Short-term rentals and long-term rentals each offer unique advantages and trade-offs for property owners. As platforms like Airbnb continue to grow, understanding the key differences between short-term rental vs long-term rental has become essential for anyone looking to maximize their investment, flexibility, and income.
So, what sets short-term rentals apart from yearly leases, and why are so many owners making the switch? Let’s break down the facts, answer the top questions, and help you make the best decision for your property and lifestyle.
Fast Facts: Short Term vs Long Term Rental
Short-term rental vs long-term rental: what’s the difference?
Short-term rentals are typically stays of less than 30 days, while long-term rentals usually involve fixed-year leases of six months or more.
Which is more profitable, short-term or long-term rental?
Short-term rentals often generate higher monthly income due to premium nightly rates and increased demand, especially in major cities or tourist destinations.
What are the biggest advantages of short-term rentals?
Higher potential income, greater control and flexibility, easier property access, and frequent professional cleaning between guests.
Are there downsides to short-term rentals?
Yes. They require more active management, frequent communication with guests, and are subject to local regulations and seasonality.
Understanding Short Term vs Long Term Rental
The choice between a short-term rental and a long-term rental is one that many property owners face. Both options offer distinct advantages and disadvantages, depending on your financial goals, desired workload, and local market conditions.
What is a Short Term Rental?
A short-term rental refers to a property leased for periods typically less than 30 days. Popularized by platforms like Airbnb and HomeAway, short-term rentals cater to vacationers, business travelers, and anyone in need of a temporary place to stay. Hosts can choose when and how often their property is available, offering unmatched flexibility.
What is a Long Term rental?
A long-term rental, or yearly lease, is a more traditional arrangement where tenants commit to a property for six months, one year, or longer. Landlords benefit from a steady, predictable income and less turnover, but also lose access to the property during the lease period.
Key Benefits of Short-Term Rentals
1. Higher Income Potential
Short-term rentals can often generate significantly more income than long-term rentals. For example, a downtown condo that rents for $2,000 per month on a yearly lease could bring in $120 per night as a short-term rental. With consistent bookings—even accounting for vacancies—the monthly earnings may far exceed the traditional rental route.
2. Less Wear and Tear
It may sound surprising, but properties used for short-term rentals often experience less wear and tear compared to long-term rentals. Why?
- Guests typically spend more time exploring the city than staying inside.
- Professional cleanings are scheduled between each guest, keeping the property in top condition.
- Security deposits and review systems encourage guests to treat the space with care.
3. Greater Property Access and Flexibility
Hosting short-term allows you to use your property whenever you want—book it for friends, family, or yourself with ease. You can also check on the property between stays and handle maintenance proactively. Long-term leases, on the other hand, limit your ability to access your property without notice.
4. Reduced Risk of Problem Tenants
Long-term rentals sometimes come with stories of problematic tenants, late payments, or lease violations. Eviction can be a long and costly process. With short-term rentals, guests come and go frequently, and public review systems make it easier to screen for reliable, responsible visitors.
Benefits of Long Term Rentals
While short-term rentals offer higher income and flexibility, long-term rentals provide their own strengths:
- Predictable monthly income
- Less day-to-day management required
- Fewer turnover costs and cleaning responsibilities
- Tenant pays for utilities and may handle minor maintenance
Short Term vs Long Term Rental: Income Example
Let’s take a practical look at income potential:
Long Term Rental:
$2,000 per month x 12 months = $24,000 per year
Short Term Rental:
$120 per night x 22 nights (at 75% occupancy) x 12 months = $31,680 per year
Even after deducting cleaning, platform fees, and higher utility bills, the short-term rental can yield higher net income.
Risks and Considerations
Short Term Rental Cons:
- Requires frequent management, guest communication, cleaning, and quick problem-solving.
- May face local zoning laws, city regulations, and permit requirements.
- Subject to seasonality, peak and low periods can affect earnings.
- Platform and service fees reduce net profits.
Long Term Rental Cons:
- Limited access to your property
- Possible risk of extended vacancy if a tenant leaves
- Potential for tenant-related damage without regular oversight
Which is Best: Short Term or Long Term Rental?
The best choice depends on your goals, property location, and availability to manage the process.
If you want a higher income and enjoy hosting, short-term rentals may be ideal.
If you prefer hands-off investing and steady income, long-term rental offers stability.
Tips for Maximizing Your Rental Strategy
- Research Local Regulations: Some cities limit or ban short-term rentals—always check before listing.
- Professional Photography: Quality photos can increase bookings for short-term rentals.
- Dynamic Pricing: Use pricing tools to adjust nightly rates and maximize occupancy.
- Screen Your Guests: Read reviews and set house rules for a safer, smoother experience.
- Consider Hybrid Models: Some owners rent short-term during peak season and long-term in the off-season.
Final Thoughts: Short Term vs Long Term Rental in 2025
With the continued rise of remote work, flexible travel, and demand for unique accommodations, the short-term rental market is expected to remain strong in 2025. However, both short-term and long-term rentals have a place in a balanced real estate strategy.
Carefully consider your personal preferences, local laws, and property type before deciding. With the right approach, you can maximize both your income and peace of mind, whichever path you choose.
If you’re ready to take the next step or need professional help managing your rental, Guestable can guide you toward rental success.