How to Start an Airbnb Business in Michigan

Why Michigan Is a Top Market for Short-Term Rentals

Michigan sits on more freshwater coastline than any other state in the country. Over 3,200 miles of Great Lakes shoreline, plus 11,000 inland lakes, create a vacation rental landscape that few states can match. Tourism generated $27.8 billion in visitor spending across Michigan in 2023, and the short-term rental sector captured a growing share of that pie as travelers increasingly chose private accommodations over hotels.

What makes Michigan particularly interesting for STR operators is the diversity of demand. The state does not rely on a single tourism driver. Traverse City draws wine country visitors and cherry festival crowds. Mackinac Island attracts history buffs and families. Detroit has transformed into a legitimate weekend destination with its restaurant renaissance and sports culture. The Upper Peninsula pulls outdoor enthusiasts year-round, from summer hikers to winter snowmobilers. Each of these markets operates on a different seasonal calendar, which means a multi-property portfolio across Michigan can generate revenue twelve months a year.

Michigan also has favorable economics for new hosts. The median home price sits around $240,000, well below the national average of $420,000. In secondary markets like Grand Rapids, Saugatuck, or Petoskey, you can acquire or lease properties at costs that make the revenue math work from month one. A lakefront cabin in northern Michigan that rents for $250 per night during peak summer can generate $40,000 to $55,000 in gross annual revenue, and the purchase price might be under $300,000.

Detroit deserves special attention. The city has undergone a dramatic economic resurgence over the past decade. Major employers are expanding, new restaurants open monthly, and events like the Detroit Grand Prix, Autorama, and professional sports draw hundreds of thousands of visitors. STR operators who got into Detroit early (2018 through 2021) have watched their property values climb 30 to 50% while rental income grew alongside the city’s revival. There is still room to enter this market, especially in neighborhoods like Corktown, Midtown, and West Village.

The state’s four-season appeal is a genuine competitive advantage. Summer brings beach tourism and boating. Fall delivers some of the best foliage viewing in America (the Tunnel of Trees drive near Harbor Springs is a perennial draw). Winter attracts skiers to resorts like Boyne Mountain, Crystal Mountain, and Mount Bohemia. Spring brings fishing opener weekends and mushroom hunting culture across northern Michigan. Each season creates its own booking window.

Michigan Short-Term Rental Laws and Regulations

Michigan’s regulatory environment for short-term rentals has been evolving rapidly, and the state made national headlines in 2024 with legislation that reshaped the relationship between local governments and STR operators. Understanding this landscape is critical before you invest a dollar.

State-Level Requirements

Michigan does not have a statewide STR permit or licensing system. However, all STR operators must register with the Michigan Department of Treasury for sales tax and use tax collection. You will need a Michigan Sales Tax License, which you can obtain through Michigan Treasury Online (MTO) at no cost.

In 2024, Michigan passed House Bill 4722, which prohibits local governments from outright banning short-term rentals in residential zones. This was a landmark win for STR operators. Under this law, municipalities can still regulate STRs (noise ordinances, occupancy limits, parking requirements, safety inspections), but they cannot implement total prohibitions. The law took effect in early 2025 and is still being interpreted by various local governments.

Michigan’s fire safety code applies to all rental properties. STRs must have working smoke detectors on every level, carbon monoxide detectors near sleeping areas, and fire extinguishers accessible to guests. Properties with more than 2 rental units on a single parcel may trigger commercial building code requirements.

Traverse City and Grand Traverse County Regulations

Traverse City requires a Short-Term Rental Permit through the city’s planning department. Properties must meet safety inspection standards and maintain a local contact person available within 30 minutes. The city distinguishes between owner-occupied rentals (where the host lives on-site) and whole-home rentals, with different density limits for each. Grand Traverse County (outside city limits) has its own permit process with a $200 annual fee. The county requires proof of septic system compliance for rural properties, which is a common stumbling block for new operators.

Detroit Regulations

Detroit requires STR operators to obtain a Short-Term Rental Certificate of Compliance from the Buildings, Safety Engineering, and Environmental Department (BSEED). The application involves a property inspection, proof of insurance, and a $200 fee. Detroit limits STR permits to one per property owner in residential zones (you cannot stack multiple STRs on the same block under one name). The city also enforces a 2-night minimum stay requirement in most residential areas.

