Dallas Short-Term Rentals Yield 11.0%, Nearly Double Long-Term Returns

⚠ Short-term rental figures assume the current court injunction holds. If the Texas Supreme Court reverses, short-term rental in single-family residential zones across Dallas would be restricted to commercially zoned properties only.

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 (91%). Annual short-term rental revenue is nightly rate × occupancy × 330 available nights. Both match the Dashboard's calculation.

Short-term rental grosses roughly 98% more than long-term rental at the city median, but operating costs are more than double, so the net gap is much narrower than the headline numbers suggest.

Short-Term Rental Gross Revenue Matches Long-Term at 22% Occupancy

The break-even occupancy in Dallas is 22%. At that nightly listing rate of $263 across 330 bookable nights, anything below that figure means short-term rental grosses less than long-term rental, before short-term rental's higher costs are even applied. The current city-wide average of 44% sits comfortably above the threshold, but submarket variation is wide.

Occupancy is the single biggest variable in short-term rental returns. Long-term rental income is essentially fixed once tenanted; short-term rental swings dramatically with bookings. At a softer 29% occupancy, gross revenue drops to roughly $25,428, barely beating long-term rental on revenue and likely losing on net once the higher cost base is applied. At a stronger 54% (achievable in tourist-heavy or event-driven submarkets near Downtown, Deep Ellum, or AT&T Stadium catchments), gross revenue lifts to around $47,095.

The verdict is conditional on execution, not guaranteed by the city-wide average. Investors need to model their specific suburb, property type, and listing strategy.

Suburban Dallas Yields Outpace the Urban Core

Yields vary sharply across Dallas County's 83 ZIP codes. The highest-yielding suburbs cluster in southern and eastern Dallas, where sale prices are roughly half the county median while rents hold up well, producing gross long-term yields above 10%. By contrast, the affluent ZIPs in the northern suburbs (Addison, Coppell, Las Colinas) carry sale prices two to three times higher with only modestly higher rents, compressing yields into the 3-4% range.

This is the suburban-balance opportunity in Dallas: the highest-yielding suburbs are not the cheapest rural fringes, nor the most prestigious urban cores, but mid-density working-class neighborhoods with steady tenant demand and entry-level pricing. Pleasant Grove (75217) leads on long-term yield at 10.5%, with sale prices around $207,250 and rents at $1,815. Cedar Crest/South Dallas (75232) and Oak Cliff/North (75203) follow closely.

These are averages per suburb. Your specific property type and bedroom count will move the figures, suburb-level breakdowns by bedroom count and property type are available in the dashboard.

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

Dallas's Texas-Sized Property Tax Eats 1.5% a Year

Property tax is the dominant operating cost for Dallas investors, far ahead of insurance, maintenance, or utilities. At 1.5% of assessed value, the annual bill on a median 3-bedroom house lands at roughly $5,115. That single line item is the largest cost line by some distance and is the structural reason Dallas long-term yields look thin against revenue.

For long-term rental at the city median, total annual operating costs run approximately $12,028, covering property tax of $5,115, landlord insurance of $3,500, and maintenance of $3,413. Net operating income comes to $7,409, producing a net yield of 2.1%. The dashboard defaults to self-managed for long-term rental in the US; if you hire a property manager at typically around 11% of rent, subtract that from net.

Short-term rental costs run substantially higher. Annual operating costs total roughly $26,906, comprising property tax of $5,115, short-term rental insurance of $5,000, higher maintenance reflecting guest turnover and furnishing wear, utilities of $2,640 (the host pays, not the guest), and Airbnb host fees of approximately $5,956 at the 15.5% host-only rate. Add the 6.0% hotel occupancy tax (passed through to guests but adds friction) plus the upfront $20,250 furnishing capital outlay. Net operating income comes to $11,522, a net yield of 3.3%. If you choose professional short-term rental management instead of self-managing, add roughly $9,607 to annual costs.

Dallas Yield Sits Below Texas Average but Above the National Median

Dallas's long-term gross yield of 5.6% is below the Texas state average of 6.1% but above the national average of 5.3%. The state average is pulled up by smaller Texas markets (San Antonio, El Paso, Lubbock, Corpus Christi) with much lower entry prices. Dallas trades a slightly thinner yield for the deepest tenant pool, the strongest job growth, and the most liquid resale market in Texas.

Comparison of key investment metrics.

Compared to other major Texas metros, Dallas falls between Houston and Austin: lower yield than working-class Houston ZIPs, higher than Austin's price-compressed urban core. For a Texas alternative, see Austin Apartments Yield 6.6% vs Houses at 5.9% on Short-Term Rental. The state hub at Texas rental market insights compares Dallas with all major Texas markets.

Tax Implications for Dallas Investors

Texas's lack of a state income tax is the single biggest tax advantage for Dallas rental investors compared to most US markets. Rental income flows through to your federal return without an additional state-level layer, which improves after-tax returns by roughly 4-5 percentage points compared to high-tax states like California or New York. The trade-off, as the cost section above shows, is the highest property tax burden in the country.

Federal tax treatment further softens the headline numbers. Depreciation lets you deduct the building portion of the purchase price (not the land) over 27.5 years on a straight-line basis. With a building allocation of around 80% of the $350,000 median (so a depreciable base of $280,000), the annual depreciation deduction is approximately $10,182. That deduction often exceeds taxable income on a leveraged property, creating paper losses that defer taxes.

Mortgage interest is fully deductible on Schedule E without the SALT cap that limits owner-occupied deductions, and the 1031 exchange lets you swap into another investment property tax-deferred. For short-term rental, material participation (managing the property yourself, averaging less than 7 nights per stay) can convert passive losses into active deductions usable against ordinary income, a more powerful position than passive long-term rental losses. Confirm classification with a CPA before relying on it.

Investment Bottom Line: Dallas Rewards Active Operators, Penalises Passive Buyers

Dallas rewards investors who pick the right submarket, run short-term rental hands-on, and capture the no-state-income-tax tailwind. It penalises passive buyers who anchor on the city median: the headline 5.6% long-term yield is thin for Texas and after the 1.5% property tax, net yield drops to 2.1%. The path to a strong return is suburb selection, not market-wide exposure.

The pending Texas Supreme Court ruling on the Dallas short-term rental ordinance is the dominant near-term risk. If the injunction is lifted and enforcement begins, single-family residential short-term rental returns the industry assumes today would be restricted to commercially zoned properties. Investors writing offers in 2026 should price both scenarios.

For deeper context, the market score methodology shows how Dallas's 9.1/10 short-term rental score and 7.9/10 long-term score are constructed, and the data sources page covers the underlying datasets. Peer markets at Fort Worth's Short-Term Rental Ban Makes Long-Term the Only Play and After All Costs, Dallas Airbnb Beats Long-Term Rentals provide regional comparisons. 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.