We’ve always been long-term, buy-and-hold investors, we’ve got about 75 units, mostly single family and small multifamily here in central Arkansas. But like a lot of folks, we dipped our toes into the short-term rental game a couple years back when the numbers looked strong. We converted six of our smaller units, one bed, one bath places in good parts of town, into Airbnb's. They were thoughtfully furnished, nice setups, and they actually performed well early on. But over time, bookings slowed a bit. After last year, we sat down and realized they were only making maybe $100/month more than they would have as long-term rentals. That might still be worth it for some folks, but in our case, my wife was the one managing them. So when we factored in her time, the turnover, guest communication, and the occasional guest-related disaster… it just didn’t feel worth the squeeze anymore. We ended up converting them all back to long-term rentals. Separately, we had bought a lake house a while back and considered using it as a short-term rental, but opted against it. Then just recently, I helped a close friend buy a lake house on the same lake that had been an Airbnb. It was a nice property, originally priced reasonably, but it sat on the market and went through multiple price cuts. We made what felt like an insultingly low offer… and still got it accepted. He ended up buying it for nearly $200K under asking, fully furnished. Great for him, but to me, it just reinforced that some STR operators are feeling squeezed. I know STRs can still work, the top-tier properties in prime markets with experienced operators are likely still doing just fine. But for the smaller stuff or folks without strong systems, it seems like things have shifted. I also think mid-term rentals are interesting, we were kind of in that zone with ours, but they take more attention than we’re looking to give right now. For us, it just wasn’t worth it, but I know some people are still crushing it with STRs. Curious how y’all are making it work in this market?

Is the Short-Term Rental Play Starting to Wear Thin?

Investor · Greer, SC · Member since 2014 · 13k+ posts · 17k+ votes

The short answer is yes in my opinion.

As you say the great properties in great areas are always going to do well.

The "Airbnb" type properties (Ones not good enough to do well on Vrbo) are going to struggle unless they have something going for them like being close to someplace like a hospital, university or are very walkable to something interesting.

1 Reply

Chase Calhoun
OP
Property Manager · Little Rock, AR · Member since 2018 · 59 posts · 47 votes
11mo
Quote from @John Underwood:

The short answer is yes in my opinion.
As you say the great properties in great areas are always going to do well.
The "Airbnb" type properties (Ones not good enough to do well on Vrbo) are going to struggle unless they have something going for them like being close to someplace like a hospital, university or are very walkable to something interesting.

Well said!
Ours were close to hospitals and medical staff or family of people receiving long term treatment were our best/ longer term guests. Still don't think they were a bad idea just not worth it given our specific situation.
0 Reply
Collin HaysBusiness Member
Property Manager · Gatlinburg, TN · Member since 2020 · 3k+ posts · 4k+ votes
10mo
Quote from @John Underwood:

The short answer is yes in my opinion.
As you say the great properties in great areas are always going to do well.
The "Airbnb" type properties (Ones not good enough to do well on Vrbo) are going to struggle unless they have something going for them like being close to someplace like a hospital, university or are very walkable to something interesting.
John, can you expand on this a bit? The difference between AIRBNB and VRBO classes of properties?
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John UnderwoodPro Member
Investor · Greer, SC · Member since 2014 · 13k+ posts · 17k+ votes
10mo
Quote from @Collin Hays:

Quote from @John Underwood:

The short answer is yes in my opinion.
As you say the great properties in great areas are always going to do well.
The "Airbnb" type properties (Ones not good enough to do well on Vrbo) are going to struggle unless they have something going for them like being close to someplace like a hospital, university or are very walkable to something interesting.
John, can you expand on this a bit? The difference between AIRBNB and VRBO classes of properties?

Absolutely.
Vrbo properties are in general a higher class. These are often vacation rentals on the beach, in the mountains, on a river or lake or close to an attraction like Disney. Places where people are willing to pay top dollar on a vacation to create memories with their family and friends.
0 Reply
Collin HaysBusiness Member
Property Manager · Gatlinburg, TN · Member since 2020 · 3k+ posts · 4k+ votes
10mo
Quote from @John Underwood:

Quote from @Collin Hays:

Quote from @John Underwood:

The short answer is yes in my opinion.
As you say the great properties in great areas are always going to do well.
The "Airbnb" type properties (Ones not good enough to do well on Vrbo) are going to struggle unless they have something going for them like being close to someplace like a hospital, university or are very walkable to something interesting.
John, can you expand on this a bit? The difference between AIRBNB and VRBO classes of properties?