Holland and West Michigan Regulations

Holland was one of the most restrictive STR markets in Michigan before HB 4722. The city had capped STR permits and created a lottery system for new licenses. Under the new state law, Holland has maintained its permit requirement but can no longer enforce an outright cap. Operators still need a local business license, safety inspection, and must comply with parking and noise standards. The $150 annual permit fee remains in effect. Other west Michigan communities like Saugatuck and South Haven have similar permit-based systems with annual inspections.

Recent Regulatory Changes (2025-2026)

The biggest shift was HB 4722 taking effect in 2025, which forced cities that had banned or severely restricted STRs to rewrite their ordinances. Several northern Michigan townships are still in the process of updating their rules. Detroit expanded its enforcement team in late 2025 to crack down on unpermitted rentals, using platform data matching and neighbor complaint tracking. Traverse City introduced a new requirement for STR operators to submit annual revenue reports to the city, which some operators view as a precursor to a local occupancy tax increase.

Tax Obligations for Michigan Airbnb Hosts

Michigan’s tax structure for STR operators is simpler than some states, but there are specific obligations you cannot afford to miss.

State Sales Tax: Michigan charges a 6% sales tax on all short-term rental accommodations (stays under 30 days). This is a flat rate applied statewide with no local sales tax additions. Airbnb collects and remits this 6% automatically for Michigan listings.

State Use Tax: If you purchase furniture, supplies, or equipment for your STR from out-of-state vendors who do not collect Michigan sales tax, you owe a 6% use tax on those purchases. Report this on your Michigan annual return.

Convention and Tourism Assessment: Some Michigan counties levy a local accommodations tax or convention assessment. These vary by county. Mackinac County charges an additional 5% accommodations tax. Marquette County charges 5%. Grand Traverse County does not currently have one, though it has been discussed. Check your specific county through the Michigan Department of Treasury.

Income Tax: Michigan has a flat state income tax rate of 4.25%. Your STR net income is reported on your Michigan individual income tax return (MI-1040). Some cities levy their own income tax as well. Detroit charges 2.4% on residents and 1.2% on non-residents earning income in the city. Grand Rapids charges 1.5% on residents. These city income taxes apply to your STR profits if your property is located within city limits.

Personal Property Tax: Michigan requires STR operators to report business personal property (furniture, appliances, equipment) if the total value exceeds $80,000. Most single-property operators fall below this threshold, but portfolio operators should track their furnishing costs carefully.

Best Cities for Airbnb in Michigan

Michigan’s geography creates natural market segments. Lake Michigan beach towns, northern resort communities, urban centers, and Upper Peninsula wilderness destinations each attract different guest profiles and produce different revenue numbers.

Traverse City

Traverse City is Michigan’s crown jewel for short-term rentals. The area draws over 4 million visitors annually for its wine trails (40+ wineries), the National Cherry Festival (July), film festivals, and access to Sleeping Bear Dunes National Lakeshore. ADR for a well-positioned two-bedroom ranges from $200 to $350 in summer and drops to $100 to $150 in winter.

Annual occupancy averages 62 to 72%, with peak summer months hitting 90%+. A lakefront or downtown property can gross $50,000 to $75,000 annually. The best-performing properties offer water access, outdoor spaces, and proximity to downtown restaurants. Competition is increasing (over 1,800 active listings in the greater TC area), so differentiation through design and guest experience matters more each year.

Detroit

Detroit has evolved from an overlooked STR market to one of the most promising urban plays in the Midwest. ADR runs $120 to $200, with occupancy averaging 65 to 73%. The demand mix is strong: business travelers during the week, event-goers on weekends (Lions, Tigers, Red Wings, Pistons, concerts at Little Caesars Arena, the auto show).

A renovated two-bedroom in Corktown or Midtown can generate $35,000 to $55,000 annually. Entry costs are still remarkably low by urban standards. You can lease a quality apartment for $1,200 to $1,800 per month and run a profitable rental arbitrage operation. The 2-night minimum in residential zones is worth factoring into your pricing model, but it also filters out one-night party bookings that plague other urban markets.

Saugatuck and Douglas

These twin Lake Michigan towns form one of the most affluent vacation markets in the Midwest. Saugatuck draws art gallery visitors, LGBTQ+ travelers, and Chicago weekenders (it is a 2.5-hour drive from the Loop). ADR ranges from $225 to $400 during summer, with winter rates dropping to $100 to $175.

