Short-Term vs. Long-Term Rentals: Which Fits Your Strategy?

[Gia Hermosillo]

Real estate investors love to debate this one—and for good reason. Both short-term rentals (STRs) and long-term rentals (LTRs) can be profitable, but the path to those returns looks very different.

Here’s a quick breakdown:

Short-Term Rentals (STRs)

Higher income potential: Nightly rates can often outpace monthly rents, especially in high-demand areas.

Flexibility: Owners can use the property themselves when it’s not booked.

More work (or systems): Guest turnover, cleaning, and constant marketing require either a strong management system or more personal involvement.

Market sensitivity: Local regulations and seasonal demand can change things quickly.

Long-Term Rentals (LTRs)

Stability: Steady monthly cash flow with less turnover.

Lower expenses: Fewer turnovers mean less spent on cleaning, furnishing, or marketing.

Easier to finance: Lenders often prefer long-term rental stability.

Less flexibility: Once you sign a lease, the property is locked in until renewal.

The real question isn’t “Which is better?” but “Which is better for your goals?”

If you value stability and minimal involvement, long-term rentals might be your lane. If you’re willing to trade more time, effort, or systems for higher potential returns, short-term rentals could be the play.

Both strategies can be winners—it’s all about aligning your investment with your time, lifestyle, and risk tolerance.

👉 What about you? Have you tried both? Which one has worked best for your portfolio?

[Dan H.]

I have made a lot of money with both LTRs & STRs. You can create wealth with either approach but both approaches are more challenging than in the recent past.

At this point I mostly seek highly desired property locations such as beach or lake front, Mountain cabins, bonus if they are near a destination such as national park of monument or other tourist attraction, etc. These properties will always be desired. Extra bonus if the destination is up and coming versus already arrived. A large majority of my recent offers have been of these high desired properties.

These properties pencil out better as STRs than LTRs. In addition, it is nice to have locations I can use or let friends and family use. Last week we had family from Minnesota visit for the first time. A group of 7 that we had stay in one of our large local STRs. This month my brother is staying at one of our beach STRs. We regularly visit our beach STRs on their vacancies. We use the parking spot, watch the sunset, eat at the beach. The good life. It is hard to quantify the value, but for us if we did not have the beach STRs I suspect we would visit the beach here much fewer times than we do.

As for the extra work …. I would argue that regardless if it is an STR or LTR you should underwrite with the use of a manager/co-host. Scaling beyond a handful of STRs with a full time job is not easy and amounts to having another job. If you choose to self manage, you deserve compensation for your efforts.

The biggest downside to STRs is increased regulations. Contrary to the view expressed in the past by some STR "experts", vacation destinations are not exempt from increased regulations. NIMBYS and/or those that seek a piece of the pie are everywhere. In some markets hotel lobbyist push for STE regulations to eliminate competition (I believe the competition is smaller than the hotels believe as many STR guests are looking for a different experience than provided by most hotels).

None of this implies that I would not purchase a LTR that meets my profit expectation. The issue is that even off market offerings are not meeting my return expectations. Residential RE is not passive. The projected return should far exceed passive options. For me, at this point (I admit to being spoiled on RE return), the LTRs in general do not project return enough in excess of passive options to justify the effort, risk, and potentially stress of residential RE. If someone wants to purchase for a COC of less than 20%, the more power to their hustle. There are passive options that perform too close to that to justify the extra work and risk. FAANG is unlikely to provide killer return indefinitely, but does anyone think their run is already over?

Good luck