Airbnb vs Rental Property: Which is More Profitable

You’ve got a property. Now comes the million-dollar question: Should you list it on Airbnb or rent it out long-term? This decision can make or break your investment returns, and the answer isn’t as simple as “one is always better.”

I’ve watched property owners in Oklahoma City and across the country wrestle with this choice for years. Some make $60,000 annually from their short-term rentals. Others sleep better at night with steady $1,800 monthly checks from long-term tenants. Both can be profitable, but which works better for your situation?

Let’s break down the real numbers, hidden costs, and practical realities of both strategies so you can make a smart decision.

Understanding the Two Investment Strategies

Before we dive into profitability calculations, let’s clarify what we’re comparing.

Long-term rental properties are traditional residential leases where tenants sign agreements for six months to a year (or longer). You collect rent monthly, typically manage one set of tenants at a time, and maintain a more hands-off approach once you’ve placed quality renters.

Short-term vacation rentals (Airbnb, Vrbo, Booking.com) involve renting your property for days or weeks at a time. Guests book online, stay briefly, and leave. You repeat this process continuously throughout the year.

The fundamental difference? Long-term rentals prioritize stability and passive income. Short-term rentals prioritize higher nightly rates and flexibility, but require significantly more involvement.

The Profit Potential: Real Numbers from Real Markets

Let’s talk about money. Because that’s why you’re here, right?

Short-Term Rental Income Potential

According to AirDNA’s 2025 data, the average Airbnb property in the United States generates between $35,000 and $45,000 annually before expenses. Top-performing properties in high-demand markets like Nashville, Phoenix, or coastal Florida can exceed $80,000 per year.

Here’s a realistic example from Oklahoma City:

A 3-bedroom single-family home in a desirable neighborhood near Bricktown lists for $175 per night. With 65% occupancy (which is solid for this market), you’re looking at:

• 237 booked nights per year
• $41,475 in gross revenue
• Occupancy rates fluctuate by season, expect 80% in summer, 45% in winter

But here’s what most calculators don’t tell you: that’s before expenses.

Long-Term Rental Income Potential

That same 3-bedroom home would rent for approximately $1,650-$1,850 per month on a traditional lease in Oklahoma City.

Annual gross income: $19,850-$22,200

Your immediate reaction? “Wait, that’s half what Airbnb makes.”

Hold that thought. We need to talk about expenses.

The Hidden Costs That Change Everything

This is where most property investors get blindsided.

Short-Term Rental Expenses (The Long List)

Running an Airbnb isn’t just about collecting payments. You’re running a hospitality business. Here’s what eats into that $41,475:

• Airbnb/Vrbo platform fees: 3% of each booking ($1,244 annually).
• Cleaning costs: $75-$125 per turnover. At 237 bookings, that’s $17,775-$29,625 per year. Yes, you read that correctly.
• Utilities: You pay for everything: electricity, water, gas, internet, and cable. Expect $300-$450 monthly ($3,600-$5,400 annually). Guests crank the AC, take long showers, and leave lights blazing.
• Supplies and amenities: Toilet paper, paper towels, soap, shampoo, coffee, laundry detergent. Budget $150-$250 monthly ($1,800-$3,000 annually).
• Furniture replacement: Guests are harder on properties than long-term tenants. Budget $2,000-$3,500 annually for wear and tear.
• Higher insurance: Short-term rental insurance costs 2-3x more than standard landlord policies. Add $2,500-$4,000 annually.Maintenance and repairs: More guests mean more wear. Budget 15-20% of revenue ($6,221-$8,295).
• Property management: If you hire help (and most owners eventually do), expect 20-30% of gross revenue ($8,295-$12,442).
• Total potential expenses: $43,435-$67,506

Wait, that’s more than the revenue.

Yes, if you’re paying for everything. Most successful Airbnb owners self-manage initially and do their own cleaning, which cuts costs dramatically. But it requires serious time investment.

