Investing in short-term rental properties in the United States has become a popular strategy for those seeking passive income, portfolio diversification, and long-term asset appreciation.
But behind the potential return, there are several key factors that must be evaluated before making a purchase.
That’s because, unlike long-term rentals, short-term rentals require greater attention to location, local regulations, management, seasonality, and property profile.
What is a short-term rental?
A short-term rental is a property offered for rent for short periods, usually a few days or weeks. Platforms like Airbnb, Vrbo, and Booking are commonly used to manage these stays.
Unlike traditional rentals, where tenants stay for months or years, short-term guests are typically tourists, business travelers, families on vacation, or people relocating temporarily.
Why invest in short-term rentals?
Short-term rentals can yield significantly higher profits than traditional leases, especially during peak demand periods. Other advantages include:
- You can use the property during the off-season;
- Frequent inspections help maintain property condition;
- Long-term appreciation in high-demand areas.
Keep in mind: this is an active investment model, requiring more time, effort, or hiring a property management company.
1. Location is everything
More than any other factor, location determines the success of your short-term rental. Consider:
- Tourist attractions: Cities near beaches, parks, ski resorts, cultural centers, or sporting events tend to attract guests year-round or seasonally.
- Accessibility: Properties near airports, train stations, highways, or public transit are more appealing.
- Local infrastructure: Nearby restaurants, pharmacies, supermarkets, and entertainment increase guest satisfaction.
- Market research: Search Airbnb to compare similar listings in the area. Look at occupancy rates, average prices, and reviews.
2. Local laws and regulations
Not every city or county allows short-term rentals. Some have strict rules, licensing requirements, or outright bans.
Before purchasing, check:
- If short-term rentals are allowed in the property’s zoning area;
- Local taxes and fees (occupancy tax, business license, etc.);
- HOA (Homeowners Association) rules;
- Guest limits, parking restrictions, or rental duration caps.
3. Ideal property features
A short-term rental must be functional, attractive, and convenient. Key characteristics include:
- Layout: Multiple bedrooms, extra bathrooms, child-friendly spaces, and accessibility have more chances to attract families and groups.
- Fully furnished: Complete with kitchenware, linens, appliances, and Wi-Fi. A solid initial investment in comfort and decor pays off.
- Parking: Private or dedicated parking is a huge plus, especially in urban areas.
- Outdoor space: Patios, balconies, grills, or pools are highly valued in warm climates.
4. Costs and expected returns
New investors often overestimate profits and underestimate costs. Include these in your plan:
- Financing: Loans for short-term rentals may require higher down payments and interest rates;
- Taxes: Annual property taxes, occupancy tax, federal/state rental income tax;
- Platform fees: Airbnb typically charges 3% per reservation;
- Cleaning: Turnover costs between guests;
- Maintenance and repairs;
- Management services, if you’re not managing it yourself.
5. Management and operations
If you live far from the property or have another job, consider hiring a short-term rental management company. They handle:
- Guest check-in/check-out;
- Cleaning and laundry;
- Emergency calls;
- Listing optimization and pricing;
- Review management.
Though they charge a percentage of your revenue, they can increase occupancy and reduce hassle.
6. Seasonality and diversification
Understand if local demand is seasonal (e.g., summer, holidays, events) or year-round. To balance low seasons, consider:
- Offering long-term rentals during the off-season;
- Reducing minimum nights for longer bookings;
- Running promotions during slow periods.
Are you ready to Generate Passive Income?
Buying a property for vacation rental can be an excellent investment opportunity, as long as it is done with planning and strategic vision.
With the help of experienced professionals like those at MGN Fine Homes, you can identify the best regions, negotiate safely and build a portfolio of short-term rentals that generates real and sustainable financial returns.
If you are considering this type of investment, schedule a personalized consultation with our team and discover the ideal opportunities for your profile!