The Short-Term Shop

Beginner’s Guide to Investing in Short Term Rental Properties

Beginner’s Guide to Investing in Short Term Rental Properties

What is a short-term rental property?

A short-term rental is a property that has a lease term of fewer than 12 months. It could be a single or multi-family home, a condominium, or a townhome. An owner typically buys this type of property with the intent of leasing and doesn’t live in it.  

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Short-term rentals are popular for vacation homes and Airbnbs in popular tourist destinations. However, they also work for renters who need a place to stay for less than 12 months, which is considered a traditional lease time. In recent years, the industry has transformed from a side-gig for homeowners looking to make extra income into a booming industry in many markets across the country. 

Although considered great investments, these types of properties require proper management and good knowledge of a local real estate market. 

Is short-term rental profitable?

Property Investment

A short-term property can be profitable under the right management. But don’t think that it will generate passive income without much effort. Before you invest your money, you have to take a look at several components that determine whether your property will create a profit or not. 

- Vacation destinations are considered the best for these types of properties, as they are often favored by tourists because of their competitive prices over expensive hotels and five-star resorts.  

- Local laws and regulations set a stage up for the real estate market. For example, some cities, like New York, have strict policies when it comes to how many days your property can be occupied. These types of restrictions could limit your ability to generate a steady income. 

If you want to buy a property in the area that is favorable toward short-term rentals, make sure to get familiar with local laws and regulations governing the real estate market. Additionally, you should also find out what the rules are for a platform such as HomeAway or Airbnb

- A good marketing strategy can turn your investment into a goldmine, while a poor one can sink it to the bottom. It’s easy to overlook a marketing strategy when you buy a short-term rental property in a tourist hotspot. However, you should never get into real estate without having a clear vision about how you are going to market your short-term rental to potential customers.

Basic rules of a good marketing plan include crisp images and possibly videos, detailed property descriptions, and good communication with your guests. You can also list all of the amenities in the area such as stores and restaurants, along with cultural and historic landmarks that could be of interest to your guests. 

Another form of advertisement that you shouldn’t overlook is social media. Some successful short-term rentals go as far as having a dedicated Instagram account and inviting influencers to create content featuring it. 

People will take note of your efforts and recommend your property to their friends and relatives. In the long run, your efforts could create an incredible form of advertisement via word-of-mouth. 

How do I run a short-term rental?

A Big House

Although short-term rentals might seem like an easy way to make money, they require an investment strategy, among other steps, to turn a profit. A short-term property market can be competitive if it is in a popular vacation spot saturated with offers. As a real estate investor, you need to spend time and effort to make sure your property creates steady cash flow.

From keeping your books to maintaining and marketing, running your property is a real job that requires the right approach and a fair amount of experience. However, if you have never run a piece of real estate, this article will help you to learn the basics of successful management.  

- Keep your records straight 

As a property owner, you can get bogged down by things such as guest screening, maintenance, listings, and reviews, especially if you have people staying at your property every week. No matter how busy your schedule gets, you should stay organized. This includes keeping tabs on your property taxes, maintenance bills, insurance, permits, and other expenses that fall under your property management. 

If you feel that the volume of work is more than you can handle, consider enlisting a professional property management company that specializes in helping owners of short-term rentals or finding a mentor who could guide you along the way. This could be a great choice for a novice real estate owner who needs a bit of help while learning the ropes of the short-term rental business. 

- Screen your tenants 

Screening your potential tenants is critical as it helps to ensure that you establish a beneficial relationship. Check the reviews that previous landlords have left for them, establish a rapport with your potential tenants, and make sure that they understand all of the rules and stipulations of your property. 

- Pay attention to local events 

While some vacation rentals can stay full year-round (For example, a place such as Southern California, where year-round perfect weather ensures visitors from all over the country flock to its coast to catch some sun), not every place is lucky to enjoy a constant flow of visitors. 

Areas that have shoulder seasons can require out-of-the-box thinking and a creative approach if you want to keep riding the wave. For example, you can pay better attention to local events such as markets, festivals, and other happenings that might bring visitors during the low season. 

When you know that an event is set to take place, start figuring out what kind of clientele you can expect and market your property accordingly. You should also check how your competitors are going to set their prices, just to make sure you don’t go too high or too low. 

- Keep maintenance up-to-date

Most renters expect a well-maintained property, and as a smart business owner, you shouldn’t let them down. Spotless properties tend to get consistent bookings and great reviews. If you are serious about keeping your guests happy and making good money, you should create a maintenance schedule.

And if you don’t have the time or skills to do upkeep, consider outsourcing this job to a professional real estate maintenance team to make sure your property doesn’t fall in a state of disrepair. 

- Provide good customer service 

Good customer service is the foundation of any successful business, and real estate is no exception. While you might have an easier task if your property is in an area with fewer listings, you have to provide superior customer service if your rental is located in a city saturated with short-term rentals. 

If you happen to be in a place where you have to compete with thousands of properties, you have to go above and beyond to please your guests. This can be done by providing them with extra information about the area, answering questions, and addressing their needs in a timely fashion. If your guests see that you are trying your best, they will likely leave you a great review, which will result in more reservations. 

How can I maximize my short-term rental?

Money Investment

The more time and effort you put into your business, the more you can (and should) seek back. This is a basic business rule that also applies to short-term rental properties. Of course, you also should take location, the local market, and your business model into consideration. However, the real force behind making it or breaking is you. 

For example, one of the best ways to maximize your profit is to make investments in your property to make it cozier and make your guests feel at home. On top of that, tending to your guests’ needs can turn them into repeat customers and create a great form of advertisement over time. 

Where can I buy short-term rentals?

Not all short-term rentals are equal. While certain cities are more favorable for short-term rental properties, others are not. When looking for a short-term rental property, pay close attention to the local real estate market and its rules and regulations, as well as real estate trends that dictate the overall changes in the industry. 

How do I choose the right location?

Location is a crucial factor in real estate that determines the success of your business. As a real estate investor, your job is to make sure that your short-term rental property is going to create a cash flow and generate a return if you decide to sell it one day. 

To achieve that, you should invest money in a property in a popular tourist area, but make sure that it doesn't have too much competition from short-term rentals. While not every destination is created equal, you should aim for an area that has a steady flow of visitors year-round and shorter shoulder seasons.


A short-term rental property is one of the best ways to generate a steady income from a few hundred dollars to a few thousand dollars a month. Although it’s often considered a form of passive income, running it requires real estate prowess, time and money investment, and excellent communication skills. However, with the right management and favorable market conditions, a real estate investment can become a successful enterprise and generate thousands of dollars per year. 

Avery Carl

Avery Carl

Avery Carl was named one of Wall Street Journal’s Top 100 and Newsweek’s Top 500 agents in 2020. She and her team at The Short Term Shop focus exclusively on Vacation Rental and Short Term Rental Clients, having closed well over 1 billion dollars in real estate sales. Avery has sold over $300 million in Short Term/Vacation Rentals since 2017. An investor herself, with a portfolio of over 100 Doors, Avery specializes in connecting investors with short term rentals with the highest ROI potential, and then training them to manage their short term rental from their smart phone from anywhere in the world.

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