Absolutely.
Vrbo properties are in general a higher class. These are often vacation rentals on the beach, in the mountains, on a river or lake or close to an attraction like Disney. Places where people are willing to pay top dollar on a vacation to create memories with their family and friends.

Good info! Thank you!
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Collin HaysBusiness Member

Property Manager · Gatlinburg, TN · Member since 2020 · 3k+ posts · 4k+ votes

11mo

Number one, anytime someone says they are “crushing it”, my default is to take whatever they are claiming and apply the square root. 😎

STRs have been around for a century or more, so it is not a new investment class.

Whether it is a good investment depends, in some part, or your definition of a good investment, and your time horizon.

If you are a cash buyer seeking income, one can expect income that is triple or quadruple treasuries and CDs, and you are holding a long term appreciating asset. I would call that an excellent investment.

If you are borrowing, you should be hoping that expenses are paid for by revenues in the early going. If you are hoping for extra cash each month, that’s a big ask.

Even if you are still out of pocket $1000-2000 a month for a while, I don’t know that this is such a bad deal either. How much cash is your 401K putting into your pocket each month, as you dutifully contribute the max? You’ll be waiting until 60 for that answer.

I bought my first STR in 2005 for $240K with 20% down. It didn't "cash flow" for five years, but now the home is paid off and it's worth triple what I paid, while I enjoy significant monthly income. Was that a bad deal?

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Chase Calhoun
OP
Property Manager · Little Rock, AR · Member since 2018 · 59 posts · 47 votes
11mo
Quote from @Collin Hays:

Number one, anytime someone says they are “crushing it”, my default is to take whatever they are claiming and apply the square root. 😎

STRs have been around for a century or more, so it is not a new investment class.

Whether it is a good investment depends, in some part, or your definition of a good investment, and your time horizon.

If you are a cash buyer seeking income, one can expect income that is triple or quadruple treasuries and CDs, and you are holding a long term appreciating asset. I would call that an excellent investment.

If you are borrowing, you should be hoping that expenses are paid for by revenues in the early going. If you are hoping for extra cash each month, that’s a big ask.

Even if you are still out of pocket $1000-2000 a month for a while, I don’t know that this is such a bad deal either. How much cash is your 401K putting into your pocket each month, as you dutifully contribute the max? You’ll be waiting until 60 for that answer.

I bought my first STR in 2005 for $240K with 20% down. It didn't "cash flow" for five years, but now the home is paid off and it's worth triple what I paid, while I enjoy significant monthly income. Was that a bad deal?

Great insight, for sure doesn't sound like a bad deal to me!!
0 Reply
Allen Bosbyshell
Investor · Member since 2020 · 16 posts · 5 votes
11mo
Quote from @Collin Hays:

Number one, anytime someone says they are “crushing it”, my default is to take whatever they are claiming and apply the square root. 😎

STRs have been around for a century or more, so it is not a new investment class.

Whether it is a good investment depends, in some part, or your definition of a good investment, and your time horizon.

If you are a cash buyer seeking income, one can expect income that is triple or quadruple treasuries and CDs, and you are holding a long term appreciating asset. I would call that an excellent investment.

If you are borrowing, you should be hoping that expenses are paid for by revenues in the early going. If you are hoping for extra cash each month, that’s a big ask.

Even if you are still out of pocket $1000-2000 a month for a while, I don’t know that this is such a bad deal either. How much cash is your 401K putting into your pocket each month, as you dutifully contribute the max? You’ll be waiting until 60 for that answer.

I bought my first STR in 2005 for $240K with 20% down. It didn't "cash flow" for five years, but now the home is paid off and it's worth triple what I paid, while I enjoy significant monthly income. Was that a bad deal?

Very well said, Collin! STRs are NOT NEW. And anytime I hear the phrase "crushing it" an alarm goes off in my head, like "don't trust this person!"
0 Reply

Andrew SteffensBusiness Member

Tampa, FL · Member since 2022 · 3k+ posts · 3k+ votes

11mo

STR IMO is great for people

- Who want to own a second (or third +) home in a desirable place where they can get personal use out of

- Investors expecting modest returns but can invest in better neighborhoods leading to hopefully higher appreciation.

- High end luxury/unique property owners with higher than average returns.