Annual occupancy sits around 55 to 65%, heavily weighted toward the May through October season. A well-positioned cottage or condo can gross $40,000 to $60,000 annually. The market skews toward higher-end properties. Guests expect quality linens, curated decor, and walkability to galleries and restaurants. This is not a market for budget furnishing. Plan to invest $8,000 to $15,000 in setup to compete effectively.

Mackinaw City and Mackinac Island

The Mackinac Straits area is intensely seasonal but incredibly lucrative during peak months. Mackinaw City serves as the gateway to Mackinac Island (no cars allowed, horse-drawn carriages only), and tourism runs from May through October. ADR during peak season hits $175 to $300. Off-season, many properties close entirely.

Annual revenue for a two-bedroom averages $25,000 to $40,000, concentrated into five to six months. The opportunity here is less about year-round cash flow and more about high summer margins. Properties within walking distance of the ferry docks command the highest rates. If you can operate without owning the property, seasonal arbitrage in this market can work well because landlords often offer discounted winter lease rates.

How Much Do Airbnbs Make in Michigan?

Michigan STR revenue varies more than most states because of extreme seasonality in many markets. Understanding the revenue curve matters as much as understanding the peak numbers.

Statewide, the median Michigan STR generates $30,000 to $40,000 in gross annual revenue. Properties in the top 25% (typically lakefront, well-designed, and professionally managed) exceed $60,000. The bottom quartile, which usually includes poorly located or undifferentiated listings, struggles to clear $18,000.

Seasonal markets like Traverse City and the Lake Michigan coast earn 60 to 70% of their annual revenue between Memorial Day and Labor Day. That concentration means your summer pricing must be aggressive enough to carry you through softer months. A property that averages $275 per night in July might drop to $110 in February. Smart operators plan their budgets around the lean months rather than the fat ones.

Detroit bucks the seasonal trend. Business travel, sporting events, and conventions create demand that is distributed more evenly across the calendar. A Detroit STR might earn $3,500 to $4,500 per month consistently rather than the boom-and-bust pattern of a beach town. For operators who need predictable cash flow (especially those using rental arbitrage with monthly lease obligations), Detroit’s stability is a major advantage.

Revenue optimization in Michigan often comes down to midweek pricing strategy. Weekends book easily in most markets. The challenge is filling Tuesday through Thursday. Offering midweek discounts of 15 to 25%, promoting to remote workers, and creating packages tied to local midweek activities (golf, spa, winery tours) can push occupancy from 60% to 75%, which represents a meaningful revenue jump.

Multi-platform distribution also matters more in Michigan than in some states. VRBO has a stronger presence in Michigan’s family vacation markets than Airbnb does. Listing on both platforms, plus Booking.com and direct booking through your own site, can increase revenue by 15 to 25% compared to Airbnb-only operators.

How to Start Your Michigan Airbnb Business

Michigan rewards preparation. The operators who rush into a lease or purchase without understanding local regulations, seasonal patterns, and market dynamics are the ones posting “is this even worth it?” on forums six months later. Here is the right sequence.

1. Choose your market segment. Michigan’s STR markets fall into distinct categories: urban (Detroit, Grand Rapids, Ann Arbor), lakefront resort (Traverse City, Saugatuck, Petoskey), and wilderness/adventure (Upper Peninsula, Houghton Lake). Each has different capital requirements, seasonal patterns, and guest expectations. Match your budget and risk tolerance to the right segment. First-time operators often do best starting in Detroit or Grand Rapids where demand is year-round and entry costs are lower.
2. Register your business. File an LLC with the Michigan Department of Licensing and Regulatory Affairs (LARA). The filing fee is $50. Obtain your EIN from the IRS. Register for a Michigan Sales Tax License through Michigan Treasury Online. Open a separate business bank account. Michigan is one of the cheaper states for business formation, which helps your startup economics.
3. Verify local regulations. Before signing any lease or making an offer, confirm your target property’s zoning allows STRs. Contact the local planning department or code enforcement office. Even with HB 4722 preventing outright bans, many cities maintain permit requirements, density limits, or minimum stay rules that could affect your model. Get this confirmed in writing.
4. Secure your property. For arbitrage, Michigan landlords in college towns (Ann Arbor, East Lansing) and resort areas are increasingly familiar with STR subletting. Lead with your business plan, insurance documentation, and a premium offer above market rent. For purchases, focus on properties with STR track records. Ask sellers or listing agents for historical revenue data. A property with 3 years of AirDNA data showing consistent bookings is worth more than one with no rental history.
5. Get your permits. Apply for your city’s STR permit or certificate. Schedule required inspections. Install safety equipment (smoke detectors, CO detectors, fire extinguishers). Some municipalities require you to post your permit number in the property and on all listings.
6. Furnish for your market. Beach house guests expect different things than Detroit business travelers. Lakefront properties need outdoor furniture, kayaks or paddleboards, fire pit areas, and beach towels. Urban properties need fast WiFi, a workspace, blackout curtains, and coffee equipment. Budget $4,000 to $10,000 for furnishing, depending on the market and property size.
7. Build your listing and pricing strategy. Invest in professional photography ($250 to $500). Write market-specific descriptions. Set up dynamic pricing through PriceLabs, Beyond Pricing, or Wheelhouse. For seasonal markets, create distinct pricing tiers: peak summer, shoulder (May/September-October), off-peak winter, and event weekends. Enable co-hosting if you do not live near your property.
8. Prepare for winter operations. This is Michigan-specific and catches new hosts off guard. Snow removal, frozen pipe prevention, furnace maintenance, and ice-dam monitoring are all part of running a winter STR. Have a reliable local handyman or property management partner on call. If you are operating a lakefront property, winterization procedures for water systems are non-negotiable.

