I have seen the future and it is not STR (for the most part).

[Ken Latchers]

There is something called an efficient market (well known in stocks and commodities).  That is where there is no easy money to be made, as everything is priced so no one has an advantage.

Then there is the mania.  For traders, the Dutch Tulip crisis centuries ago.  People kept bidding up the price of special tulips, investing everything, and then the crash wiped out many.  Roaring 20s and Great Depression anyone?

Doom comes ever closer.

Eager beavers are pouring into the STR remarket. They get excited. They want to buy as many properties as possible. They read a book! They read a few posts here! They want to arb. They want to scale. They ask how much WILL they make (as if their market cannot get saturated in the future). Can I retire with 4 of these properties?? Yowza. I'm so excited. And I just cant hide it. I'm about to lose control and I think I like it! Occupancy can plunge and rates forced down. That is the meaning of an efficient market.

Regulatory restrictions in cities, moving to towns, moving to the country.  Our small "country" town is now investigating restrictions - and has been considered one of the permissive/supportive of short term rentals historically - it came out of nowhere.  They are actually discussing requiring ONE PARKING SPACE PER BEDROOM.  Like Bed and Breakfasts.  Of course most houses here are on small lots and have no such space!  This may became a small tidal wave.

Doom comes ever closer.

There are a few companies (whose name escapes me) getting into building or controlling vacation rentals. Hotel chains are getting into it. This is the tip of the iceberg. When REIT and other companies really decide that the possibility of 15-20% return outweighs the struggles with the stock and bond market, it will turn into a tsunami. Occupancy can plunge and rates forced down. That is the meaning of an efficient market.

The expansion may have reached its end. The Trade Wars and a lot of other things are starting to wear on this economy.

Doom comes ever closer.

Consider Hades.  Consider the "safer" places with a long history of vacation rentals that will likely stay that way.  But your brilliant purchase of a $750K house may make more money as a landlordly endeavour.  If you have 20 arbs cleverly arranged at market rent for 5 years, welcome to the "Wall Street Lays an Egg" scenario.

[Nathan Gesner]

I'm in historic Cody, Wyoming. We're the last real town before hitting the east gate of Yellowstone and get a ton of tourists in the summer. Our City recently enacted regulations for vacation rentals and now the County is considering the same due to the number of complaints. Some people - like myself - will have a vacation rental on 5+ acres so the noise and parking isn't an issue. But there are many that have standard lots with neighbors close by and they are cramming 20+ people into one house and that causes problems.

I used to manage 70 vacation rentals and know that it is very difficult to make more money with a vacation rental than it is with a long-term rental. When you factor in costs of furnishings, utilities, TV/Internet, landscaping, firewood, marketing, lodging taxes, and everything else that goes into it, the margins get pretty thin. 

Why do so many report to be making $40,000 a year? That's easy: they don't break out all the expenses. The vast majority of posts I see on BP will give out a big number but refuse to share the details when I challenge them. Even the ones that report their expenses are still cheating because they don't calculate the cost of their own time.

I know a woman that owned five vacation rentals, starting back in 2000. She did everything herself through a private website and was probably booked 95% of the time, year round, year after year. She made a NET that was 2x what a long-term rental would be but that's before calculating her time and she was BUSY! She did all the cleaning, maintenance, marketing, checking people in, answering the phone, taking payments, answering questions, etc. If she paid herself $20 an hour, she would have probably been back down to the income of a long-term rental.

There are exceptions to every rule but I don't think STR is a path to long-term wealth unless you're really busting your hump. I'm buying one because it can pay for itself and then give me a place to go when I want to get away from things...or people.