Is Ann Arbor, Michigan Good for Airbnb Investment?

To start an Airbnb in Ann Arbor, Michigan, begin by researching the city's short-term rental regulations, which require registration with the city and compliance with zoning ordinances that typically allow rentals in residential areas for no more than 30 consecutive days. Obtain necessary permits including a business license from the city clerk's office, register for Michigan sales tax with the Department of Treasury, and ensure compliance with fire safety codes which may require smoke detectors, carbon monoxide detectors, and fire extinguishers. Find a suitable property in neighborhoods like Kerrytown, Old West Side, or near the University of Michigan campus where demand is high, ensuring it meets Ann Arbor's housing standards and any homeowners association restrictions. Furnish the space with quality basics including comfortable bedding, kitchen essentials, WiFi, and local guidebooks, while considering the preferences of business travelers and university visitors who frequent the area. Create your Airbnb listing with professional photos, competitive pricing around $80-150 per night depending on location and size, and highlight proximity to University of Michigan, downtown attractions, and major employers like the University Hospital. Manage your property by establishing check-in procedures, maintaining cleanliness standards, responding promptly to guests, collecting and remitting the required 6% Michigan sales tax plus any local taxes, and keeping detailed records for tax purposes while monitoring reviews and adjusting your approach based on guest feedback and seasonal demand patterns around university events and football games.

To identify profitable short-term rental properties in Ann Arbor, Michigan, focus on locations within 1-2 miles of the University of Michigan campus, particularly in neighborhoods like Burns Park, Old West Side, and areas near State Street and South University Avenue, as these attract consistent demand from visiting parents, prospective students, and university-affiliated travelers. Target 2-4 bedroom properties built after 1950 with modern amenities, parking spaces, and outdoor areas, as these command premium rates of $150-300 per night during football season and graduation periods. Conduct pricing analysis using AirDNA and Mashvisor to identify properties generating $3,000-6,000 monthly revenue, with particular attention to seasonal fluctuations where summer months may drop 30-40% but football weekends can triple standard rates. Research competition by analyzing similar properties within a 2-mile radius using tools like AirDNA, STR Helper, and local Facebook groups like "Ann Arbor Real Estate Investors" to understand occupancy rates averaging 65-75% annually. Leverage University of Michigan's academic calendar and athletic schedule through resources like the Ann Arbor Convention & Visitors Bureau, local MLS data from Realcomp, and city zoning maps to ensure compliance with Ann Arbor's STR regulations, while targeting properties under $400,000 that can achieve 8-12% annual returns after expenses including the city's 6% accommodation tax.

To obtain an Airbnb/STR permit in Ann Arbor, Michigan, you must first apply through the City of Ann Arbor's Planning and Development Services Department located at 301 E. Huron Street or online through their permitting portal. Required documents include a completed short-term rental license application, proof of property ownership or lease agreement with landlord consent, a floor plan showing maximum occupancy, proof of liability insurance (minimum $1 million), contact information for a local responsible party available 24/7, and a parking plan demonstrating adequate off-street parking. The application fee is approximately $150 annually with additional inspection fees of around $100. Ann Arbor requires STRs to be owner-occupied or have the owner live within 1,000 feet of the property, limits occupancy to 2 people per bedroom plus 2 additional guests (maximum 10 people), mandates registration with the city's rental housing program, requires annual safety inspections, and prohibits STRs in certain zoning districts. The timeline typically takes 4-6 weeks for processing after submitting a complete application, including the required inspection. You must also register for city taxes and collect the 5% accommodation tax from guests, display the permit number in all listings, and maintain a guest registry for city inspection upon request.

Short-term rentals (STRs) are legal in Ann Arbor, Michigan, but operate under strict regulations implemented in 2019 and updated in 2021. The city requires STR operators to obtain a license, pay annual fees of approximately $250-500, and comply with safety requirements including smoke detectors and emergency egress plans. STRs are prohibited in R1A and R1B single-family residential zones but are permitted in R1C, R1D, R2A, R2B, and higher-density residential areas, as well as commercial zones. Key restrictions include a maximum occupancy of two people per bedroom plus two additional guests, quiet hours from 9 PM to 8 AM, mandatory neighbor notification within 400 feet, and required on-site parking. The city caps the total number of STR licenses and requires operators to maintain a 24-hour contact person for complaints. Recent changes in 2022-2023 have strengthened enforcement mechanisms and increased penalties for violations, with the city actively monitoring platforms like Airbnb and VRBO for compliance, making Ann Arbor one of the more regulated STR markets in Michigan.

The best Airbnb investment areas in Ann Arbor, Michigan include the Central Campus neighborhood near the University of Michigan, which attracts constant demand from visiting parents, prospective students, and academic conferences year-round. The Kerrytown district offers excellent potential due to its proximity to the farmers market, unique shops, and walkable downtown atmosphere that appeals to leisure travelers. The Burns Park area provides a quieter residential option that attracts families visiting the university while offering easy access to campus and downtown. The Old West Side neighborhood is highly desirable for its historic charm, tree-lined streets, and proximity to both the university and downtown business district, making it attractive to both leisure and business travelers. The area near Michigan Stadium and Crisler Center experiences massive demand during football season and other sporting events, with properties commanding premium rates during game weekends. Finally, the South University corridor offers strong investment potential due to its central location between campus and downtown, attracting visitors attending university events, medical appointments at the University of Michigan Health System, and business travelers to the numerous tech companies and research facilities in the area.

