Chicago Short-Term Rentals Yield 10.3%, Nearly Double Long-Term

⚠ Short-term rental figures apply only where legally permitted. Chicago and several Cook County municipalities have active license moratoriums; new investor entries face zoning, separation, and per-ward cap restrictions. Existing licensed operators are unaffected.

Estimates for a typical 3-bedroom house. Figures are modelled from market data; not guaranteed outcomes.

Annual long-term rental revenue is monthly rent × 12 × tenanted occupancy (95%). Annual short-term rental revenue is nightly rate × occupancy × 330 available nights. Both match the Dashboard's calculation.

Short-term rental grosses roughly 92% more than long-term rental at typical Cook County occupancy, but operating costs and the 14.75% lodging tax close most of that gap on a net basis.

Short-Term Rental Gross Revenue Matches Long-Term Rent at 23% Occupancy in Chicago

Short-term rental gross revenue matches long-term rental annual rent at around 23% occupancy in Cook County. Below that threshold, the roughly $262-a-night nightly rate cannot generate enough bookings to clear the $20,207 that a long-term tenant pays reliably each year. The actual after-costs break-even sits higher, because short-term rental carries roughly double the operating costs of a long-term let. The market average sits at 45%, comfortably above the break-even, but downtown high-rises and outer-suburban zip codes diverge sharply from that midpoint.

Occupancy is the single biggest variable in short-term rental returns. Long-term income is essentially fixed once tenanted, but short-term income swings dramatically with bookings. At a softer 30% occupancy (closer to a slow shoulder-season pattern), gross revenue falls to roughly $25,889, only modestly ahead of long-term gross. At a stronger 55% occupancy (closer to a well-managed downtown listing), gross revenue climbs to about $47,462. The 100% occupancy ceiling, useful as a sanity check, is roughly $86,295; nobody hits it, and licensing constraints make it irrelevant in most Chicago wards.

Suburban Cook County Suburbs Deliver the Best of Both Worlds

Cook County's highest yields cluster in the south- and far-southwest-side suburbs where sale prices remain affordable but long-term rents have held up. Beverly/Morgan Park (60643) leads at 11.4%, with median 3-bed houses at $268,000 and rents around $2,542 a month. That combination, affordable entry alongside resilient long-term rent, is the suburban-balance pattern: strong enough demand to fill a property, cheap enough to deliver a real cash-on-cash return.

Compare these to the urban core (River North, the Loop, Streeterville) where 2-bed apartments around $192,887 produce gross long-term yields well below the county median, or to far-rural McHenry-edge zip codes where weak rental demand offsets cheap entry. The mid-density southwest suburbs land in the middle: enough rental demand for short-term operators willing to navigate licensing, low enough sale prices for double-digit long-term yields. These are averages per suburb. Your specific property may differ, the dashboard shows breakdowns by bedroom count and property type.

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

Operating Costs Eat a Bigger Share of Short-Term Rental Revenue in Chicago

Total annual operating costs for a Cook County 3-bed short-term rental run roughly $28,805, compared with around $13,423 for the same property let long-term. The biggest line items on the short-term side are Airbnb host fees at 15.5% of bookings (about $6,019 a year), short-term rental insurance at $3,765, maintenance at $3,681 (higher than long-term because of guest turnover and furnishing wear), utilities at $2,928 (paid by the host on short-term, by the tenant on long-term), and property tax at $7,477, reflecting Cook County's stiff 2.0% effective rate. There is also an upfront furnishing outlay of around $20,250 that long-term landlords avoid entirely.

The dashboard defaults short-term rental management to 0% (self-managed), and these total cost figures reflect that. If you choose to hire a professional manager rather than self-manage, add approximately $8,543 a year, lifting management to roughly 22% of gross revenue. That is a material drag on what is already a thin net yield in this market: net yield drops from 2.7% on a self-managed basis to roughly 0.4% once a professional manager is paid. Long-term rental in Chicago is most often self-managed too in the dashboard's default view; if you use a property manager, expect around 9% of monthly rent.

On a net basis, the gap between strategies narrows considerably. Short-term rental nets approximately $10,028 (2.7%), versus long-term at $6,784 (1.8%). The 92% gross premium becomes a much smaller net premium once Cook County's property tax and the city's lodging tax are paid.

Property Taxes Take 2.0% Off the Top in Cook County

Cook County's effective property tax rate of 2.0% is one of the highest among major U.S. metros, and it falls hardest on long-term rental yields. On a $377,500 3-bed house, the annual bill is roughly $7,477, which by itself absorbs more than a third of long-term gross rent. The same dollar tax bill is more easily digested on the short-term side because gross revenue is roughly 92% higher.

Layered on top, short-term operators pay a combined 14.75% lodging tax (Chicago 7.5% + Cook County 1% + Illinois 6.25%). That tax is passed through to guests at booking but compresses the price the property can charge competitively against suburban hotels. Investors should model the lodging tax as a price ceiling rather than a direct cost line, since a higher posted nightly rate to absorb it can suppress occupancy.

Cook County Yields Edge the National Average But Trail the Illinois State Median

Comparison of key investment metrics.

Cook County prices sit well above the Illinois state median of $149,491, reflecting that the rest of Illinois is dominated by lower-priced downstate and central markets. Compared with the national median of $242,500, Cook County is more expensive on entry, but rents at $1,767 a month more than compensate, producing a gross long-term yield close to the national median of 5.3%. Investors comparing Chicago against other metros should consider the data sources and the market score methodology to understand how regulatory friction is priced into the market score.

Tax Implications for Cook County Investors

Depreciation on a Cook County 3-bed house produces about $10,982 a year in paper deductions, calculated by allocating 80% of the $377,500 purchase price to the building (roughly $302,000) and dividing by the 27.5-year IRS schedule. That deduction often exceeds the property's net operating income on a long-term let, creating a paper loss that reduces taxable income. Mortgage interest is fully deductible on Schedule E, with no SALT cap on rental properties, which matters in Illinois because state income tax (4.95% flat) compounds federal liability.

For short-term rental operators, material participation rules can change the tax character of losses. If you average less than 7 days per stay (as most Cook County short-term rentals do) and meet material participation tests, losses can offset W-2 income rather than being trapped as passive losses. The 14.75% lodging tax is a pass-through, not deductible against income, but the Illinois state income tax and Cook County's high property tax mean that any depreciation shield is genuinely valuable. A 1031 exchange remains available for tax-deferred swaps if you eventually rotate out of the market.

Investment Bottom Line: Suburban Long-Term Wins on Simplicity, Short-Term Wins on Active Yield

Chicago is a market where the verdict depends entirely on execution. Investors willing to navigate the licensing moratorium and operate hands-on can extract roughly 92% more gross revenue from short-term rental, but 2.0% property tax and 14.75% lodging tax compress that premium on a net basis. Long-term rental in southwest suburban zip codes delivers a cleaner story: double-digit gross yields, predictable cash flow, and no regulatory ceiling.

For a closer look at the underlying rental data, explore rental data in the dashboard or compare neighboring markets via Illinois rental market insights. Sister markets worth comparing include Illinois Rental Investment Insights, Chicago's Airbnb Premium Shrinks After All Costs Are Paid, Chicago Apartments Beat Houses on Yield, but HOAs Narrow the Gap, and Beverly/Morgan Park (60643) Yields 11.4% in Chicago, Doubling Premium Suburbs. 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.