Detroit Airbnb Net Yields Drop to 3.0% After All Costs

The gross short-term rental premium runs 61% for a 3-bed house in Detroit (Wayne County), but after Airbnb fees, insurance, maintenance, utilities, and property tax the picture shifts materially. 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: 7.8% 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%.

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 61% 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 7.8% 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 lease 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.

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 21% Occupancy

The 3-bed house short-term model breaks even against the long-term benchmark at roughly 21% 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 materially higher, while outer-ring neighbourhoods can drop below break-even entirely. These are city medians; individual suburbs diverge significantly.

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

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 rental 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 April 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.