Detroit Short-Term Rentals Yield 12.5%, Long-Term 7.4%

Detroit Investors Earn 69% More Gross From Short-Term Rentals, but Only Above 20% Occupancy

Detroit (Wayne County) is one of the rare US metros where short-term rental clears a double-digit gross yield on paper, with long-term rental running close behind. The cheap entry price does the heavy lifting: at roughly $196,500 for a 3-bedroom house, it takes far less rent to produce a strong yield than in coastal markets. The trade-off is that operating costs land on a smaller revenue base, so net margins are tighter than the gross figures suggest.

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

On gross revenue, short-term rental pulls ahead by roughly 69%. After platform fees, lodging tax, higher insurance, and utility costs, that lead disappears entirely, long-term lease ends up with the higher net yield (4.1% vs 3.0%).

Break-Even Occupancy: 20%

Short-term stays in Detroit only outperforms long-term rental on gross revenue when occupancy clears 20%. The market average sits at 34%, which leaves a comfortable buffer, but execution still matters: a poorly photographed listing in a soft pocket of the city can easily run below the 20% break-even.

Occupancy Sensitivity

Occupancy is the single biggest variable in short-term rental returns. Long-term lease income is essentially fixed once tenanted, but short-term revenue swings hard with bookings. At a softer 19% occupancy, gross revenue falls to roughly $13,606, sliding below the $14,562 that long-term rental delivers passively. At a stronger 44% occupancy, short-term revenue climbs to about $31,508, more than doubling the long-term gross. The verdict here depends entirely on whether you can outperform the market average, not just match it.

Suburban Detroit: Where Affordability and Rent Demand Meet

Detroit's suburbs sit in the sweet spot the suburban-balance investor is looking for: house prices well under the national median of $242,500, paired with rents firm enough to produce yields that urban coastal markets cannot touch. The dataset covers 67 ZIP codes across Wayne County, and the spread between top and bottom is wide.

The highest gross long-term rental yields cluster on the city's east and west sides, where 3-bedroom houses still trade well under $100,000 but command rents over $1,000 per month. Moross/Chandler Park (48224) leads at 16.2%, with houses around $84,800 renting for $1,144/month. Warrendale/Cody Rouge (48228) and Fitzgerald/Eight Mile (48238) sit just behind. These yields are exceptional by national standards, but they reflect the risk profile of higher-vacancy, lower-tenant-quality submarkets, not turnkey returns.

Top-yielding ZIPs in Wayne County by gross long-term rental yield.

These are averages per ZIP. The dashboard breaks it down further, by bedroom count and property type, so you can model your specific property.

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

Operating Costs Eat a Bigger Slice of Detroit Short-Term Rental Revenue

Short-term operating costs in Detroit total roughly $18,648 per year, against gross revenue of $24,563. That brings net yield down to 3.0%, well below the headline 12.5% gross figure. The biggest line items, by some distance, are platform fees and utilities.

• Airbnb host fees: $3,807 per year (Airbnb's host-only fee of 15.5%; Vrbo and direct bookings differ)
• Short-term rental insurance: $2,876 per year (commercial-grade, required by most carriers for nightly stays)
• Maintenance and furnishing replacement: $4,029 per year (higher than long-term rental because guest turnover wears furnishings faster)
• Utilities: $3,180 per year (paid by the host on short-term rentals; Michigan winters drive heating costs)
• Property tax: $3,282 per year (1.7% of sale price; Detroit assessment ratios are above the national norm)
• Lodging use tax: 6.0% of gross short-term rental revenue, collected and remitted to Michigan

Long-term rental costs are tighter. Total annual outgoings come to about $6,574, leaving net income of roughly $7,988 and a net yield of 4.1%. The cost categories shrink: routine maintenance of $1,916, landlord insurance of $1,376, the same $3,282 property tax bill, and no platform fees, lodging tax, or host-paid utilities. Tenants cover heat and power.

