The Short Answer
It depends on the property, the market, and how much effort you will put in. A short-term rental can generate higher gross revenue in strong destinations but is an operating business with more variability. A long-term rental offers steadier, simpler income with lower revenue potential and less work.
Income
Short-term rentals charge nightly rates that can flex with demand. Long-term rentals lock in a monthly rent. Higher gross revenue does not always mean higher profit, because STR expenses are also higher.
Costs and Effort
- STR: Furnishing, cleaning after every stay, supplies, platform fees, utilities, guest communication, and higher insurance costs.
- Long-term: Tenant screening, occasional turnover and repairs, and usually the tenant pays utilities.
Risk and Stability
- STR revenue swings with seasons, events, and local supply.
- Regulation is heavier for STRs and can change quickly. See permit requirements.
- Long-term rentals face vacancy and tenant risk, plus landlord-tenant law that varies by state.
- A struggling STR can sometimes be converted to a long-term lease as a fallback, which is worth modeling.
Who Each Suits
STRs suit owners in destination markets who can manage operations or pay a professional team. Long-term rentals suit owners who prefer steady, low-touch income or who own in markets where STRs are restricted or weak.
What to Check
- Model net cash flow for both strategies using conservative numbers, not gross revenue.
- Confirm STR is legal at the address.
- Include management fees for the STR case even if you plan to self-manage, so you know the value of your time.
- Compare the worst realistic month for each strategy.
- Consider whether the location depends on tourism or on local residents.
Further Reading
See cash-on-cash return to compare strategies on the same basis, and passive income through short-term rentals for a realistic view of the effort involved.