Otherwise you are likely experiencing similar results to what you mentioned, of course depending on the market.

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Chase Calhoun
OP
Property Manager · Little Rock, AR · Member since 2018 · 59 posts · 47 votes
11mo
Quote from @Andrew Steffens:

STR IMO is great for people
- Who want to own a second (or third +) home in a desirable place where they can get personal use out of
- Investors expecting modest returns but can invest in better neighborhoods leading to hopefully higher appreciation.
- High end luxury/unique property owners with higher than average returns.
Otherwise you are likely experiencing similar results to what you mentioned, of course depending on the market.

Love it and would agree on all points. I still think they are a great option for a lot of people although they seem to get a lot of push back from municipalities (I'm sure at the bidding of local hotel owners) and neighbors, especially in better neighborhoods that usually don't have many rentals. Still love them for 2nd or 3rd home potential as long as fundamentals work in a slow market.
0 Reply

Collin HaysBusiness Member

Property Manager · Gatlinburg, TN · Member since 2020 · 3k+ posts · 4k+ votes

11mo

One of the challenges in the current STR investment environment is that, in the 2018-2023 time span, the investment was being touted as a money tree. Anywhere you bought an STR it was going to grow money. Books and podcasts galore, promoting the phenomenon. But a lot of folks writing those books were washing cars in 2008-2011, when the entire vacation rental market came crashing to the ground.

The trap with the 2018-2023 period of time is, it was a perfect storm for the STR investment class. Ultra-low interest rates and quite low RE prices. Humans tend to fall heavily for the old "recency fallacy" trap. That is, we tend to use very current information to make long-term decisions, assuming that everything today will also be true tomorrow and the day after. We also tend to place the highest value on the most recent information, which is why a jury hears "closing arguments" before beginning deliberation.

Right now, "AI" investments are all the buzz. We assume that NVDA and AMD will keep rising from now own, because they did last month, last week, and today. Is AMD a good investment? Perhaps, but not as good as it was in April!

STRs are terrific investments for a certain class of investors.

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3 Reply

John UnderwoodPro Member
Investor · Greer, SC · Member since 2014 · 13k+ posts · 17k+ votes
11mo
Quote from @Collin Hays:

One of the challenges in the current STR investment environment is that, in the 2018-2023 time span, the investment was being touted as a money tree. Anywhere you bought an STR it was going to grow money. Books and podcasts galore, promoting the phenomenon. But a lot of folks writing those books were washing cars in 2008-2011, when the entire vacation rental market came crashing to the ground.

The trap with the 2018-2023 period of time is, it was a perfect storm for the STR investment class. Ultra-low interest rates and quite low RE prices. Humans tend to fall heavily for the old "recency fallacy" trap. That is, we tend to use very current information to make long-term decisions, assuming that everything today will also be true tomorrow and the day after. We also tend to place the highest value on the most recent information, which is why a jury hears "closing arguments" before beginning deliberation.

Right now, "AI" investments are all the buzz. We assume that NVDA and AMD will keep rising from now own, because they did last month, last week, and today. Is AMD a good investment? Perhaps, but not as good as it was in April!

STRs are terrific investments for a certain class of investors.

Very true. Some people are jumping in at the end of many things such as a stock that has already run up or a RE market that has already run up and will be flat or have a correction.
2 Reply

Michael BaumPro Member

Olympia, WA · Member since 2016 · 8k+ posts · 7k+ votes

11mo

Hey @Chase Calhoun, I have always thought these kinds of questions/observations interesting.

What makes a 'prime market' or a 'top tier property'?

I believe that their aren't prime markets per se but markets where STRs do better than others.

A house on a lake should do well, unless there is other outstanding issues like crime.

Getting that lakehouse for 200k under asking isn't a result of it being a STR but a result of the market. Working STRs don't bring more $$$ than a regular house. It is all comps and the market.

I think that if you buy a place in a good area, like in the mountains, on the beach, on the lake, on the river, etc and furnish and price it correctly, then I think you can do just fine.

Our place is on Lake Coeur d'Alene in north Idaho. It is a nice destination but I am betting that the majority of people wouldn't think about it as a place to go but we do just fine. People come for the lake, the bike trails and nature of course.

In the end, location, location, location is the primary place to start.

