The classic investor debate: rent to one tenant for 12 months or welcome multiple guests year-round? Both strategies have made people wealthy, and both have burned investors who didn't understand what they were getting into. The right answer depends entirely on your market, your property, and how much work you're willing to put in.
The Quick Answer
Short-term rentals typically generate 2-3x the gross revenue of long-term rentals in the same market. But that extra revenue comes with higher expenses, more time investment, and greater uncertainty. The net difference is usually smaller than the gross numbers suggest, and sometimes STRs actually underperform after accounting for everything.
Revenue Comparison
Long-Term Rental Revenue
Long-term rentals offer predictable income. You sign a lease, collect the same rent every month for 12 months, and know exactly what's coming in. If market rent is $2,000/month, you'll gross $24,000 for the year (assuming no vacancy between tenants).
Short-Term Rental Revenue
Short-term rentals charge premium nightly rates but don't stay booked every night. Your actual revenue depends heavily on occupancy rate and seasonal fluctuations.
Example comparison for the same property:
In this example, the STR grosses 58% more. But that's before expenses.
Expense Comparison
Long-Term Rental Expenses
- Utilities: Tenant typically pays (you save $150-300/month)
- Turnover costs: Once per year at most, minimal cleaning and repairs
- Insurance: Standard landlord policy ($800-1,500/year)
- Furnishing: Usually unfurnished (tenant provides furniture)
- Platform fees: None
- Property management: 8-10% if you hire out
Short-Term Rental Expenses
- Furnishing: $10,000-30,000 upfront depending on size and quality
- Cleaning: $75-150+ per turnover (with 2-3 turnovers per week, this adds up fast)
- Utilities: You pay everything ($150-300/month)
- Insurance: STR-specific policy ($1,500-3,000/year)
- Platform fees: 3% of bookings on host-only fee structure
- Supplies: Toiletries, coffee, cleaning supplies ($100-200/month)
- Property management: 20-25% if you hire out
The math gets tight: In our example, the STR grossed $13,800 more per year. But after accounting for $15,000 in furnishing (amortized over 5 years = $3,000/year), $150/cleaning × 80 turnovers ($12,000/year), utilities ($2,400/year), and higher insurance ($1,500 extra), the STR advantage shrinks to roughly $5,000-7,000 per year in net income—if you self-manage.
Time and Effort
Long-Term Rental
- Find a tenant once per year
- Collect rent (often automated)
- Handle occasional maintenance calls
- Truly passive once tenant is in place
~2-5 hours/month
Short-Term Rental
- Guest communication (inquiries, check-in help)
- Cleaning coordination
- Restocking supplies
- Managing reviews and pricing
~10-20 hours/month (or pay 20-25%)
Other Factors to Consider
Regulations
Many cities have restricted or banned short-term rentals entirely. Before investing in an STR strategy, research local laws thoroughly. Some markets require permits, limit rental days, or prohibit non-owner-occupied STRs. Regulations can change, putting your investment at risk.
Flexibility
With an STR, you can block off time to use the property yourself. Want to spend two weeks at your beach condo? Just don't accept bookings. With an LTR, you've got a tenant for the year.
Wear and Tear
More guests means more potential for damage. While most guests are respectful, the sheer volume of people through an STR creates more wear on furniture, appliances, and finishes. Budget for more frequent replacements.
Seasonality
STR income can swing wildly by season. A beach property might earn $6,000/month in summer and $1,500/month in winter. Your annual numbers might look great, but you need reserves to cover lean months. LTR income is the same every month.