Michigan STR Insurance and Liability

Michigan has unique insurance considerations that differ from warmer-climate states. Your coverage needs to account for winter-specific risks alongside standard hospitality exposures.

Standard homeowner’s policies in Michigan exclude commercial rental activity. You need either a dedicated STR policy or a commercial dwelling policy. Proper Insurance and CBIZ both offer Michigan-specific STR coverage starting around $1,500 to $2,800 annually for a typical two-bedroom property.

Key coverage areas for Michigan hosts:

• Liability coverage: Minimum $1 million recommended. Michigan’s slip-and-fall risk increases dramatically in winter. Ice on walkways, steps, and decks is a leading cause of guest injury claims. Your policy should explicitly cover premises liability for rental guests.
• Property damage: Coverage for guest-caused damage, vandalism, and theft. Michigan vacation rentals in remote areas face higher theft risk during off-season vacancy periods.
• Weather damage: Michigan gets heavy snow, ice storms, and occasional severe weather. Ensure your policy covers roof damage from ice dams, fallen trees, and wind damage. Confirm your deductible is manageable for weather claims.
• Loss of rental income: If your property is damaged and offline for repairs, this coverage replaces the bookings you would have earned. Critical for seasonal operators who cannot afford to lose peak summer weeks.
• Watercraft liability: If you provide kayaks, paddleboards, canoes, or dock access, you need additional liability coverage for water-related activities. Many base policies exclude this. A watercraft liability rider typically costs $200 to $400 annually.

Airbnb’s AirCover provides supplemental protection but should never serve as your primary coverage. The claims process is slow, coverage limits are lower than dedicated policies, and many Michigan-specific risks (ice dams, frozen pipes, dock damage) may not be covered. For detailed coverage comparisons, review our guide on Airbnb insurance coverage.

Why 10XBNB Gives You the Edge in Michigan

Michigan’s STR market punishes operators who apply generic strategies from warm-weather markets. The seasonality swings, winter operational challenges, and rapid regulatory changes require a framework built for complexity.

10XBNB teaches operators how to build systems that work across seasonal cycles. You will learn pricing strategies that maximize summer revenue while maintaining enough winter occupancy to cover your fixed costs. The program covers lease negotiation tactics specifically designed for resort-area landlords who may be skeptical of STR subletting. And the community includes operators actively running properties in markets like Traverse City, Detroit, and the UP who share real-time data on what is working.

The regulatory landscape in Michigan shifted dramatically with HB 4722, and understanding how to take advantage of newly opened markets is a time-sensitive opportunity. Operators who move quickly into previously restricted municipalities can establish market presence before competition arrives. That first-mover advantage, combined with the right operational playbook, is how portfolios get built in Michigan.

Whether you are eyeing a lakefront cabin in Leelanau County or an urban loft in Detroit’s Midtown, having a proven system beats guessing. Compare Michigan to other high-potential markets in our guide to the best states for Airbnb.

Frequently Asked Questions

For Michigan business registration and licensing information, visit the Michigan Department of Licensing and Regulatory Affairs (LARA).