Short-term rentals (STRs) have become a booming sector in the real estate industry, offering investors an opportunity to generate significant income while providing travelers with unique and comfortable accommodations. But what exactly qualifies as a short-term rental? Understanding the definition, requirements, and regulations surrounding STRs is crucial for investors looking to buy, sell, or manage these properties successfully.

At The Short Term Shop, we specialize in helping investors navigate the STR market in over 20 of the top vacation destinations across the U.S. Whether you’re new to short-term rental investing or looking to expand your portfolio, this guide will break down everything you need to know about what qualifies as a short-term rental.

Defining a Short-Term Rental

A short-term rental is a furnished property that is rented out for a short duration, typically ranging from a single night to several months. The exact definition can vary depending on local regulations, but most jurisdictions consider any rental period of less than 30 days to fall under the category of short-term rental.

Unlike long-term rentals, which involve lease agreements of six months or more, short-term rentals cater to vacationers, business travelers, and temporary residents seeking flexible lodging options.

Common Types of Short-Term Rentals

Short-term rentals come in various forms, depending on location, property type, and target guests. Some of the most common STR types include:

• Vacation Homes – Standalone houses in popular tourist destinations (e.g., beach houses, mountain cabins, lakefront cottages).
• Condos & Apartments – Urban rentals ideal for business travelers and city tourists.
• Cabins & Lodges – Rustic properties catering to outdoor enthusiasts.
• Tiny Homes & Unique Stays – Specialty properties like treehouses, yurts, and A-frame cabins offering one-of-a-kind experiences.
• Accessory Dwelling Units (ADUs) – Guesthouses or in-law suites rented separately from the main home.
• Shared Spaces – Private rooms within a home where the host remains on-site.

Each of these property types has different advantages, and choosing the right one depends on your investment goals and local demand.

Key Factors That Determine a Short-Term Rental

1. Length of Stay

The primary characteristic of a short-term rental is the length of guest stays. In most markets, STRs are defined as rentals available for periods ranging from one night to 30 days. However, some municipalities extend this definition up to 90 days or more, depending on their specific rental policies.

2. Furnished & Ready for Immediate Use

Unlike long-term rentals, which often require tenants to bring their furniture and household items, short-term rentals are fully furnished. This means they include essential amenities such as:

• Beds, linens, and towels
• Kitchen appliances, cookware, and utensils
• Internet and entertainment options
• Basic toiletries and cleaning supplies
• Heating and air conditioning (if applicable)

A well-furnished short-term rental enhances guest experience and leads to better reviews, ultimately improving profitability.

3. Legal & Zoning Compliance

One of the most important aspects of operating a short-term rental is ensuring compliance with local laws. Zoning regulations and rental policies vary widely across different cities and states. Before investing, it’s essential to check:

• Short-Term Rental Permits & Licenses – Some areas require property owners to obtain special licenses to operate legally.
• Zoning Restrictions – Certain neighborhoods may prohibit STRs or limit them to specific zones.
• Occupancy Limits – Many municipalities set a maximum number of guests per rental.
• Homeowner Association (HOA) Rules – If your property is in an HOA-governed community, check if STRs are allowed.

Researching these requirements upfront will save you potential legal troubles and financial setbacks.

4. Rental Platform Listings

Most short-term rentals are marketed through platforms like Airbnb, Vrbo, and Booking.com. Listing your property on these platforms allows you to reach a broader audience and benefit from built-in booking management tools.

Each platform has specific listing requirements, such as detailed property descriptions, professional photos, and cancellation policies. Successful STR investors optimize their listings by highlighting unique features, pricing competitively, and responding quickly to guest inquiries.

5. Revenue & Tax Considerations

Since short-term rentals generate income differently from long-term rentals, owners must consider the following financial factors:

• Rental Income Taxes – STR income is subject to federal and state taxes, and in some cases, local occupancy taxes (also known as hotel or lodging taxes).
• Property Expenses – Utilities, cleaning fees, maintenance, and platform service fees impact profitability.
• Seasonal Demand & Pricing – Markets with peak and off-peak seasons require strategic pricing adjustments to maximize revenue.
• Insurance Needs – Short-term rentals often require specialized insurance policies beyond standard homeowner’s insurance to cover liability risks.

Consulting with a real estate tax professional can help ensure that you comply with tax laws while maximizing deductions.

Short-Term Rentals vs. Other Rental Types

It’s important to distinguish short-term rentals from other types of rental properties, such as:

Rental Type	Typical Stay Duration	Primary Audience	Furnishing
Short-Term Rental	1–30 days	Tourists, business travelers	Fully furnished
Mid-Term Rental	1–6 months	Relocating professionals, travel nurses	Fully furnished
Long-Term Rental	6+ months	Local tenants, families	Usually unfurnished
Extended Stay Hotel	1 week – Several months	Business travelers, students	Fully furnished with hotel amenities

While mid-term and long-term rentals offer more stability, short-term rentals provide higher earning potential due to premium nightly rates, making them a popular choice for investors.

Is a Short-Term Rental Right for You?

Investing in a short-term rental can be highly profitable if done correctly. Here are a few key benefits:

Higher Rental Income Potential – STRs often generate more income than traditional rentals, especially in high-demand vacation markets.

Flexibility – Owners can use their property for personal vacations when not rented out.

Portfolio Diversification – STRs offer a different revenue stream from traditional buy-and-hold real estate investments.

Tax Benefits – Depending on how a property is managed, STR owners may qualify for tax deductions on expenses, depreciation, and mortgage interest.

However, STRs also come with unique challenges, such as fluctuating occupancy rates, ongoing maintenance, and the need for hands-on management. If you’re unsure whether STR investing is right for you, working with an experienced real estate professional can help guide your decision.

Understanding what qualifies as a short-term rental is the first step toward making a smart investment decision. From rental duration and legal considerations to furnishing and platform listings, there are many factors to consider before entering the STR market.

At The Short Term Shop, we specialize in helping investors buy, sell, and learn about short-term rentals in some of the most profitable vacation markets in the U.S. If you're ready to start your STR journey, our expert team is here to guide you every step of the way.

Call us at 1.800.898.1498 or email info@theshorttermshop.com to find the perfect short-term rental investment today!