Is Royal Oak, Michigan Good for Airbnb Investment?

To start an Airbnb in Royal Oak, Michigan, begin by researching the city's short-term rental regulations, which require registration with the city clerk's office and compliance with zoning ordinances that typically allow short-term rentals in residential areas with proper permits. Obtain necessary permits including a business license from Royal Oak City Hall, ensure your property meets fire safety codes, and verify compliance with Oakland County health department requirements. Find a suitable property in desirable neighborhoods like downtown Royal Oak near Main Street or areas close to the Detroit Zoo, considering proximity to restaurants, shopping, and public transportation. Furnish the space with quality, durable furniture from retailers like IKEA, West Elm, or local Michigan suppliers, focusing on comfort and functionality while incorporating local touches that reflect Royal Oak's character. Create compelling listings on Airbnb, VRBO, and Booking.com with professional photography showcasing your property's proximity to attractions like the Royal Oak Music Theatre and Farmers Market, setting competitive rates based on comparable properties in the $80-150 per night range. Manage your property by establishing cleaning protocols between guests, responding promptly to inquiries and reviews, coordinating key exchanges or installing smart locks, maintaining the property regularly, and tracking income for tax purposes while staying current with any changes to Royal Oak's short-term rental ordinances.

To identify profitable short-term rental properties in Royal Oak, Michigan, focus on locations within walking distance of downtown Royal Oak's Main Street entertainment district, near the Detroit Zoo, or close to major employers like Beaumont Hospital. Target 2-3 bedroom single-family homes or condos built after 1950 with modern amenities, parking, and outdoor space, as these typically command $80-150 per night. Analyze comparable properties on Airbnb and VRBO within a 2-mile radius, noting seasonal pricing fluctuations with peak rates during summer months and Detroit Lions home games. Research competition density using AirDNA or Mashvisor, aiming for areas with less than 30% STR saturation while maintaining strong occupancy rates above 65%. Utilize tools like Rabbu, STR Helper, and local MLS data to identify properties under $300,000 that can generate 12-18% annual returns, while ensuring compliance with Royal Oak's zoning ordinances and Michigan's STR regulations. Consider proximity to I-75 and I-696 for easy airport access, and leverage local Facebook groups and Royal Oak Chamber of Commerce resources for market insights.

To obtain an Airbnb/STR permit in Royal Oak, Michigan, you must first contact the Royal Oak Planning Department at City Hall located at 211 Williams Street to submit an application for a Special Land Use permit, as short-term rentals require special approval under the city's zoning ordinance. Required documents include a completed application form, site plan showing the property layout, proof of property ownership or lease agreement, certificate of occupancy, proof of liability insurance (minimum $1 million), contact information for a local property manager if you're not local, and a floor plan indicating maximum occupancy. The application fee is approximately $500-750, with additional fees for inspections and hearings. You must also register with the Michigan Department of Treasury for sales tax collection and obtain a Royal Oak business license for approximately $25-50. The timeline typically takes 60-90 days as applications require Planning Commission review, public hearing notification to neighbors within 300 feet, and final approval. Royal Oak specific requirements include limiting occupancy to no more than two guests per bedroom plus two additional guests, maintaining off-street parking for all guests, ensuring the property meets all building and fire codes, prohibiting rentals for less than two consecutive nights, and requiring the owner or designated local contact to be available 24/7 for any issues that arise during guest stays.

Short-term rentals (STRs) are currently prohibited in Royal Oak, Michigan. The city enacted an ordinance in 2019 that effectively bans STRs in residential areas, citing concerns about neighborhood character, parking, noise, and housing availability. The ordinance restricts rentals of less than 30 days in residential zones, though some limited exceptions may exist for certain commercial districts. This ban applies citywide to residential properties, making Royal Oak one of the more restrictive municipalities in Oakland County regarding short-term rentals. Property owners who violate the ordinance face fines and enforcement action. The city has maintained this stance despite the popularity of platforms like Airbnb and VRBO, prioritizing long-term housing stability and neighborhood preservation over short-term rental income opportunities.

The most promising Airbnb investment areas in Royal Oak, Michigan include the Downtown Royal Oak district centered around Main Street and Washington Avenue, which attracts visitors due to its vibrant nightlife, restaurants, shopping, and proximity to the Royal Oak Music Theatre and Detroit Zoo. The Arts District near 11 Mile Road offers appeal for cultural tourists visiting galleries, studios, and attending art events throughout the year. The Woodward Corridor area provides excellent access for business travelers commuting to Detroit's corporate centers while offering walkability to local amenities. The residential neighborhoods near Normandy and Lincoln Avenue are attractive for families visiting the Detroit Zoo and Cranbrook Educational Community, while also serving medical tourists accessing nearby Beaumont Hospital. The area around Memorial Park draws visitors during summer festivals and events, and properties near the Royal Oak Farmers Market benefit from weekend visitors and food enthusiasts. These locations capitalize on Royal Oak's position as a cultural hub between Detroit and Birmingham, attracting both leisure travelers seeking suburban charm with urban amenities and business visitors needing convenient access to metro Detroit's commercial districts.