Long-Term Rental Expenses (The Shorter List)

Traditional rentals have a different expense profile:

• Property management: 8-10% of monthly rent if you hire professionals ($158-$185 monthly, or $1,896-$2,220 annually)
• Maintenance and repairs: 10-15% of annual rent ($1,980-$3,330)
• Vacancy loss: Budget 5-8% for turnover periods ($990-$1,776)
• Insurance: Standard landlord policy ($1,200-$1,800 annually)
• Lawn care and HOA fees: Typically tenant-paid, but budget $600-$1,200 if you cover these.

Total typical expenses: $6,766-$10,326

See the difference?

Net Profit Comparison: The Moment of Truth

Let’s run the numbers on our Oklahoma City 3-bedroom example:

Airbnb Net Profit (Self-Managed)

• Gross revenue: $41,475
• Expenses (self-managed, no cleaning service): $21,400
• Net profit: $20,075

Long-Term Rental Net Profit (Professionally Managed)

• Gross revenue: $22,200
• Expenses: $8,326
• Net profit: $13,874

Airbnb makes $6,201 more annually, about 45% higher returns.

But this assumes you’re willing to:

• Clean the property yourself or coordinate cleaning 237 times per year
• Respond to guest messages at 11 PM
• Restock supplies monthly
• Handle emergency maintenance on weekends
• Manage bookings, reviews, and pricing optimization

When you factor in your time, the gap narrows considerably.

Time Investment: The Hidden Cost Nobody Calculates

Here’s what property management professionals like us at OKC Home Realty Services see consistently:

Long-term rental time commitment: 2-4 hours monthly

• Collecting rent (automated)
• Coordinating occasional repairs
• Annual property inspections
• Lease renewals

Short-term rental time commitment: 15-25 hours monthly

• Guest communications (per-arrival, during stay, post-departure)
• Cleaning coordination or self-cleaning
• Restocking supplies
• Managing bookings and pricing
• Responding to reviews
• Emergency repairs (more frequent with higher turnover)

If your time is worth $50 per hour, that’s an additional $10,800-$13,800 annual cost for Airbnb management versus $1,200-$2,400 for long-term rentals.

Suddenly, the profitability gap disappears entirely.

Market Conditions That Favor Each Strategy

The “better” option depends heavily on your specific market and property characteristics.

When Airbnb Makes More Sense

Location advantages:

• Tourist destinations (beaches, mountains, national parks)
• Major event cities (concerts, sports, conventions)
• Business travel hubs near corporate offices
• College towns during graduation, parents’ weekend, and football season
• Urban areas with limited hotel inventory

Property characteristics:

• Unique features (pool, hot tub, lakefront, downtown views)
• 3+ bedrooms that can accommodate groups
• Proximity to attractions (within 15 minutes of main draws)
• High-end finishes that command premium rates

Personal situation:

• You live nearby and can manage the property yourself
• You’re retired or have a flexible schedule
• You enjoy hospitality and guest interaction
• You’re tech-savvy with dynamic pricing tools

When Long-Term Rentals Make More Sense

Location advantages:

• Residential neighborhoods far from tourist attractions
• Markets with strong job growth and population influx
• Areas with high homeownership rates (less transient)
• Suburbs with good schools are attracting families
• Markets with restrictive short-term rental regulations

Property Characteristics:

• Standard 2-3 bedroom homes without unique features
• Properties requiring less frequent maintenance
• Homes in HOAs that prohibit short-term rentals
• Older properties where high turnover could accelerate wear

Personal situation:

• You live far from the property
• You have a full-time job with limited flexibility
• You prioritize passive income over maximizing returns
• You prefer a predictable cash flow
• You’re building a retirement income stream

Regulatory Risks: The Wild Card

Short-term rental regulations change rapidly, and cities increasingly restrict or ban them entirely.

Cities with heavy STR restrictions:

• New York City (strict registration requirements)
• San Francisco (limit of 90 days annually for hosted rentals)
• Santa Monica (requires owner occupancy)
• Many HOAs nationwide prohibit short-term rentals

Oklahoma City currently allows short-term rentals with proper business licensing and occupancy tax collection, but regulations could tighten. We’ve seen property owners in other markets suddenly unable to operate their Airbnbs after new ordinances were passed.