In Ann Arbor, Michigan, Airbnb hosts are subject to multiple lodging taxes including the Michigan state sales tax of 6%, the Michigan Use Tax Act accommodation tax of 6%, and the City of Ann Arbor transient occupancy tax of 5%, resulting in a combined tax rate of approximately 17% on short-term rental bookings. The state taxes are collected and remitted by Airbnb directly to the Michigan Department of Treasury on behalf of hosts for stays of less than 30 days, while the city's 5% transient occupancy tax must be collected by hosts and remitted monthly to the City of Ann Arbor by the 20th of the following month using the city's online tax portal. Hosts must register with both the state and city tax authorities, obtain necessary permits, and maintain detailed records of all transactions. Exemptions typically apply to stays of 30 days or longer which are considered long-term rentals rather than transient accommodations, and certain government or non-profit organization bookings may qualify for exemptions with proper documentation, though hosts should verify current exemption criteria with local tax authorities as regulations can change.

Starting an Airbnb in Ann Arbor, Michigan requires approximately $350,000-$450,000 in total initial investment. Property purchase costs average $320,000-$380,000 based on median home prices in desirable neighborhoods near the University of Michigan campus. Furnishing a 2-3 bedroom property runs $15,000-$25,000 including beds, sofas, dining sets, kitchenware, linens, and decor to create an attractive rental space. Initial setup costs of $3,000-$5,000 cover professional photography, listing creation, welcome materials, and basic technology like smart locks and WiFi upgrades. Permits and fees total approximately $500-$1,200 including business licenses, short-term rental permits from the city, and any required inspections. Insurance premiums for short-term rental coverage cost $2,000-$3,500 annually, with the first year paid upfront. Utility deposits and connections require $500-$800 for electricity, gas, water, internet, and cable services. First six months of operating costs including utilities ($200/month), cleaning services ($75 per turnover), supplies and maintenance ($150/month), platform fees (3% of bookings), and marketing expenses total approximately $4,000-$6,000, assuming moderate occupancy rates during the initial period.

Airbnb properties in Ann Arbor, Michigan demonstrate strong profitability potential, with average annual revenues ranging from $25,000-$45,000 for well-positioned properties near the University of Michigan campus. Properties within 2-3 miles of campus typically achieve 65-75% occupancy rates with average daily rates of $85-$120, while those closer to downtown can command $100-$150 per night during peak periods including football season and graduation. Operating expenses generally run 35-45% of gross revenue, including cleaning fees ($40-60 per turnover), property management (15-25%), utilities ($150-250/month), insurance ($1,200-2,000 annually), and maintenance costs. Net profit margins typically range from 25-40% for owner-operated properties, with successful hosts reporting annual profits of $15,000-$25,000 on properties valued at $200,000-$350,000. Key success factors include proximity to campus (properties within 1 mile consistently outperform), game day availability during Michigan football season (commanding 3-4x normal rates), professional photography and staging, and responsive guest communication. Properties targeting visiting professors, parents, and business travelers tend to achieve higher year-round occupancy compared to those solely focused on student demand, with some hosts reporting ROI of 8-12% annually when factoring in property appreciation alongside rental income.

Airbnb investments in Ann Arbor, Michigan typically generate annual ROI of 8-12% due to strong demand from University of Michigan students, faculty, and football game visitors. Cash-on-cash returns generally range from 6-10% annually, with properties near campus commanding premium rates of $80-150 per night during peak periods like football season and graduation. Most investors achieve profitability within 18-24 months, particularly for 2-4 bedroom properties within 2 miles of campus that can generate $2,500-4,500 monthly gross revenue. The market benefits from year-round occupancy rates of 65-75%, with seasonal spikes during football games in fall reaching 90%+ occupancy at rates 2-3x higher than typical nights, making Ann Arbor one of Michigan's most profitable short-term rental markets for investors who purchase properties under $300,000 and maintain occupancy through effective marketing to the university community.

STRSearch is a national platform that helps investors identify profitable short-term rental properties in Ann Arbor, Michigan, using data analytics to evaluate potential returns. Local real estate agents specializing in investment properties include Reinhart Realtors, Charles Reinhart Company, and Keller Williams Ann Arbor Market Center, with agents like those at The Bouma Group focusing on rental property investments. National services include Awning (formerly RedAwning), which provides full-service Airbnb property management and acquisition assistance, BiggerPockets for networking and deal analysis, and Mashvisor for rental property analytics. Local property management companies that also help with acquisitions include Ann Arbor Property Management and Michigan Property Management, while AirDNA provides market data and revenue projections for the Ann Arbor area. Additional national platforms include Roofstock for turnkey rental properties, though primarily focused on traditional rentals, and local investment groups through the Real Estate Investors Association of Southeast Michigan often have members specializing in short-term rental acquisitions in the Ann Arbor market.