroom count and property type.
Short-Term Gross Revenue Matches Long-Term Rent at 26% Occupancy
The break-even occupancy for the 3-bed house is 26%. That is the gross floor: below it, short-term gross revenue is less than the long-term annual rent of about $34,000, and the operating cost stack pushes the comparison further in favor of long-term letting. The Los Angeles market median occupancy is 51%, comfortably above break-even, but the figure is a city-wide average. Beachside neighborhoods in Venice and Santa Monica run higher; inland neighborhoods sit lower. Operators modelling a deal should sanity-check the local occupancy rather than assume the city median.
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Hiring a Manager Costs Around 20% of Gross and Drops Net Yield to 0.3%
The cost tables above assume self-management. For an investor who lives out of state, lacks the time to handle messaging and turnovers, or simply wants a hands-off operation, a professional short-term manager typically charges around 20% of gross revenue. On the 3-bed house that translates to roughly $13,000 per year, dropping net yield from 1.7% to 0.3%. Total costs with management rise to about $63,000.
Long-term management is cheaper in percentage terms, typically around 8% of gross rent. For the 3-bed house, that adds roughly $2,800 per year and drops long-term net yield to 0.9%. Individual managers charge differently and these are market estimates; quotes from two or three local agents are the only reliable benchmark.
Tax Implications: Depreciation Is the Biggest Lever
California has a state income tax that applies to rental income on top of federal tax, so investors do not get the no-state-tax advantage available in Texas or Florida. Federal depreciation is the largest tax shield: residential property depreciates over 27.5 years, and for this market the building allocation is approximately 70% of the sale price (about $662,000), producing an annual deduction of about $24,000. Short-term rentals reported as a business on Schedule C versus passive on Schedule E are taxed differently, and the Transient Occupancy Tax of 12.0% is collected and remitted by Airbnb in most LA-area cities. The dashboard calculates after-tax cash flow under each scenario; data sources documents how each line is built.
For peer-city comparisons, market score methodology explains how Los Angeles ranks against other coastal premium markets. Explore rental data in the dashboard to filter by neighborhood. After All Costs, Oakland's Airbnb Premium Shrinks Sharply covers similar after-cost mechanics for another premium California market, and California Rental Investment Insights covers the same question across the state's other coastal markets.
Data reflects market conditions as of October 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 New York City 30-day minimum stays and San Francisco un-hosted 90-night caps), 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 around 20% 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
Check state, county, and HOA rules before investing; these change frequently. The regulations summary in this article reflects the latest data we hold. Always verify the live position with the local authority.
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.