You’ve invested in Tel Aviv property—now comes the critical decision that will shape your returns for years: should you chase the higher nightly rates of Airbnb and short-term rentals, or secure the steady income of a long-term tenant? In 2025’s dynamic Tel Aviv market, both strategies offer distinct advantages and challenges. This analysis breaks down the real numbers, hidden costs, and practical considerations to help you make the right choice for your investment.

The Short-Term Rental Opportunity

Tel Aviv’s short-term rental market remains robust, with over 4,000 active Airbnb listings generating significant revenue for property owners. The numbers are compelling: average annual revenue reaches approximately ₪137,000 ($36,000), with median occupancy rates around 56%—roughly 204 booked nights per year. Top-performing properties in the 90th percentile achieve monthly revenues exceeding $5,600.

The seasonal dynamics create real opportunity. Peak season runs from April through August, with April typically seeing the highest demand. International tourists—89% of guests are from abroad, with Germans comprising the largest segment—flock to Tel Aviv’s beaches, restaurants, and cultural attractions. During these months, well-managed properties command premium rates of ₪689 ($181) per night on average, with luxury apartments in prime locations earning significantly more.

The Yield Advantage

Short-term rentals can generate gross yields of 4-6%—substantially higher than the 3.1-3.3% gross yields typical of long-term leases in Tel Aviv. For a property valued at ₪4 million, that difference translates to ₪40,000-80,000 in additional annual income. During peak tourist season, a well-positioned two-bedroom apartment in central Tel Aviv can generate in one month what a long-term rental produces in two.

The Hidden Costs

However, those headline revenue figures mask substantial costs that long-term landlords don’t face:

• Platform fees: Airbnb and Booking.com take 3-15% of each booking
• Professional cleaning: ₪200-400 per turnover, potentially 100+ times annually
• Utilities: Owner pays electricity, water, internet, and streaming services
• Supplies: Linens, toiletries, coffee, and consumables require constant restocking
• Accelerated wear: Furniture, appliances, and fixtures need replacement more frequently
• Taxation: Short-term rental income is taxed as business income at progressive rates up to 50%, plus social security contributions—compared to the 10% flat rate for long-term rentals

When these costs are factored in, the net yield advantage shrinks considerably. Additionally, September through February brings significantly lower demand, leaving properties struggling for bookings during winter months.

The Long-Term Rental Case

Long-term rentals in Tel Aviv offer a fundamentally different value proposition: predictability. With vacancy rates near historic lows and approximately one-third of Israeli households renting, demand remains consistently strong. A quality four-room apartment in Tel Aviv commands ₪8,000 or more monthly, while one-bedroom units in central locations fetch around $2,400 (₪9,000).

Stability and Simplicity

The advantages of long-term tenants extend beyond steady income:

• Minimal turnover: One tenant transition per year or less, versus 50-100+ guest turnovers
• Tenant-paid utilities: Electricity, water, and internet become the tenant’s responsibility
• Favorable taxation: Rental income taxed at a flat 10% rate, with potential exemptions for lower earners
• Lower management burden: No daily guest communications, key exchanges, or cleaning coordination
• Reduced wear: Long-term tenants typically treat properties more carefully than transient guests

While gross yields of 3.1-3.3% appear lower on paper, net yields after expenses often approach those of short-term rentals once all costs are calculated—with far less operational complexity.

The Hybrid Approach

Experienced Tel Aviv investors increasingly adopt a hybrid strategy: short-term rentals during peak tourist season (April-August), transitioning to medium-term rentals (1-3 months) during slower periods. This approach captures premium summer rates while maintaining occupancy through winter with visiting professionals, medical tourists, or temporary relocations.

The hybrid model requires sophisticated management and flexible furnishing, but can optimize returns across the full calendar year.

The Management Factor

Whichever strategy you choose, success depends heavily on professional management—especially for overseas investors who can’t handle day-to-day operations personally.

Short-Term Rental Management

Effective short-term rental management encompasses: dynamic pricing optimization that adjusts rates based on demand, events, and competitor analysis; professional photography and listing optimization across multiple platforms; 24/7 guest communication in multiple languages; seamless check-in coordination; professional cleaning and quality control between guests; inventory management and restocking; maintenance response; and detailed financial reporting.

Long-Term Rental Management

Long-term rental management focuses on different priorities: comprehensive tenant screening including credit checks, employment verification, and reference validation; lease negotiation and legal compliance; rent collection and arrears management; routine maintenance coordination; annual inspections and condition reporting; lease renewals and market-rate adjustments; and tenant relations throughout the tenancy.

Discover our flexible Property Management Services for both short and long-term rentals—we handle the operational complexity so you can focus on returns.

Making the Right Choice

The optimal strategy depends on your specific circumstances. Short-term rentals suit investors with properties in prime tourist locations (beachfront, Neve Tzedek, Florentin, central Tel Aviv), tolerance for variable income, and willingness to invest in professional management. Long-term rentals better serve investors prioritizing stable, predictable returns, those with properties in residential neighborhoods, and owners seeking minimal operational involvement.

Consider also the regulatory horizon. Tel Aviv is monitoring short-term rental regulations implemented in cities like Barcelona and Amsterdam, and future restrictions could impact the viability of Airbnb strategies.

Frequently Asked Questions

Q: What’s the realistic annual income from a Tel Aviv Airbnb?

A: Average properties generate approximately ₪137,000 ($36,000) annually at 56% occupancy. Top performers exceed ₪200,000, while median properties may only achieve ₪80,000-100,000. Net income after all expenses is typically 40-50% of gross revenue.

Q: How does taxation differ between short and long-term rentals?

A: Long-term rental income enjoys a flat 10% tax rate. Short-term rental income is taxed as business income at progressive rates up to 50%, plus social security contributions and potentially VAT if revenue exceeds ₪100,000 annually.

Q: Which neighborhoods perform best for short-term rentals?

A: Central Tel Aviv, beachfront properties, Neve Tzedek, Florentin, and areas near Rothschild Boulevard command the highest nightly rates and occupancy. These locations attract both tourists and business travelers.

Q: Can I switch between short and long-term strategies?

A: Yes—many investors start with long-term rentals to learn the market, then transition to short-term or hybrid models. The key is ensuring your property is appropriately furnished and your management partner can handle both approaches.