Long-term rentals face virtually no regulatory risk beyond standard landlord-tenant laws.

Tax Implications: A Often-Overlooked Factor

Both strategies offer tax benefits, but they work differently.

Short-Term Rental Tax Treatment

The IRS may classify your Airbnb as a business (not just rental income) if you provide “substantial services” like daily cleaning or meals. This classification allows you to:

• Deduct a wider range of business expenses
• Potentially avoid passive activity loss limitations
• Qualify for the qualified business income deduction (up to 20% of net income)

However, you’ll pay self-employment tax on net profits (15.3%), which doesn’t apply to long-term rentals.

Long-Term Rental Tax Treatment

Traditional rentals offer:

• Depreciation deduction (3.33% of property value annually)
• Standard landlord expense deductions
• Potential for 1031 exchanges to defer capital gains
• No self-employment tax

Important: Tax laws are complex and change frequently. Always consult with a qualified CPA who understands real estate taxation in your specific situation. The tax treatment alone can swing profitability by thousands of dollars either direction.

The Hybrid Approach: Best of Both Worlds?

Some investors split the difference:

• Seasonal switching: Airbnb during high-demand months (summer, holidays), long-term rental during the slow season.
• Midterm rentals (30+ days): Target traveling nurses, corporate relocations, and insurance displacements. These bookings offer higher rates than traditional leases but less turnover than Airbnb. Platforms like Furnish Finder specialize in this niche.
• Portfolio diversification: Run some properties as Airbnbs, others as long-term rentals. This balances income volatility with stability.

The hybrid approach works well in markets with strong seasonal tourism but year-round rental demand.

Financing Considerations: How Lenders View Each Strategy

Here’s something most articles skip: how you plan to use the property affects your financing options.

Long-term rental financing:

• Qualifies for conventional investment property loans (15-25% down)
• Lenders consider 75% of projected rent as qualifying income
• Easier to get approved with multiple properties

Short-term rental financing:

• Many lenders won’t consider Airbnb income for qualification
• Requires larger down payments (20-30%)
• Some lenders specifically prohibit STR use in loan documents
• Specialized STR investment property loans are emerging, but at higher rates

If you’re leveraging your property purchase, the financing route can significantly impact your decision.

Real Success Stories from Our Property Management Experience

At OKC Home Realty Services, we manage single-family homes using both strategies. Here’s what we’ve learned from real owners:

The Mitchell Family (Long-Term Strategy): Three-bedroom home in Edmond. Rented a $1,750/month for four years straight. Same tenants, zero vacancy, minimal maintenance. Net cash flow: $890 monthly after mortgage and expenses. Total owner time invested: 6 hours annually.

The Chen Property (Short-Term Attempt – Long-Term Switch): Beautiful four-bedroom near downtown. Started as Airbnb with 58% occupancy and $38,200 annual revenue. After 18 months, the owners were exhausted from constant management. Switched to long-term rental at $2,100/month. Revenue dropped to $25,200, but net profit actually increased by $3,400 when factoring in reduced expenses and recovered time.

The Patterson Investment (Short-Term Success): Lake house in a high–demand recreational area. Peak summer rates of $350/night, 75% annual occupancy. Gross revenue: $67,800. With professional management (25% fee), net profit: $31,400. Worth it because the location commands premium rates year-round.

The pattern? Success depends on matching strategy to property location, owner involvement level, and local market dynamics.

How to Make Your Decision: A Practical Framework

Ask yourself these questions:

1. What’s your primary goal?

• Maximum profit regardless of effort – Consider Airbnb
• Passive income with minimal involvement – Choose long-term rental
• Building long-term wealth – Either works; long-term may have less risk

2. How’s your local market?

• High tourist traffic or business travel – Airbnb advantages
• Strong job growth and population influx – Long-term rental advantages
• Seasonal demand fluctuations – Evaluate carefully or consider a hybrid

3. What are the regulations?

• STR-friendly with simple licensing – Airbnb is viable
• Restrictive or evolving regulations – Long-term rental is safer
• HOA prohibitions – No choice, go long-term

