Short-Term Rental vs. Long-Term Rental. Which Strategy Earns More in the Markets That Actually Matter in 2026

In Austin, Texas, the typical short-term rental generates $33,500 in gross annual revenue. Net it out: strip away management fees, cleaning costs, platform commissions, and realistic vacancy. That STR clears about $20,800 a year. A comparable long-term rental in the same city earns roughly $18,400 net. The STR advantage is 13%. Not 50%. Not double. Thirteen percent.

I have been running market numbers for forty years, first as a government statistician in Santa Fe, and for the last two decades as a market researcher watching real estate investors make the STR vs. LTR decision based on gross revenue comparisons that systematically overstate the real income gap. The gross number tells you how much money passed through the property. The net number tells you whether the strategy was worth it.

The picture changes completely in leisure and mountain markets. A property in Gatlinburg, Tennessee generates $39,863 in STR net income against $17,340 in LTR net income, a 130% premium. Gatlinburg and Austin are both short-term rental markets. They are not the same decision, and treating them as though they are is the analytical error this article exists to correct.

Why National Averages Fail Investors

Most content comparing STR to LTR income blends wildly different market types into a single number. When someone publishes that “STRs earn 2x what long-term rentals earn,” they are averaging a Gatlinburg cabin (where that is true) with a Denver condo (where it barely applies) and presenting the blend as useful guidance. It is not. It sends investors into markets where the economics do not support the strategy they are implementing.

Think of it like comparing the fuel efficiency of all vehicles sold in America. You get a number. It means nothing for the specific decision you are making.

The STR vs. LTR question only becomes answerable when you examine specific markets, account for actual operating costs on both sides, and compare strategies applied to comparable properties. That is what this analysis does.

If you are evaluating a property right now, the StaySTRA Analyzer shows actual revenue data for your specific market and property type before you commit to any strategy.

The Data Behind This Analysis

STR revenue figures come from the StaySTRA database, drawing on LTM (last twelve months) market metrics through early 2026. These figures represent gross monthly revenue averages across active listings in each market, covering all property types. Long-term rental benchmarks use HUD Fair Market Rents (FY 2026, effective October 2025) and the Zillow Rent Index for 2-bedroom units. Mid-term rental estimates apply a 25% furnished premium above market-rate LTR rent, consistent with Furnished Finder and corporate housing platform pricing in each market.

Operating cost assumptions: STR net income applies a 38% total cost burden (management fees 20-25%, platform commissions 3%, cleaning and supplies 12%, miscellaneous 3%). LTR net income applies a 15% total cost burden (management 9%, vacancy 6%). These are averages. Self-managing hosts will see better STR net numbers. Properties with above-average management fees will see worse. The comparison holds regardless of which direction you adjust, because both strategies receive the same treatment.

The Full Income Comparison: 8 Markets, Three Strategies

Here is what the numbers actually look like across eight U.S. markets spanning mountain, coastal, leisure, and urban types. All figures are annual and net of typical operating costs.

Sources: StaySTRA database LTM through early 2026, HUD Fair Market Rents FY 2026, Zillow Rent Index 2026. STR net assumes 38% total cost burden. LTR net assumes 15% total cost burden. MTR net assumes 25% furnished premium over LTR rate, 15% cost burden. Figures represent market averages across all active property types and sizes.

Stay with me here, because that table has a few results worth unpacking before you draw conclusions.

Leisure and Mountain Markets: Where STR Wins Clearly

Gatlinburg is the clearest example of what STR delivers when market conditions are right. StaySTRA data shows $64,295 in gross annual STR revenue for the average Gatlinburg listing, at a $365 average daily rate and 48% annual occupancy. That works out to $39,863 in net income, 130% more than the $17,340 an investor earns renting the same property long-term at roughly $1,700 per month.

The math works in Gatlinburg because of a structural gap: vacation guests pay peak leisure rates for STR stays, but the local LTR rental market is priced for working-class Sevier County residents. A guest paying for a Smoky Mountains cabin during October fall color season pays what a long-term tenant might pay in two full months of rent. That spread between STR nightly revenue and LTR monthly revenue is wide enough to absorb all of the extra STR operating costs and still deliver 2.3 times the LTR net income.

Nashville, at an 83% STR premium, follows the same structural logic but through a different demand driver. StaySTRA data shows $60,276 in gross annual STR revenue at $301 ADR and 61% occupancy. Long-term rental for a comparable 2-bedroom runs about $2,000 per month, netting $20,400 after costs. STR nets $37,371. If you asked me to describe the conditions that make STR outperform, I would say: look for cities where the leisure demand is year-round, the visitor profile is affluent, and long-term rental costs have not risen to match STR demand. Nashville delivers all three.

Savannah hits the same 83% premium from a different angle. StaySTRA data shows $50,580 in annual gross at $245 ADR and 67% occupancy. That high occupancy reflects the city’s consistent tourism demand from arts, history, and garden festival visitors across the full calendar year. HUD Fair Market Rents for Savannah (Chatham County FY 2026) put the 2-bedroom LTR benchmark at $1,680 per month. The spread is strong. Investors in Savannah in 2026 should monitor Chatham County’s regulatory environment, which has been active, as legal constraints on STR locations in the historic district affect where the strategy applies.

