A short-term rental business involves temporarily renting out furnished apartments, houses, or other forms of lodging, usually for less than 30 days. The most common rental durations are weekly and monthly. Examples could be vacation rentals or properties rented out through platforms like Airbnb, VRBO, etc. Unlike a hotel or motel, a short-term property usually provides the comforts of being in a home while traveling. This may include kitchens, a yard, a deck, fire pit, laundry, and other conveniences. The profitability of a short-term rental business can vary greatly depending on a few key factors:

Location: Short-term rental properties in desirable tourist locations, major cities, or near significant points of interest often yield higher rental and occupancy rates. Examples of significant points of interest include things like landmarks, convention centers, or popular entertainment venues.

Proximity to these locations so guests can walk or easily find public transportation is also a big factor. In addition, there is always a market for neighborhood lodging close to family for reunions, weddings, and other family events.

Property type and quality: Higher-end properties or those with unique features may command higher rental rates. Pools, hot tubs, lake access, and other features can be popular. Well-maintained and aesthetically pleasing properties are more likely to receive positive reviews. Receiving positive reviews can lead to more business over time.

Management costs: The management costs can be quite expensive and can eat into your profit margin. These management costs include cleaning and maintenance costs, costs for utilities and amenities, and time or money spent on managing bookings and customer service. Some property owners use a property management company to handle these tasks, which is an additional cost. Property management companies typically charge a percentage of the gross rent of 20 to 30%.

Marketing: A well-marketed property can significantly increase occupancy rates. This might include professional photography, search engine optimization for online listings, or even paid advertising.

Regulations and taxes: In some cities or regions, there may be restrictions, regulations, or additional taxes for short-term rentals, which could impact profitability. It’s important to research local laws before starting a short-term rental business.

Market saturation and competition: In areas with many short-term rentals, it might be harder to maintain high occupancy rates.

Some people have found significant profit in the short-term rental business, while others find that the returns are not worth the time and effort required. Doing thorough research and planning before embarking on this business venture is important. It’s also crucial to keep up with the evolving nature of the short-term rental market, which changes can influence in travel trends and local regulations.