Last spring, a couple I know bought a two-bedroom apartment near a university hospital in Lyon. They'd run the numbers on a long lease and signed a tenant for €950 a month. A friend of theirs did the same thing three streets over, furnished the place, listed it on a short-term platform, and pulled in about €2,300 a month during the high season.
Same neighbourhood. Same size. Same purchase price. More than double the gross revenue on one side.
But when I asked the second couple what they actually kept after cleaning, commissions, utilities, and taxes, the answer got a lot less impressive. That gap between gross and net is where the entire short-term vs long-term rental debate lives, and it's the part most comparison articles skip over.
This piece is about which model leaves more money in your pocket — as an investor making a real decision, not a theoretical one.
Key Takeaways
- Short-term rentals typically gross 1.5 to 2.5 times more than a long lease on the same property, but 15-20% platform commissions, cleaning, and turnover costs eat a large chunk of that edge.
- Net margins matter far more than gross revenue: a well-run long-term rental often nets 8-12% of gross income, while a short-term rental can net anywhere from 25% to negative territory.
- The 2% and 7% rules are built for long-term rent, and applying them to a furnished short-term property will mislead you badly.
- Short-term hosting is an active business; if you won't manage it, you're paying someone else's margin.
- Your city's regulations — night caps, licence requirements, tourist taxes — can eliminate the short-term option entirely.
- The most profitable use of a property depends less on the model and more on your time, your market, and your tolerance for volatility.
The real math behind short-term vs long-term rentals
Start with what the two models actually produce before expenses.
A long lease in a mid-sized city gives you a predictable figure. Rent comes in every month, minus very little. A short-term operation produces a much higher headline number, but it arrives in lumps: strong weekends, dead weekdays in February, and a summer that can carry the whole year.
When I sat down with the actual spreadsheets from the couple in Lyon, the pattern was clear. On €2,300 a month of peak-season bookings, they were spending roughly €400 on cleaning and linen across eight to ten turnovers, around €345 to the platforms, and €280 on utilities, internet, and consumables. That's over €1,000 gone before they touched their mortgage.
Gross revenue is the wrong number to chase
The mistake almost every new investor makes — and I made it too — is comparing gross short-term revenue to long-term rent and stopping there. It feels great. It's also fiction.
Here's a more honest comparison for a property renting at €950 long-term versus €2,300 short-term in high season:
| Line item | Long-term (monthly) | Short-term (monthly avg) |
|---|---|---|
| Gross income | €950 | €1,650 |
| Vacancy adjustment | – | –€180 |
| Platform commissions | €0 | –€250 |
| Cleaning & linen | €0 | –€300 |
| Utilities & internet | €0 (tenant pays) | –€220 |
| Furnishing amortised | €0 | –€90 |
| Tourist tax handling | €0 | –€30 |
| Net before mortgage | €950 | €580 |
That's the part nobody posts about. When I ran these numbers for the first time on my own property, I had to sit with the result for a while. The short-term model was still ahead in peak months, but the annual average was a different story.
Real talk: the short-term edge is real, but it's a margin game, not a revenue game.
Do short-term rentals make more money than long-term rentals?
Often yes, on gross. Frequently no, on net — and the gap gets wider as your occupancy drops.
The break-even occupancy for a short-term unit is usually higher than people assume. Once you account for turnover costs, you often need to fill the calendar 60-70% of the year just to match a stable long lease. Fill it 40% and you've built a second job that pays less than doing nothing.
And occupancy isn't the only variable you're juggling. Seasonal swings, local regulations, and platform fee structures all move the finish line.
When long-term wins
Long-term rentals win in three specific situations:
- You don't want to work. A single tenant, one lease, one rent payment a month. That's it.
- Your market has strict short-term rules. If your city caps nights or requires owner-occupancy, the short-term model may simply be off the table.
- Your property is in a low-tourism area. A suburban unit near nothing memorable won't fill a calendar at short-term rates.
Long-term also wins on financing. Lenders treat a signed lease as stable income. Short-term projections? They'll discount them heavily, sometimes to zero.
When short-term wins
Short-term wins when your calendar is genuinely full and you're willing to run a small operation day to day. A well-managed flat in a tourist-heavy city can clear twice what a long lease would bring, even after every cost is subtracted. That's not a myth — I've seen it in coastal towns and city centres with year-round demand.
The catch is that "well-managed" is doing most of the work in that sentence. If you outsource everything, the property manager takes 20-30% of revenue, and your margin collapses toward the long-term baseline — with more risk and more steps.
What is the 2% rule in rentals?
The 2% rule is a quick screening shortcut: a property should generate monthly rent equal to at least 2% of the purchase price. On a €200,000 property, that means €4,000 a month.