3 Reply

James Carlson

Real Estate Agent · Colorado | stan.store/JamesCarlson · Member since 2014 · 2k+ posts · 2k+ votes

11mo

Quote from @Chase Calhoun:

...They were thoughtfully furnished, nice setups, and they actually performed well early on. But over time, bookings slowed a bit. After last year, ....

My guess is that "thoughtfully designed" from a few years ago is today's "basic design" for Airbnb. No offense intended at all. But the only way I see people really doing well with STRs today is with something unique in design. Wallpaper that stands out, crazy big art, several killer amenities.

(This client's A-frame in the mountains is a decent example of something really sharp.)

Otherwise, the increased competition will eat you alive nowadays.

4 Reply

Jules Aton
MD/DC · Member since 2024 · 1k+ posts · 1k+ votes
11mo
Quote from @James Carlson:

Quote from @Chase Calhoun:

...They were thoughtfully furnished, nice setups, and they actually performed well early on. But over time, bookings slowed a bit. After last year, ....
My guess is that "thoughtfully designed" from a few years ago is today's "basic design" for Airbnb. No offense intended at all. But the only way I see people really doing well with STRs today is with something unique in design. Wallpaper that stands out, crazy big art, several killer amenities.

(This client's A-frame in the mountains is a decent example of something really sharp.)

Otherwise, the increased competition will eat you alive nowadays.

Agree I think the STRs that shine have both excellent location and design. I'm extremely picky about furnishings and cleanliness. If it is at all dated or ugly I'm not staying there and will happily pay more for something nice.
1 Reply

John MorganPro Member

Rental Property Investor · Grand Prairie, TX · Member since 2018 · 2k+ posts · 2k+ votes

11mo

My first rental I bought 10 years ago is a STR. It's my worst performer out of 31 SFR. lol. But it's fun to stay in it once a year for a couple nights when we go to Branson.

3 Reply

Gary NelsonBusiness Member
Real Estate Agent · Branson, MO · Member since 2016 · 141 posts · 93 votes
11mo
Quote from @John Morgan:

My first rental I bought 10 years ago is a STR. It's my worst performer out of 31 SFR. lol. But it's fun to stay in it once a year for a couple nights when we go to Branson.
Branson’s a fun place to own, but performance here really comes down to the number of bedrooms, accessibility, and location. Some assets are oversaturated and just don’t pull the same numbers.
Contact me and I’ll take a quick look at your numbers and help show you what’s not working.
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Henry Lazerow

Real Estate Agent · Chicago, IL · Member since 2017 · 2k+ posts · 2k+ votes

11mo

I decided to switch over a STR to LTR this year. It used to make a good 20-40%
net more then LTR but now it’s pretty much a wash and not worth the extra work at all.

I think STR rates just have not appreciated at the rate that LTR rates have since COVID.

2 Reply

Travis TimmonsPro Member

Rental Property Investor · Ellsworth, ME · Member since 2021 · 1k+ posts · 2k+ votes

11mo

If you own at pre-2022 prices and rates, they are cash machines. If you bought after that, you are probably sub 5-10% cash on cash return (or maybe losing a little if you are honest about your expenses). That return just is not worth the amount of effort unless there is some upside or you get to own an awesome asset like a beach, lake, or mountain view house.

You kind of have to make a deal or do some heavy lifting to get any real income. I'm a fan of a 4 bed/1 bath or 4/1.5 bath where you can add or convert a full bathroom to make it a proper 4/2. Or a single family home on some land that can be parceled off into additional lots...stuff like that with upside is where STRs now make sense given how much margins have compressed.

And you have to be a good operator. It's not a business for everyone.

5 Reply

Account Closed

Investor · FL · Member since 2016 · 332 posts · 388 votes

11mo

Well I might be the outlier and say they are worth it. Some of my places are truly crushing it. I have even purchased more in the past couple months at great prices. What makes alot of people say it is not worth it is their profit margin is low because their carrying costs are high. About a year ago I looked at how to run more efficiently financially and cut costs without sacrificing quality. This included changing cleaners, changing plumbers, changing HVAC companies, tinting windows so they don't look as dirty and need windows cleaners, changing internet providers, changing from satellite TV to DirecTV stream, remove/change items requiring high maintenance like skeeball along with a dozen other things. The second way to reduce costs is monthly mortgage payments. To reduce this there are three options. First, the easier one right now, buy low. I have had four offers rejected in the past week, but that is what they are worth to me to run as a business. Second, put a larger down payment. This reduces your monthly carrying costs and also could reduce your interest rates. I am seeing .63% or greater reduction in rate between a 20% down and 30% down right now. Third, is the interest rate reduction. This is harder right now, but do not rule out owner financing or creative financing.