If you are actively evaluating STR markets for an acquisition, the best states to buy an Airbnb in 2026 analysis includes state-level data that helps identify where regulatory and market conditions align.

The Urban Primary Market Reality

Austin and Denver are where investor expectations most frequently collide with what the data actually shows.

Austin’s STR market produces $33,528 in gross annual revenue per StaySTRA data, with a $225 ADR and 57.7% average occupancy. That sounds like substantial income. But after management fees (typically 20-25% in Austin’s competitive property management market), platform fees, cleaning costs driven by frequent short turnovers, and supplies, net income comes to approximately $20,787.

A 2-bedroom long-term rental in Austin runs about $1,800 per month, or $21,600 gross annually. Net of management and vacancy, that’s roughly $18,360. The STR advantage is $2,427 per year, or 13%.

Don’t let that number depress you. A 13% income premium is genuine and repeating annually. But the real question is whether that 13% justifies the additional complexity, management intensity, and regulatory risk that come with operating an STR in Austin, where platform enforcement for unlicensed listings takes effect July 1, 2026. That is a decision every investor makes individually based on their own tolerance for operational involvement.

Denver’s STR data from StaySTRA shows $33,996 in gross annual revenue at $178 ADR (the lowest of the eight markets in this study) and 72.4% occupancy. Denver draws both business travelers and outdoor recreation visitors, producing strong occupancy but limited rate power. Net STR income works to about $21,077. A comparable 2-bedroom LTR at roughly $1,900 per month nets about $19,380. The STR advantage: $1,697, or 9%.

Denver also carries a regulatory condition that eliminates the STR strategy for most investment buyers: the city requires STR operators to use the property as their primary residence. Non-owner investors relying on DSCR financing cannot legally run an STR in Denver. The data here is for existing owner-operators evaluating whether to switch from LTR to STR on their primary home, not for investors shopping for rental property.

Edgar Moreno’s reporting on whether STR is still a good investment in 2026 covers the broader market conditions affecting these urban markets.

The Markets in the Middle

Scottsdale, Myrtle Beach, and Breckenridge each occupy a different position on the spectrum and illustrate why the “mountain or beach equals automatic STR win” thinking oversimplifies.

Scottsdale generates $50,340 in STR gross per year per StaySTRA data, with a $297 ADR and 68.4% occupancy. Long-term rental for a 2-bedroom runs about $2,200 per month. The STR premium in Scottsdale is 39% net, meaningful but closer to the “is the extra work worth this premium?” conversation than to the Gatlinburg case. What makes Scottsdale distinctive is its extreme seasonality: January and February are peak months at over $7,000 per month, while June and July drop below $4,100. Investors who manage that seasonality well push toward the higher end of the range. Those who do not may find themselves closer to the Austin math. Scottsdale also shows the smallest gap between STR net ($31,211) and MTR net ($28,050) of any market in this study. MTR is a serious alternative for investors who want to avoid peak-season operational intensity.

Myrtle Beach illustrates the coastal seasonality risk clearly. StaySTRA data shows $31,140 gross annually, but July alone accounts for more than 20% of that total. January nets $1,471. An investor who finances acquisition around peak summer projections and encounters a damaging storm season or softening coastal demand faces a very different economic picture than the annual average implies. The 46% STR premium is real on average. The variance around that average is the highest of any market in this analysis.

The Breckenridge Anomaly Every Ski Town Investor Should Understand

Breckenridge warrants its own section because it routinely surprises investors who expect that a premium mountain ski market means a large STR income premium over LTR.

StaySTRA data shows $64,152 in gross annual STR revenue at $393 ADR, one of the highest ADR figures in the Colorado market. You would expect a 2x or 3x premium over LTR. The STR net income premium in Breckenridge is 34%.

Here is why. Long-term rental costs in Breckenridge are also very high. A 2-bedroom apartment in town runs approximately $2,904 per month, the highest LTR benchmark of any market in this study. Mountain resort towns have severe housing shortages for the workers who operate the ski industry year-round, and that drives LTR rents up toward what upper-income renters can bear. The same structural scarcity that makes Breckenridge an expensive place to visit also makes it an expensive place to rent long-term.

Think of it like this: the STR premium is large where guests pay significantly more per night than the equivalent LTR monthly cost would imply on a per-night basis. In Gatlinburg, only the STR rate is expensive. LTR is affordable by comparison. In Breckenridge, both sides of the equation are expensive, and the spread closes. This is not a Breckenridge-specific condition; it applies across most high-end ski resort towns where worker housing pressure has driven up LTR costs alongside property values.

For investors planning to use DSCR financing for an STR acquisition, understanding how lenders view the income comparison in these markets is essential reading. The step-by-step guide to buying an Airbnb property in 2026 covers how DSCR lenders approach STR underwriting.

The Operating Cost Differential, Explained

The 38% STR cost burden versus the 15% LTR cost burden is the mechanical reason every gross revenue comparison overstates the STR advantage. Investors who skip this step are the ones who end up surprised by the Austin math.

