Short-Term Rental Investment Guide
STR vs Long-Term Rental
Short-term rentals can generate 2-3x the income of long-term rentals, but come with:
- Higher operating expenses (utilities, cleaning, supplies)
- More management intensity (guest communication, turnovers)
- Seasonality and occupancy risk
- Regulatory risk (many cities restrict STRs)
- Higher insurance costs
- Furnishing and setup costs
Key STR Metrics
- ADR (Average Daily Rate) - Average nightly rate across all bookings
- Occupancy - % of nights booked. Typical: 50-75%
- RevPAN - Revenue Per Available Night = ADR × Occupancy
STR Expense Categories
- Platform fees: Airbnb 3% host fee, VRBO 5%+
- Management: 15-25% if using a PM, 0% if self-managing
- Cleaning: $75-200 per turnover depending on size
- Utilities: You pay all (unlike LTR where tenant pays)
- Supplies: Toiletries, coffee, paper goods, etc.
- Insurance: STR-specific policy costs 2-3x standard
- Maintenance: More wear and tear than LTR
Before You Invest
- Check local regulations - many cities ban or restrict STRs
- Research AirDNA or Mashvisor for market data
- Check HOA rules if applicable
- Talk to other STR hosts in the market
- Consider starting with a long-term rental as backup plan