I think for some STR operators the thrill has worn off as the honeymoon stage is over. It isn't as sexy as they thought it would be when dealing with other people's problems. Also, people have now owned long enough to have high price maintenance issues like HVAC, roofs, new decks, staining/painting, etc... This leads to marital spats over money and the decision to sell or convert to LTR.

Lastly, some markets can not support multiple viable STRs. This includes small towns and remote areas.

Do your research Did you know Gulf Shores/Orange Beach area has more STRs than the Smokys? Doesn't mean the Gulf Shores isn't viable, but it is harder to make a profit especially the Nov to Feb time frame.

Lastly, like marriages, as long as it isn't abusive (finances/life abuse in STRs) sticking through the tough times can lead to a phenomenal marriage (STR) later.

2 Reply

Kenneth GarrettPro Member

Investor · Florida Panhandle/Illinois · Member since 2016 · 4k+ posts · 3k+ votes

11mo

I have invested in STR, MTR and LTR. I bought my STR in February 2021. Although the cash flow is not what I thought it would be, the appreciated value has almost doubled. Bought in the Florida Panhandle. You can walk to the beach. 5 minute walk to a private beach entrance. When I look at all the numbers it does ok, but not the crushing numbers I thought. I could sell today and make over 400K, but I enjoy it and family gets to use it. The investment is more about family time than crushing cash flow.

5 Reply

Jules Aton
MD/DC · Member since 2024 · 1k+ posts · 1k+ votes
11mo
Quote from @Kenneth Garrett:

I have invested in STR, MTR and LTR. I bought my STR in February 2021. Although the cash flow is not what I thought it would be, the appreciated value has almost doubled. Bought in the Florida Panhandle. You can walk to the beach. 5 minute walk to a private beach entrance. When I look at all the numbers it does ok, but not the crushing numbers I thought. I could sell today and make over 400K, but I enjoy it and family gets to use it. The investment is more about family time than crushing cash flow.

This to me is the sweet spot for many STR situations. Enjoy!
1 Reply

Jon Martin

Member since 2022 · 1k+ posts · 1k+ votes

11mo

The problem with the properties you had is that with a 1 bedroom property you are basically competing with hotels for the same type of guest and price point. Business travelers want to maximize their points, have a beer and burger in the hotel bar, and leave in the morning without worrying about check out duties.

Even if it is a guest that wants the STR experience, your pricing is still tied to whatever the going hotel rate is for the given dates and area. Only exception would be a luxury experience aimed at couples, although most regular properties in Anytown USA simply aren't locations that can justify the big price tag.

5+ bedroom properties are the only thing I consider nowadays, and I think there is plenty of room in lots of market for that guest avatar.

3 Reply

William KwongPro Member

Real Estate Agent · Jersey City, NJ · Member since 2015 · 110 posts · 53 votes

11mo

I think STR is still alive but when it comes to prime areas it depends on how you define prime areas. I'm in a suburban neighborhood in north jersey with not much competition at all and it's primarily guests coming for work, some Ny city go-ers (further away from other areas that are closer), MetLife stadium, visiting family, insurance situations etc. Those 2 do 20% above what I could get for LTR. My other one in jersey city does 35% more than what it could do LTR but it's a different animal. Not as much competition bc you need a permit for being owner occupied which I am in my building so it works out.

That was this year though, last year wasn’t as successful. I think building up great reviews, being a guest favorite and being punctual as a host helps I presume. At least it seems having that established could just be a correlation vs a causation to the bottom line but it can’t hurt!

MTR is also a great strategy which I dabbled in as well. As long as youre surrounded by the 3 H's (Highways, Hospitals, Hotels) I think STR/MTR is still alive but you have to be creative with the deals. I'm really big into neighborhoods with decent multifamily properties in the area and doing a hybrid of STR or MTR with an LTR to hedge your bets.

2 Reply

Account Closed

Interior Decorator · Member since 2025 · 82 posts · 42 votes

11mo

100% agree with James Carlson. I am an STR Designer and my clients who are successful have invested in curated design and photography and now in some instances, increasing their ROI almost 70%. With investing in STR's, its location, design, amenities, photography and then — the guest experience.