4. How much time can you dedicate?

• 15-25 hours monthly available – Airbnb is manageable
• Want truly passive income – Long-term rental
• Willing to pay 20-30% for STR management – Airbnb still possible

5. What’s your risk tolerance?

• Comfortable with income volatility – Airbnb acceptable
• Need predictable monthly cash flow – Long-term rental
• Concerned about regulatory changes – Long-term rental

6. How’s the property positioned?

• Unique features, great location, tourist appeal – Airbnb leverage
• Standard home in residential area – Long-term rental likely better
• Needs major updates – Long-term rental (less wear and tear)

Professional Property Management: When to Hire Help

Here’s the honest truth: most successful rental property investors eventually hire professional management, regardless of strategy.

For long-term rentals, professional property management (like what we provide at OKC Home Realty Services) typically costs 8-10% of monthly rent and includes:

• Tenant screening and placement
• Rent collection and accounting
• Maintenance coordination
• Lease enforcement and renewals
• Property inspections
• 24/7 emergency response

For single-family homes, this service transforms your investment into truly passive income while protecting your asset with professional oversight.

Short-term rental management costs more (20-30% of revenue) because the service intensity is higher. You’re essentially outsourcing a hospitality operation.

The question isn’t whether to hire management; it’s when. Most property owners reach their DIY limit at 2-3 long-term rentals or 1-2 Airbnbs.

Airbnb vs Long-Term Rental: Which Is More Profitable?

Here’s the straightforward answer:

Airbnb can generate 30-60% higher gross revenue in tourist-friendly locations with high occupancy potential.

Long-term rental delivers 15-40% higher net profit when you account for all expenses, time investment, and reduced risk.

The most profitable strategy is the one you’ll actually execute consistently without burning out.
If you’re willing to treat your property like a part-time business, live nearby, and your market supports strong short-term rental demand, Airbnb can absolutely generate superior returns.

If you want hands-off income, live far from the property, or your location doesn’t attract frequent visitors, long-term rentals will serve you better, and you’ll sleep better, too.

For most property owners investing in single-family homes in standard residential markets (not tourist hotspots), long-term rentals prove more profitable after factoring in all costs and risks.

Getting Started: Your Next Steps

Whichever direction you choose, success requires proper execution:

For Airbnb:

1. Research your local regulations and obtain necessary licenses
2. Analyze comparable listings to set competitive pricing
3. Invest in quality photos and furnishings
4. Create systems for guest communication and cleaning
5. Use dynamic pricing tools to maximize occupancy
6. Budget for higher expenses and time commitment

For long-term rentals:

1. Conduct a thorough market rent analysis
2. Screen tenants carefully with background and credit checks
3. Use detailed lease agreements that protect your interests
4. Set aside 10-15% of rent for maintenance reserves
5. Consider professional property management to maximize returns
6. Maintain the property proactively to keep quality tenants

At OKC Home Realty Services, we specialize in helping property owners maximize returns from single-family home investments through expert long-term property management. We handle everything from tenant placement to maintenance coordination, turning your property into a truly passive income stream.

Whether you choose the Airbnb path or traditional rentals, understanding the real numbers, not just the optimistic projections, is how you build wealth through real estate.

Final Thoughts: The Strategy That Matches Your Life

The best investment isn’t always the one with the highest potential return. It’s the one that fits your life, goals, and risk tolerance.

I’ve seen property owners chase Airbnb profits only to burn out within a year and sell at a loss. I’ve also seen investors build impressive wealth with simple, unglamorous long-term rentals that just quietly cash-flowed month after month.

Your property is a tool to build the financial future you want. Choose the strategy that gets you there without consuming your life in the process.

Need help evaluating your specific property and market? That’s exactly what we do. Reach out to OKC Home Realty Services for a free rental analysis, and let’s determine which strategy maximizes your property’s profit potential while matching your investment goals.

The right decision isn’t Airbnb versus rental property; it’s the strategy that turns your real estate into the wealth-building machine you bought it to be.