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Thinking about buying a second home to use as a short-term rental (STR) or adding a rentable unit to your primary residence? Dreaming of scaling into a full-blown business with multiple Airbnbs and Vrbos? While STRs are often hyped as a fast track to wealth, the reality is far more complicated than what you see on TikTok. If you’re serious about entering the STR market, here’s exactly what is required to succeed.
Make the shift from tourist to investor
Having a great location where you have a beachfront view or where you can ski directly to the lifts from your unit is great but avoid making the mistake of choosing a property based upon what you would rent. When you’re investing, the decision must be tied to a variety of other factors that are even more important than the location.
1. ALWAYS investigate the local regulations and restrictions governing the property BEFORE you begin your property search
Many popular cities such as Austin, New York, San Francisco, Honolulu and large parts of Florida, have severely restricted or banned short-term rentals. For example, Austin has very specific requirements governing how homeowners may use part or all of their primary residence as an STR. Other areas require all STR stays to be a minimum of 30 days.
Check the zoning and HOAs
Even in short-term-rental-friendly markets, neighborhood HOAs and condo associations often prohibit rentals under 30 days. If you’re looking at a condominium property, always check the property’s HOA’s CC&Rs to make sure short-term rentals are allowed.
Use data tools
Platforms like AirDNA, Rabbu, and Mashvisor let you compare occupancy rates, average daily rates (ADR), and seasonality for Airbnb and Vrbo listings side-by-side. By the way, don’t assume Airbnb is your best choice. Vrbo is strong in many vacation markets.
2. Airbnb vs. Vrbo: Which one is right for you?
Both platforms offer short-term rentals, but they often serve very different types of travelers. The question is what type of guests would you like to attract?
Airbnb
Airbnb appeals more to urban travelers, younger guests, digital nomads and quirky stays. Think: tiny homes, Airstreams and well-designed condos near downtown attractions.
Vrbo (Vacation Rentals by Owner)
Vrbo attracts families and larger groups looking for traditional vacation homes, often in beach towns, mountain resorts and suburban getaways.
Vrbo guests often stay longer and spend more
Their average booking value tends to be higher, but they also expect more space and amenities, including full kitchens, multiple bathrooms and kid-friendly features.
Cross-listing is smart
Most successful hosts list on both Airbnb and Vrbo (and sometimes Booking.com), using tools like Lodgify, Guesty for Hosts, or Hostaway to sync calendars, automate messages and avoid double bookings. Guesty claims that users who switch from Hostaway to their platform increase their revenue by 16.4 percent.
3. Buy a property that performs — not just one that looks good
Not every cute cottage is a winner. To succeed with short-term rentals, you need a property that guests love and that fits your management strategy.
Size matters
One-bedroom units often get higher occupancy, while three- to four-bedroom homes attract family groups on Vrbo and command higher nightly rates.
Outdoor amenities boost income
Fire pits, hot tubs, BBQs and fenced yards add value, but pet-friendly may add the most.
Themed properties stand out
A mountain retreat, midcentury modern hideaway or coastal beach bungalow can help you charge more and get booked faster.
Avoid big renovation projects
Unless you’re experienced with permits, design, code, supply chain issues, time delays due to slow responding city/county inspectors, unexpected costs can destroy your return.
4. Beware: Pitfalls that can turn your investment into a money pit
Short-term rental ownership isn’t just mortgage + dreams. There are layers of costs that can turn a profitable property into a money pit.
Furnishing and staging
In terms of your budget for furniture, decor, kitchenware, linens, cable, internet, etc., it’s smart to hold your budget between 10–15% of the property’s value.
Licensing, taxes and inspections
These requirements can vary based on the city, the state, subdivision or even a specific condominium building. For example, some cities require short-term rental permits, business licenses, hotel taxes and annual safety inspections. Penalties for noncompliance can be steep.
Caveat: Your homeowner’s insurance policy doesn’t cover short-term rentals
Standard homeowners’ insurance does not cover STRs. Resources for STR insurance include the following companies:
- Proper: Offers comprehensive short-term rental insurance, including property damage, liability and lost income.
- Safely: Known for its flexible “pay as you go” model and short-term rental coverage.
- CBIZ: Provides tailored insurance solutions for short-term rental businesses.