Both figures assume self-management, matching the dashboard default. If you choose to hire a professional manager for a short-term stays instead of self-managing, add roughly $5,404 per year, which widens the gap between short-term rental's 3.0% net yield and long-term rental's 4.1%. Long-term property management runs at around 9% of rent if outsourced.

Property Tax and Lodging Tax Take 1.7% and 6.0% Off Detroit Returns

Detroit's property tax rate of 1.7% sits above the national median, a legacy of the city's tax base challenges. On a $196,500 3-bedroom house, that produces an annual bill of around $3,282. Some neighborhoods have additional special assessments, and Wayne County's millage rates can push the effective rate higher in specific jurisdictions. Verify the actual rate with the city assessor before closing.

The Michigan use tax of 6.0% applies to short-term stays revenue, plus a 5% convention and tourism assessment in some jurisdictions. Hosts collect this from guests at booking and remit to the state. Long-term lease income is not subject to lodging tax.

Tax Implications for Detroit Investors

Federal depreciation is the workhorse deduction for Detroit rental investors. The IRS lets you depreciate the building portion of a rental property over 27.5 years on a straight-line basis. With a building allocation of around 80% of sale price for this market, that means a depreciable base of $157,200 and an annual paper deduction of $5,716. That deduction often wipes out most or all of the taxable rental income, even when cash flow is positive.

Mortgage interest is fully deductible on Schedule E for both long-term and short-term rentals, with no SALT cap to worry about (the SALT cap applies to personal residences, not investment properties). For active short-term rental operators who can document material participation (typically 100+ hours per year and more than any other person), losses can offset ordinary income rather than being trapped as passive losses; long-term rental losses are passive by default and limited to $25,000 against ordinary income, phasing out above $150,000 of modified adjusted gross income.

Michigan layers a flat 4.25% state income tax on top of federal liability, plus Detroit imposes a city resident income tax of 2.4% (1.2% for non-residents). That said, after federal depreciation and operating expenses, taxable rental income is often modest or negative on paper, which softens the state-tax bite. For larger portfolios, a 1031 exchange remains available to defer gains when rolling capital from one investment property into another.

Detroit Yields 7.4%, Well Above the Michigan and National Medians

Detroit's long-term lease yield of 7.4% is one of the highest in the country at the metro level, comfortably above the state median of 5.4% and the national median of 5.3%. The driver is price, not rent: at $196,500, Detroit houses cost noticeably less than the Michigan median of $213,467 and far below the national median of $242,500, while rents of $1,272/mo are competitive.

Comparison of key investment metrics.

Compared to peer Rust Belt and Midwest cities, Detroit's gross yield advantage is real but comes with the highest risk profile of the cohort. Cleveland and Pittsburgh offer similar yield arithmetic with marginally stronger tenant fundamentals; Indianapolis and Columbus trade lower yields for stronger appreciation and population growth. For other state and city overviews, see Michigan rental market insights, Detroit Houses and Apartments Run Close on Yield, with Bedroom Count Tipping the Balance, Detroit Airbnb Net Yields Drop to 3.0% After All Costs, and Moross/Chandler Park (48224) Leads Detroit Yields at 16.2%, Triple the Premium Belt.

Investment Bottom Line

Detroit is a yield market, not an appreciation market. The arithmetic favors short-term stays on gross revenue and long-term rental on simplicity and net margin per hour of work. Operators who can clear the 20% break-even occupancy and run a tight, well-photographed listing in a stable suburb capture the headline 12.5% gross. Investors looking for set-and-forget income earn a respectable 4.1% net yield long-term, with far less operational drag.

The bigger risk in Detroit is not strategy choice but submarket choice. The yield spread across 67 ZIP codes in the dataset is wide, and a property in the wrong block can sit vacant or attract tenants who damage the asset value. Use the dashboard to identify ZIP codes where rent levels and price points have both held up.

Data reflects market conditions as of May 2026. For methodology details, see our market score methodology and data sources.

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.