In Royal Oak, Michigan, Airbnb hosts are subject to both state and local lodging taxes. The Michigan state sales tax of 6% applies to short-term rental accommodations, along with the state use tax at the same rate. Royal Oak imposes a local accommodations tax of approximately 5-6% on short-term rentals under 30 days, which is collected by the city's finance department. Oakland County may also levy an additional transient occupancy tax of around 2-3%. These taxes are typically collected from guests at the time of booking through Airbnb's automated tax collection system for state taxes, while local taxes may need to be collected directly by hosts and remitted monthly or quarterly to the respective jurisdictions. Hosts must register with the Michigan Department of Treasury for state tax purposes and with Royal Oak's city clerk office for local permits and tax collection. Exemptions generally apply to stays exceeding 30 consecutive days, which are considered long-term rentals rather than transient accommodations. Failure to collect and remit these taxes can result in penalties and interest charges from both state and local authorities.

The total cost to start an Airbnb in Royal Oak, Michigan is approximately $315,000-$385,000. Property purchase costs around $275,000-$325,000 based on median home prices in the area. Furnishing a 2-3 bedroom property requires $15,000-$25,000 for quality furniture, bedding, kitchenware, and decor to create an attractive rental space. Initial setup costs including professional photography, listing creation, smart locks, and welcome materials total $2,000-$3,000. Permits and fees in Royal Oak include business license ($100), short-term rental permit ($200-$500), and potential HOA approvals. Insurance for short-term rentals costs $1,500-$2,500 annually, significantly higher than standard homeowner's insurance. Monthly utilities including electricity, gas, water, internet, and cable average $200-$300. First six months of operating costs including utilities ($1,200-$1,800), cleaning services ($1,800-$3,000), maintenance reserves ($1,000), marketing ($500), and property management software ($300) total approximately $4,800-$6,600. Additional considerations include potential property taxes of $4,000-$6,000 annually and a recommended cash reserve of $10,000-$15,000 for unexpected repairs and vacancy periods.

Airbnb properties in Royal Oak, Michigan typically generate annual revenues between $25,000-$45,000 for well-positioned units, with average daily rates ranging from $85-$140 depending on property type and location proximity to downtown attractions like the Royal Oak Music Theatre and Main Street dining district. Operating expenses generally consume 40-60% of gross revenue, including cleaning fees ($30-50 per turnover), property management (10-20% of revenue), utilities ($150-300 monthly), insurance ($1,200-2,000 annually), and maintenance costs averaging $2,000-4,000 yearly. Properties within walking distance of downtown Royal Oak or near the Detroit Zoo command premium rates and achieve 65-75% occupancy rates, resulting in net profit margins of 15-25% for owner-operators. A typical 2-bedroom condo near 11 Mile Road and Main Street might generate $3,200 monthly in peak seasons (May-October) but drop to $1,800 during winter months, with successful hosts like those managing properties near Normandy Oaks Park reporting annual net profits of $8,000-$15,000 after expenses. Key success factors include professional photography, responsive guest communication, strategic pricing during Detroit Red Wings games and summer festivals, and maintaining properties that appeal to both business travelers visiting nearby automotive suppliers and leisure guests exploring metro Detroit attractions.

Based on Royal Oak, Michigan market conditions, Airbnb investments typically generate annual ROI of 12-18% with cash-on-cash returns ranging from 8-14% depending on property type and location within the city. Properties near downtown Royal Oak and the entertainment district along Main Street command higher nightly rates of $120-180, while residential areas average $80-120 per night. Initial profitability usually occurs within 8-14 months after accounting for startup costs including furnishing, permits, and marketing expenses. The strong demand from Detroit metropolitan area visitors, business travelers to nearby corporate centers, and weekend tourists exploring the vibrant downtown scene supports consistent occupancy rates of 65-75% annually. Properties requiring minimal renovation in desirable neighborhoods like the Arts District or near Royal Oak Music Theatre tend to achieve the higher end of ROI projections, while those needing significant updates may see returns closer to 10-12% in the first two years before reaching full potential.

STRSearch is a national platform that helps investors identify profitable short-term rental properties across markets including Royal Oak, Michigan. Local real estate agents specializing in investment properties in Royal Oak include Keller Williams agents who focus on rental property acquisitions, Coldwell Banker professionals with STR expertise, and RE/MAX agents experienced in multi-family and investment properties. National services include Awning (formerly RedAwning) which provides market analysis and property management for Airbnb investments, Mashvisor for rental property analytics and ROI calculations, and AirDNA for short-term rental market data and performance metrics. Local property management companies like Great Lakes Property Management and Michigan Property Management Group offer services to help investors maximize their Airbnb returns. Additional national platforms include Roofstock for turnkey rental properties, BiggerPockets for investor networking and deal sourcing, and Vacasa for property management services that extend to the Detroit metro area including Royal Oak.