- American Family Insurance: Offers short-term rental coverage as an add-on to existing home insurance.
- Allstate: Offers HostAdvantage home-sharing insurance with a discount.
- Nationwide: Offers comprehensive protection for landlords with short-term and vacation rental property.
Vrbo’s damage protection is separate
Unlike Airbnb’s AirCover (which has limits), Vrbo allows hosts to set damage deposits or require guests to purchase protection, providing you with control but also increased paperwork.
5. How will you manage your short-term rental?
There are three options when it comes to managing your short-term rental: handle it all yourself, hire a property manager or use a hybrid model.
Do-it-yourself
As mentioned above, use tools such as Lodgify, Guesty for Hosts, or Hostaway to sync calendars, automate messages and avoid double bookings. Other useful tools include:
- Hospitable for automated guest messaging and channel management
- PriceLabs for dynamic pricing and revenue management
- Turno Automated cleaning scheduling for short-term rentals worldwide.
Hire a local property manager
Expect to pay 20 percent to 30 percent of gross rental income. This is ideal if you don’t live near the property or are seeking true passive income. Thorough vetting of your property manager is an absolute must.
Hybrid approach
Handle bookings and messaging yourself but outsource the cleaning and maintenance. This reduces costs while keeping you involved in guest experience and reviews.
6. Marketing your short-term rental: Good images mean more bookings
Your photos will make or break the number of bookings you receive. Here are some important guidelines to follow.
Hire a professional photographer
High-resolution, professionally shot images are one of the best investments you can make. Properties with great photos often see up to 40 percent more bookings.
Stage your STR like a boutique hotel
Cozy throws, coffee setups and books on the nightstand evoke a lifestyle, not just a short-term stay.
Highlight key amenities
Pools, views, fire pits, bunk rooms and spacious kitchens should be front and center. Also, if you’re property is “pet friendly,” make sure that is featured as well. If there’s a local dog park or hike and bike trail nearby, be sure to show that as well.
Photograph all the spaces in your STR
Include outdoor areas, entrances, workspace setups and bathrooms — guests want to see everything.
7. Provide your guests with the little touches that make a big difference in your reviews
The guidelines below are essential to getting great reviews and booking repeat business.
Be in constant communication with your guests
Respond quickly when your guests reach out to you or risk receiving a poor review. Both Airbnb and Vrbo reward responsive hosts with better visibility.
Cleanliness is king
A missed crumb or unwashed dish can tank your reviews. Systematize cleanings and quality control.
Overdeliver
Provide a basket of local snacks, a handwritten welcome note, games for kids or a guide to local restaurants. These little touches make a big impact on guest satisfaction and future bookings.
8. Additional resources
Letting strangers into your short-term rental, particularly if it’s also your second home, isn’t risk-free. Here are additional steps to take that can reduce the chance of damage or complaints.
Guest vetting
Consider minimum stay requirements, ID verification or even hosting only guests with prior positive reviews.
Smart locks and cameras
Use code-based entry, doorbell cams (at the front door only).
Have strict house rules
Spell them out in the listing as well as clearly posting them on-site. Include quiet hours, guest limits, and rules for smoking, pets and events.
Insurance and deposits
Airbnb’s AirCover provides up to $3,000 in damage protection, but it’s still recommended that you carry commercial STR insurance. Vrbo allows hosts to require damage deposits or renter protection directly from guests.
Other issues to consider include booking your short-term rental, security, noise monitoring, protecting your property and guest vetting.
- Hostfully provides direct booking websites as well as digital guidebooks for assistance.
- Minut is a great service that not only monitors the noise in your STR like NoiseAware does, but also detects “crowd events,” temperature and cigarette smoke as well.
Short-term rental buyer checklist:
Before you buy, ask yourself:
- Are short-term rentals legal in this location?
- Is this a high-demand market for Airbnb and Vrbo?
- Have I identified how the cleanings, emergencies and other communication will be handled?
- Have I budgeted for furniture, insurance, taxes and software?
- What makes my listing more attractive than others nearby?
- Would I want to stay here?
If you answered all these questions, “Yes,” you’re ready to take the next step and launch your STR business.
Bernice Ross, president and CEO of BrokerageUP and RealEstateCoach.com, the founder of Profit.RealEstate and a national speaker, author and trainer with over 1,500 published articles.
