Seattle Long-Term Rental Yields 2.6%, Short-Term Doubles It

Seattle's 2.6% Long-Term Yield Sits Well Below the National Median

Seattle (King County) is a textbook premium-price, low-yield market. A typical 3-bedroom house trades at around $986,000, more than four times the national median 3-bed sale price of $242,500. Long-term rents reach roughly $2,266 a month, which is healthy in absolute terms but produces a gross long-term yield of just 2.6%, compared with 5.3% nationally and 4.0% for the broader Washington state median. Investors who buy here are explicitly accepting current-income compression in exchange for the West Coast tech-economy growth thesis.

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

Short-term rental grosses roughly 97% more than long-term rental, but Seattle's higher operating costs (cleaning, platform fees, utilities, insurance) compress that gap once costs are taken out.

The break-even arithmetic is straightforward: short-term rental only outperforms long-term rental on gross revenue if occupancy exceeds roughly 27%. With the King County average sitting at 52%, the average operator clears the bar comfortably, but only the average. Run a sensitivity at 37% occupancy and gross revenue falls to $36,410, narrowing the lead over long-term rental considerably. Run it at 62% and revenue lifts to $60,687, the kind of number that justifies the operating overhead. Occupancy is the single biggest variable, and it is the one most under the operator's control.

Seattle Suburb Yields Range From 5.0% Down to Sub-3% Inside the City

The 2.6% county-level yield hides enormous suburb-to-suburb variation. Across King County's 83 ZIP codes, the highest-yielding suburb is Seatac (98168) at 5.0%, where prices around $587,500 pair with rents of $2,449. At the other end of the distribution, central Seattle and Eastside ZIPs in Bellevue and Mercer Island can drop below 1.5% gross yield because sale prices are simply too high relative to what tenants will pay. The dispersion is the entire investment story.

Top-yielding King County suburbs, ranked by gross long-term rental yield.

The pattern is consistent across King County: south-end ZIPs (SeaTac, Burien, Auburn, Federal Way) deliver the highest current-income yields, while Eastside addresses (Bellevue, Mercer Island, Kirkland) deliver the strongest historical appreciation. Picking between them is the core decision a Seattle investor faces. These are averages per suburb; your specific property may differ. Bedroom count and property type both shift the figures meaningfully, and the dashboard lets you filter on those when modelling a specific address.

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

Operating Costs in Seattle Take Most of the Short-Term Rental Premium

Short-term rental gross revenue of around $50,976 sounds compelling against long-term rental's $25,832, but the full cost stack tells a different story. Annual operating costs for a self-managed short-term rental in King County run to approximately $39,495, leaving net income of roughly $11,481 and a net yield of 1.2%. Long-term rental costs total around $20,666, producing net income near $5,166 and a net yield of 0.5%. The headline 97% gross-revenue advantage shrinks substantially on a net basis.

For a Seattle 3-bed house, the short-term rental cost stack at the dashboard default of self-managed operations breaks down as Airbnb host fees of $7,901 (15.5% of gross), specialist short-term insurance of $4,458, maintenance and furnishing replacement of $9,614, utilities of $2,676, and property tax of $8,094 (Washington's effective rate of roughly 0.82% applied to the $986,000 sale price). On top of that, Washington short-term rental lodging tax adds approximately 6.5% of revenue, paid by guests but collected and remitted by the host. There is also the upfront furnishing outlay of around $20,250 that should be amortised across the holding period. If you choose to hire a professional manager instead of self-managing, expect to add roughly 20% of gross revenue to annual costs, which would lower the net yield from 1.2% into noticeably thinner territory.

Long-term rental is simpler. Insurance runs to $2,958, routine maintenance to $9,614, property tax to $8,094, and (for self-managed operators following the dashboard default) no agent fee. Hiring a property manager would add around 8% of rent, a meaningful but not crippling drag.

Tax Implications for Seattle Investors

Washington's lack of a state income tax is the single most useful tax fact for Seattle landlords. Net rental income flows through to the federal Schedule E and faces only federal income tax, with no additional state-level haircut. That structural advantage is worth real money on a $986,000 property generating modest current-income returns.

Depreciation on a Seattle 3-bed house is substantial. With a building allocation of approximately 80% of the sale price, the depreciable base is around $788,800. Spread over the IRS 27.5-year residential schedule, that produces an annual deduction of roughly $28,684. For most Seattle long-term rental investors, this deduction comfortably exceeds the cash net income from the property, creating a paper loss for tax purposes even when the property is cash-flow positive. Mortgage interest is fully deductible on Schedule E without the SALT cap that constrains primary-residence deductions, which meaningfully reduces after-tax cost for leveraged buyers.

Short-term rental operators may qualify for material participation status if they spend more than 100 hours a year on the activity (and more than anyone else), which can convert otherwise-passive losses into active losses deductible against W-2 income. This is a common motivation for Seattle tech professionals to operate short-term rentals personally rather than hiring a manager. The 1031 exchange remains available for tax-deferred swaps when the property is eventually sold, which is particularly valuable in an appreciation-led market like Seattle where unrealised gains can be substantial.

Seattle Yields Trail State and National Medians, but Appreciation Compensates

Comparison of key investment metrics.

Seattle's 2.6% long-term yield is well below both the Washington state median of 4.0% and the national median of 5.3%. Investors are not buying current income; they are buying access to one of the country's most established tech-economy housing markets, with corresponding price appreciation and rental growth dynamics over multi-decade holding periods. The trade-off is explicit and the question for any investor is whether their capital can stomach low cash returns in year one to three in exchange for the long-duration thesis.

Investment Bottom Line

Seattle is fundamentally an appreciation play with a short-term rental kicker available to operators willing to do the work. Short-term rental wins on gross revenue by roughly 97% and on net yield by a smaller margin, but neither strategy produces strong current cash flow at a $986,000 entry price. The market score of 8.2/10 for short-term rental and 6.3/10 for long-term rental reflects this: respectable but not outstanding fundamentals, gated by entry cost. The licensing regime is permissive (a $75 Seattle operator license, two-unit cap with one primary-residence requirement) so regulation is not the binding constraint; price is.

For peer-market context, see Washington Rental Investment Insights, Seattle After Costs: short-term rental Net Drops to 1.2% on a House, Seattle Apartments Beat Houses on Yield at Every Bedroom Count, and Seatac (98168) Leads Seattle Yields at 5.0%, Far Above the City Median. The Washington rental market insights page covers state-level dynamics in more depth. For methodology, the market score methodology and data sources pages explain how these figures are produced. Explore rental data in the dashboard for suburb-specific modelling. 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.