Short-Term Rentals in 2024: What Smart Investors Do Differently

Short-term rentals had an extraordinary run from 2019 through 2022. Investors who bought cabins in scenic destinations, put them on Airbnb, and rode the post-lockdown travel boom generated returns that felt almost unfair. Then 2023 happened. Inventory flooded the market, regulations tightened in dozens of cities, and the average host saw revenue drop meaningfully while the median host — the one who bought late, paid too much, and financed with expensive debt — saw it collapse.

The good news: STR is not dead. Done well, it is still a strong business. Done badly, it is now one of the fastest ways to lose money in real estate. This post is about what actually works in 2024, based on what we are seeing in actual portfolios rather than what is still being sold on hype-driven weekend seminars.

The biggest shift since 2022 is that location matters more than it used to, and amenities matter more than they used to, and the amateur operator has largely been pushed out. In 2021 you could buy almost any cabin in almost any market and do well. In 2024, you need to buy a specific kind of property in a specific kind of market, and operate it like a business rather than a side hobby. The investors making money right now are the ones who understand that shift.

The economics have compressed. Gross revenue per property is down roughly 15 to 25 percent from the peak. Expenses are up. Regulation has added friction and cost in many cities. Cap rates that used to be 12 to 15 percent at acquisition are now 6 to 9 percent at best. That is still a real business — but it is a different business than the one people signed up for two years ago.

Five things smart STR investors are doing differently in 2024:

1. Buying only in destinations with real year-round demand. The “buy a cabin anywhere, list it on Airbnb” thesis does not work in 2024. You need markets with either year-round tourism, year-round business travel, or a genuine event calendar. Seasonal single-peak markets have been especially punished and are where most of the current pain lives.
2. Treating amenities as the product, not the property. The pool, the hot tub, the game room, the outdoor kitchen, the dedicated workspace — these are what get bookings in a crowded market. Plain properties without a hook rent for less and rent less often, and the gap has widened every quarter for two years running.
3. Reading local regulations carefully before buying, not after. Dozens of cities have imposed STR caps, licence requirements, or outright bans in the last two years. An investor buying in a city with pending regulation is buying a property that may lose its business model in twelve months. Read the city council minutes before you read the listing.
4. Running the numbers at occupancy levels that actually reflect the current market. If your pro forma assumes 75 percent occupancy and the market average is 55 percent, your pro forma is a fairy tale. Use realistic numbers from AirDNA or similar for your specific market and property type, and then subtract ten percent for good measure.
5. Building the option to convert to a long-term rental if the STR math stops working. The best STR deals in 2024 are properties that would still cash-flow as long-term rentals if you had to pivot. That option is what separates an investment from a speculation. If the only thing that makes the deal work is STR revenue at peak occupancy, you are gambling, not investing.

The investors we know who are still doing well in STR have typically been operating for four or more years, run their properties with near-hotel-level discipline, have built their own direct booking infrastructure alongside the platforms, and have concentrated in three or four markets they know deeply. They do not spread thin across six states. They dig in, refine their operation, and compound in one or two places.

If you are new to real estate and considering STR as your first deal, we usually suggest the opposite order: do your first long-term rental in a solid market, learn the basics of being a landlord, and then consider adding an STR in year two or three once you have a feel for how properties actually behave. The STR business has meaningfully more operational complexity than most beginners expect, and stacking that complexity on top of “never owned a rental before” is where most of the recent horror stories originated.

Short-term rental is still a real business. It is just no longer a beginner’s business. The sooner that reality reshapes how you evaluate the opportunity, the faster you will find the deals that still work in 2024 — and there are still deals that work, if you know what you are looking for.

The gold rush ended. The gold is still there, but it takes a miner now rather than a tourist.