0 Reply

Melissa HaworthBusiness Member

Real Estate Agent · The Panhandle | The Emerald Coast | Panama City Beach | Destin · Member since 2017 · 266 posts · 103 votes

10mo

Thanks for sharing your experience. It’s super relatable, especially the part about it just not being worth the squeeze when you factor in the time and mental bandwidth. A hundred bucks a month sounds nice on paper, but when it’s tied to guest messages at 11pm and constant turnovers, that premium disappears pretty fast.

I'm focused on the Florida Panhandle, mainly Panama City Beach and Destin, and I've found the STR game here feels like a different world compared to more traditional rental markets. The properties that tend to perform well are larger, close to the beach, and set up for families or groups on vacation. Those listings are still doing fine if they're marketed well and have something that helps them stand out, like a hot tub, rooftop deck, or a solid game setup. But even in a true vacation market, things have tightened up. It's definitely not a set-it-and-forget-it situation anymore.

Totally agree that the middle-of-the-road STRs are getting squeezed. If it’s not in a destination market or doesn’t offer a memorable guest experience, it’s tough to stay competitive. That lake house example really says a lot. Sounds like the original owners might have overpaid or just didn’t have the systems in place to keep it profitable.

I’ve looked into mid-term rentals too, especially for snowbirds or traveling professionals, and I think they have potential. But like you said, they still require more attention than some of us want to give right now.

Appreciate the honest take. It’s helpful to hear from others who have been in the trenches and made thoughtful pivots when things stopped penciling out.

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2 Reply

Jules Aton

MD/DC · Member since 2024 · 1k+ posts · 1k+ votes

10mo

I also wonder with above lake house example if it wasn't a STR fail but any of other reasons someone wants to get out of a property and sells at a reduced price. IDK but property near lakes, beaches etc. if done even fairly well seem like a steady investment if not a great one.

0 Reply

Sameul Ahsan

Real Estate Agent · Worcester, MA · Member since 2024 · 107 posts · 45 votes

10mo

No. Right now Yes it seems like its dying but I beleive this is just part of the cycle and if you can build/survive during this time, it will be worth it at the end. Patience and consistency is key to success, your time will come be strategic and plan ahead.

1 Reply

Ashish AcharyaBusiness Member

CPA, CFP®, PFS · FL · Member since 2017 · 5k+ posts · 3k+ votes

10mo

@Chase Calhoun, from the tax side, what you’re describing is exactly what I’m seeing with a lot of investors right now. STRs used to justify the extra work because the first-year tax benefits were massive, cost seg plus bonus depreciation plus material participation could wipe out a ton of W2 or business income. But once that first year or two passes, the tax advantage drops off, and you’re left with the true cash flow… which, as you said, often isn’t much higher than LTRs anymore, especially on smaller units.

Your move back to long-term rentals makes total sense if the operational drag outweighs the tax benefit. STRs are becoming more of a specialized business model rather than a plug-and-play investment, and the people still winning are usually the ones with strong systems, premium locations, or heavy tax planning upfront.

You’re not missing anything, the math has just changed.

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Jerry W.Pro Member

Moderator

Investor · Thermopolis, WY · Member since 2012 · 4k+ posts · 4k+ votes

9mo

@Chase Calhoun, I doubt that my situation is normal as I am in a town of 3,000 in the middle of Wyoming, but I started in 2016 and after I figured things out had pretty decent years in 2018 and 2019, then Covid was a bouncing ball of down and up. 2021 to 2023 were really good, but the last 2 years are frankly pretty close to 2019. The problem is inflation has eaten up a lot of what would have been profit. I have not been able to raise prices enough to keep up with inflation. When I go to add new houses now I have to pay a lot more for them, and interest rates are a good bit higher, and materials and furnishings are higher. So the ones I bought 9 years ago are doing decent, new ones are struggling a bit. I have found that I must do a better job of running them just to gross the same amount as past years. I am going to have to overhaul my first STR as it is performing the worst, but it needs new cabinets, new carpet, and in general a lot of updating. I can make about double what they would do as a long term rental, but I simply cannot buy a house, rehab it and go as a long term rental, I would have negative cash flow. Our market has a LOT more competition now. I was around number 10 in my town on my first STR, and I see we have over 80 now. My houses are grossing in the high teens ($19,000)and low 20 ($24,000)thousands. These houses would be grossing between $8,500 to $12,000 per year as LTRs. I add about one STR a year, and advertise hard for mid term renters in our slow months.

