Quote from @Calvin Baughman:
This must be a commonly asked question here, but I'm seeking updated opinions, from People who are daily operating in those markets. Could the profitability of Short-Term Rentals outweigh the stability offered by Long-Term Rentals in today's dynamic real estate landscape? What key factors contribute to the financial advantage or stability between these two rental models, and how do market fluctuations impact their respective profitability over the long term?
There have been a lot of good replies above, and I would echo their sentiment - the answer is "It depends"
I know quite a few people with own LTR or STR, some with both. In our market (Orlando) STR CAN be quite lucrative, but most of the people I know with STR here are not seeing the ROI that people boast when they say STR is more profitable. My lender friend owns 8 rentals, 6 LTR and 2 STR (house in Kissimmee and a condo in Miami), and only recently started doing STR after his LTR portfolio could support the STRs. His occupancy is around 65-70%, which is above national average, but the ROI has not been all that is hyped up to be. He said he is likely to sell the Kissimmee house early next year because it has not been more profitable than his LTRs and he has no personal use for it like he does with his Miami condo.
My friend who has the best success with STR self-manages and is VERY active with it. It takes up a lot of her time, but she reaps the rewards. Her occupancy is usually 90% and has strong nightly averages. She also does most of the repairs herself, which cuts down on her costs.
Professionally, I have received 10 sales calls in the last 8 business days from clients wanting to transition their STR to LTR because they are not performing well enough to barely cover the expenses. With that said, after talking to them many did not do sufficient and adequate research before buying. They drank the "STR is the best investment" Kool-aid and bought a decent property, but not one that stood out from the other 20,000+ STRs in the area and did not want to invest money to theme it.
Like others have said, I think it comes down to your goals. Are you more concerned about appreciation or cash flow? Do you want a passive investment or one that may require more work? Are you hiring a manager or self-managing? What is your overall financial situation and what kind of reserves will you have for the property? One mistake I've seen with some STR owners is not saving enough money when the property is performing well, and then when the seasonality kicks in and things slow down, they do not have enough money to cover the expenses, which puts them in a bind.
Personally, I like LTR because you can largely "set it and forget." Spend the work up front to prepare the house to show well, find good tenants, and then sit back and collect rent. I pay for preventative maintenance plans and rarely have maintenance calls. I like the passive nature of LTRs.