Spoiler alert: almost nothing in most Western markets hits that today. It was designed for distressed, high-yield markets with cheap entry prices.
Here's the important thing to understand if you're weighing short-term against long-term — the 2% rule was never built to be applied to a short-term rental. It assumes long-term rent and long-term costs. Apply it to an Airbnb-style unit and you'll get a number that looks spectacular, because you're using the higher short-term gross rent in the numerator without adjusting the denominator or subtracting the costs that only exist in the short-term model.
If you want a short-term version of the rule, build your own: take the annual short-term revenue, subtract every cost, and divide by the purchase price. Then compare it to what the same property would yield as a plain long lease. That comparison is the one that matters.
What is the 7% rule for rental property?
The 7% rule is a rougher version of the same idea: annual rent should equal about 7% of the property's value. A €200,000 flat would need to bring in €14,000 a year, or roughly €1,165 a month.
That's a far more realistic benchmark for long-term rentals in many mid-sized cities. If your long lease clears 7%, you have a defensible investment. If it clears 3%, you're relying on price appreciation to make the math work.
But notice what the 7% rule silently assumes: that the property is rented unfurnished, on a long lease, with no turnover, no cleaning, no platform fees. It's a long-term yardstick. Use it as one.
For short-term units, I'd argue you should ignore both the 2% and 7% rules and instead track net operating income after every short-term cost. That's the only figure that survives contact with reality.
The costs that eat your short-term margin
Platforms don't advertise their share loudly, but the number lands around 15-20% of every booking once you combine host fees with the extra charges for promoted listings. On €1,650 a month, that's €250-330 gone silently.
Cleaning is the second bite. Guests expect a spotless space, and someone has to do it. Even at modest local rates, ten turnovers a month at €50-60 per clean swallows €500-600 — before you count linen, welcome kits, or restocking coffee and toiletries.
Then there's furnishing. A furnished short-term unit costs €8,000-15,000 to set up properly, and it degrades far faster than a long-term rental. Sofas sag. Mattresses need replacing. Small appliances break. In my experience, budget 5-8% of annual revenue just for replacement and repairs.
Regulations and tourist taxes
Tourist taxes are collected from guests and remitted to the local authority, so they pass through — except when you forget to collect them, which happens more than anyone admits. Licences and registration numbers, where required, add administrative work and, in some cities, a real barrier to entry.
Night caps are the killer. A city that limits short-term hosting to 120 nights a year fundamentally changes the math. Suddenly you can't scale the property into a business; you have a part-time rental that competes with long-term but without the stability.
Tax treatment: short-term vs long-term
Tax rules vary enormously by country, so I'll keep this at the level that actually transfers across markets. In most jurisdictions, furnished short-term hosting is taxed differently from unfurnished long-term letting — sometimes more favourably on paper, sometimes much less so in practice.
The key distinction is usually between active income and passive rental income. Short-term hosting often gets classified closer to a business activity, which can mean social contributions, business taxes, and additional reporting. Long leases are typically treated as investment income, with simpler treatment and, in many places, lower effective rates.
I've watched people chase the higher gross of short-term hosting and discover, at tax time, that their net advantage had evaporated. Before you commit, talk to an accountant who knows your local rules — this is one area where a single conversation can reshape the decision.
What is the most profitable thing to rent out?
If you want the honest answer: whatever you can manage well, in a market with genuine demand, at a price that covers your real costs with room left over. That sounds like a dodge, but it isn't.
The highest returns I've seen personally didn't come from a model at all. They came from matching the model to the property. A small studio next to a hospital earns more as a long lease to travelling nurses than as a short-term listing that sits empty midweek. A flat on a coastal promenade earns more short-term than any lease would justify. Same investor, same money, different answer.
What matters is that you know your own figures — net, not gross — before you decide.
How to decide
Ask yourself three questions, in this order.
- Is short-term even allowed here, and if so, how many nights can I legally host per year?
- What is my realistic occupancy, not my best-case occupancy?
- Will I run the day-to-day myself, or will I pay someone 20-30% to do it?
If the answer to the third question is "pay someone," run the numbers on a long lease instead. You'll probably sleep better.
If you'll manage it yourself, if the calendar fills, and if the regulations are friendly — short-term can genuinely out-earn long-term, sometimes by a wide margin. That's a real possibility, not a sales pitch.
But here's the thing I keep coming back to. The couple in Lyon, three streets apart, both found the answer that fit their situation. One wanted income they could forget about. The other wanted a project. Both are probably right.
The question isn't which model is more profitable in the abstract. It's which model is more profitable for you — and the only way to know is to build the spreadsheet yourself, with your market, your costs, and your time honestly priced in. Do that, and the answer tends to show up on its own.