Here is what eats into STR gross revenue that LTR landlords do not pay:

Management fees: LTR property managers charge 8-10% of monthly rent. STR managers charge 20-30%. The additional cost reflects the real work of managing guest communications, check-ins, maintenance response, and frequent turnover coordination. In urban markets with 2-3 night average stays, this overhead is significant.

Cleaning costs: A long-term tenant cleans their own unit. An STR host pays professional cleaning after every departure. In markets with high ADR and longer average stays (Gatlinburg cabin stays average closer to 5-6 nights), cleaning costs as a percentage of revenue are manageable. In urban markets with frequent 2-night stays and lower ADR, cleaning alone can consume 12-15% of gross revenue.

Platform commissions: Airbnb charges hosts approximately 3% on the host-only fee model. Multi-platform distribution adds additional costs. Long-term landlords pay zero platform fees.

Supplies and restocking: STRs operate like small hotels. Toiletries, paper products, kitchen supplies, and amenity replacements are recurring host expenses. This adds 2-3% of gross revenue in most markets.

Together, these costs consume roughly 35-40 cents of every gross revenue dollar generated by the STR. A long-term rental keeps 85 cents. The difference in what each strategy keeps is the corrective factor that turns the “STR earns 2x LTR gross” claim into a much more nuanced picture at the net income level.

Breakeven Occupancy: The Number That Tells You Everything

Breakeven occupancy is the occupancy rate at which STR net income equals LTR net income. Below that rate, you would have been better off with a long-term tenant. Above it, STR wins. The margin above breakeven tells you how much risk the market absorbs before the strategy fails.

Breakeven occupancy = LTR net income / (ADR x 365 x 0.62). Sources: StaySTRA database, HUD FMR FY 2026, Zillow Rent Index 2026.

Denver’s 48% breakeven is the number I want you to sit with. In Denver, the STR must be occupied nearly half of all nights just to equal what a long-term tenant would have paid. Denver’s actual 72% average occupancy clears that bar, which is why the 9% net premium exists at all. But the margin above breakeven (24 points) is thinner in Denver and Austin than in any leisure market in this study.

Gatlinburg’s 27-point margin above breakeven means that even a poorly managed cabin property (one running 30-35% occupancy rather than the 48% market average) still beats LTR net income by a meaningful amount. That structural cushion is what “market type favors STR” actually means in practice.

The Mid-Term Rental as a Third Path

The table at the top of this article contains two results that stop most investors: in Austin and Denver, mid-term rental net income exceeds STR net income.

Mid-term rentals (furnished stays of 30 to 90 days) command roughly a 25% premium above market-rate LTR rent in most markets. That rate is lower than STR nightly rates, but MTR operating costs are significantly lower: no per-stay professional cleaning, no OTA platform commissions, minimal guest communication overhead. Vacancy rates for well-priced MTRs run 3-5% versus the effective 40%+ vacancy built into STR occupancy rates in urban markets.

The result: Austin MTR net income of approximately $22,950 beats STR net income of $20,787 by $2,163 per year. Denver MTR net of $24,225 beats STR net of $21,077 by $3,148. In both markets, the MTR strategy captures more income than STR while requiring significantly less operational intensity.

This does not mean MTR always wins in urban markets. Consistent 30-day guest sourcing is its own challenge. Corporate relocation demand and traveling healthcare worker demand both vary by city. But for investors in urban primary markets who want more than LTR produces without the full complexity of STR, mid-term rental is worth modeling explicitly before the strategy decision is made.

How to Apply This to Your Investment Decision

The honest answer to the STR vs. LTR question is: it depends entirely on which market you are buying in, and whether the STR premium in that specific market is large enough to justify the additional complexity, cost, and risk.

In Gatlinburg, Nashville, and Savannah, the data says STR clearly. The premium is large enough that a moderately competent operator captures substantially more income than any LTR scenario would produce. The market structure supports the strategy. A well-located property in these markets operating at or above average occupancy should net 80-130% more than the same property rented long-term.

In Austin and Denver, the conversation is more nuanced. A 9-13% net premium over LTR is real but thin. It rewards investors who manage efficiently and absorb costs below the market average. It penalizes those who pay full retail for management services or underestimate cleaning costs. And in Denver, the primary residence requirement eliminates the strategy for most investment buyers entirely.

Scottsdale, Myrtle Beach, and Breckenridge each offer genuine STR premiums in the 34-46% range, but each carries its own structural risk (seasonal concentration, expensive LTR market compression, or regulatory activity) that investors need to account for in their underwriting.

Run your specific property through the StaySTRA Analyzer before finalizing any strategy. The market-level averages here are a starting point, not a conclusion. A well-located property in any market outperforms the average. A poorly located one rarely reaches it.

We do our best to keep our data accurate and up to date, but markets move fast and we are only human. Always verify current figures directly with local sources before making investment decisions.

Ready to see what your specific market and property type would earn under each strategy? The StaySTRA Analyzer runs the income comparison using current market data for any U.S. location. Plug in your property address and see exactly where your market falls on this spectrum before you make an offer.