As long as the money allows me to purchase and add a STR every year I will keep on doing it. I also usually add one LTR a year with an average loss of about $100 to $200 per month. I hope that between year 3 and 5 I will be able to break even on them. I hate going negative, but cash flowing LTRs are not possible in my market at the moment. I am here for the long haul though. While I use 20 year loans rather than 30 year, they still would not cash flow at 30 year financing. The good news is a lot of my properties are under 7 years to pay off, and some are paid off. It is wait and see mode for me. I can buy distressed houses, fix them up, and if I get tired of losing a hundred or 2 a month I can always sale and make a little. Neither really good or bad times last forever. Wait and be careful.

Thanks for the post.

1 Reply

Chase Calhoun
OP
Property Manager · Little Rock, AR · Member since 2018 · 59 posts · 47 votes
9mo
Quote from @Jerry W.:

@Chase Calhoun, I doubt that my situation is normal as I am in a town of 3,000 in the middle of Wyoming, but I started in 2016 and after I figured things out had pretty decent years in 2018 and 2019, then Covid was a bouncing ball of down and up. 2021 to 2023 were really good, but the last 2 years are frankly pretty close to 2019. The problem is inflation has eaten up a lot of what would have been profit. I have not been able to raise prices enough to keep up with inflation. When I go to add new houses now I have to pay a lot more for them, and interest rates are a good bit higher, and materials and furnishings are higher. So the ones I bought 9 years ago are doing decent, new ones are struggling a bit. I have found that I must do a better job of running them just to gross the same amount as past years. I am going to have to overhaul my first STR as it is performing the worst, but it needs new cabinets, new carpet, and in general a lot of updating. I can make about double what they would do as a long term rental, but I simply cannot buy a house, rehab it and go as a long term rental, I would have negative cash flow. Our market has a LOT more competition now. I was around number 10 in my town on my first STR, and I see we have over 80 now. My houses are grossing in the high teens ($19,000)and low 20 ($24,000)thousands. These houses would be grossing between $8,500 to $12,000 per year as LTRs. I add about one STR a year, and advertise hard for mid term renters in our slow months.
As long as the money allows me to purchase and add a STR every year I will keep on doing it. I also usually add one LTR a year with an average loss of about $100 to $200 per month. I hope that between year 3 and 5 I will be able to break even on them. I hate going negative, but cash flowing LTRs are not possible in my market at the moment. I am here for the long haul though. While I use 20 year loans rather than 30 year, they still would not cash flow at 30 year financing. The good news is a lot of my properties are under 7 years to pay off, and some are paid off. It is wait and see mode for me. I can buy distressed houses, fix them up, and if I get tired of losing a hundred or 2 a month I can always sale and make a little. Neither really good or bad times last forever. Wait and be careful.
Thanks for the post.

Good morning sir, I hope all is well. Thanks for taking the time to share such a thoughtful and honest breakdown of your experience.

It definitely sounds like things are tight for a lot of operators across the country right now, both on the short-term and long-term rental side. Inflation, higher rates, higher acquisition costs, and more competition have really compressed margins, and I think you articulated that reality very well.

One thing your post really reinforces for me is how cyclical this business is. There are seasons where things feel easy and seasons where you have to work twice as hard just to maintain the same results. Having a long-term lens is critical, especially during tighter cycles like this and I agree that neither good times nor bad times last forever.

Given your situation, sticking with STRs where you can still materially outperform LTRs makes a lot of sense, especially since you’ve got legacy properties that are performing well and some debt coming off in the near future. I also think you hit the nail on the head with focusing on running them better. In this environment, operational excellence matters more than growth for growth’s sake.

Personally, I’ve always been very growth-oriented, sometimes to the point of pushing pretty aggressively. This year has forced me to slow down a bit and be more selective, not necessarily stopping, but being smarter about how hard I’m pressing in a tighter market. Like you, I’m in this for the long haul and fully expect to still be doing this 20–30+ years from now, so there’s no real rush to force deals that don’t quite pencil today.

Really appreciate you sharing your perspective. It’s a good reminder to stay patient, run the business well, protect downside risk, and be ready to lean back in when the cycle turns.

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Is the Short-Term Rental Play Starting to Wear Thin?

Is the Short-Term Rental Play Starting to Wear Thin?

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