Back 10 years ago when I started my short term rental journey, I put a new property online, it rented, and I was making a lot of money.

But that’s not always the case today.

And so I want to talk about this week, if it’s still worth it to start an Airbnb in 2025.

Welcome to Short Term Rental Riches.

We’ll discuss investing in real estate, but with a specific focus on short term rentals, quick, actionable items to acquire, manage, and scale your portfolio.

I’m your host, Tim Hubbard.

Welcome back to the show, I’m glad you’re here again, and thanks for tuning in over these last five plus years.

If you’ve been a listener for a while, then you know my team and I have managed tens of thousands of guests in lots of different countries, lots of different cities, and we’re still starting a lot of new properties.

And I know what you may be thinking, if you’re new to the industry, is does it still make sense to start an Airbnb in 2025, or a short term rental?

And the short answer is yes.

But it depends.

So let’s go ahead and jump in to some of the reasons you’ve undoubtedly been hearing about why it’s more challenging.

And some of those are pretty clear.

Right after COVID, we saw everyone going out and buying a second home and starting vacation rentals.

And so that’s the first one.

There has been a lot of supply that’s come on to the market, especially in those vacation type areas, which means there’s a lot more competition there, right?

Or they’re over saturated, you could say.

But that doesn’t mean it doesn’t make sense.

And so we’re going to come back to some of the real estate fundamentals here in just a couple quick minutes, because real estate is one of those amazing, amazing investments that makes money in multiple ways, not just through cash flow.

In fact, there’s actually five ways that you make money through real estate, whether it’s a long-term rental or a short-term rental.

So we’re going to come back to that in one quick second.

But before we do, let’s just talk about some more of these challenges.

Some places have been heavily regulated, right?

Where people started with Airbnbs, then unfortunately, they were no longer able to do it because the city laws changed, the county laws changed, the neighborhood laws, the state laws.

We know that it really depends on the zip code in your actual neighborhood, whether or not you can rent a short-term rental legally.

So we’ve seen oversaturation, we’ve seen really heavy regulations, and we’ve seen costs increase dramatically.

So not just the purchase price of a property, but also the cost to operate it, right?

Our utilities have gone up, our insurance has gone up, our housekeeping fees have gone up, our supplies have gone up, and that definitely has an impact on our bottom lines.

That definitely has an impact on whether an investment actually makes sense.

And then lastly, I would just say that the short-term rental environment in general has gotten more competitive.

10 years ago, that wasn’t really the case.

And so people weren’t actually expecting that, or guests, I should say, weren’t expecting perfect quality 100% of the time.

But now those companies like ours exist, and we’re operating as professionals, from the guest experience down to the revenue management.

And that means there’s more competition for someone just getting started that doesn’t have the experience, that hasn’t managed tens and thousands of guests, and kind of learn the ropes.

So yes, there are a lot of challenges out there, but I believe that there’s still a ton of opportunity, and we see it all the time.

And it really comes down to this.

Will your short term rental make more than a long term rental?

Otherwise, you’re not in the real estate game, right?

That’s pretty much, those are our options, right?

We have our long term rentals, and we have short term rentals.

And this is of course excluding those personal residence properties.

So will your properties of short term rental make more than you could potentially get investing that same amount of money in long term rentals?

And I believe the answer is yes.

Of course, there’s lots of little caveats there.

So one of the upsides to starting in 2025 is that a lot of that new supply has slowed down, right?

And actually gone the other way in a lot of markets, and there’s still a lot of demand.

And so with supply dropping or staying even and demand staying even or even increasing, that’s a good just economic situation to be in.

So I also feel that there’s still a lot of opportunity in the short term rental industry because we see some hosts way outperform other hosts with very similar properties.

That means if you are out there and you’re operating with professionalism and your guests are having a really good experience and you’re getting really good reviews, well, then you have the opportunity to earn more money.

A lot of this, of course, depends on the market that we start in to begin with.

And so if you missed some of our prior episodes, you can head over to strriches.com.

We talk a lot about this.

You’ll definitely want to check out episode 267 and 268 where we met with John Bianchi.

This is what his team does, is just searches for profitable properties and helps their clients even acquire them.

And they’ve done this with hundreds of properties and they’re all cashflow and they’re still doing it.

So yes, there is a lot of opportunities still out there.

And I believe, especially if we’re comparing to long-term rentals, that a short-term rental can earn you much, much more.

And some of those reasons just come back to the tax benefits.

Something we also talked about with my accountant recently, that was episode 253.

So if you missed that, check out how you can save a bunch on taxes by investing in a short-term rental.

Things like bonus depreciation and being able to take losses from a short-term rental when you’re not a real estate professional, those are huge, huge advantages.

And for some people, that is reason alone to invest in a short-term rental versus a long-term rental.

So does it still make sense to invest in an Airbnb in 2025?

I believe yes, but we have to make sure we’re checking these boxes, right?

We have to make sure that we’re starting in the right market to begin with.

We have to make sure that we will be operating that property really perfectly, right?

I mean, we have to have really, really good guest experiences.

We got to make sure that we set the property up right.

But another benefit that we have today that we didn’t have 10 years ago are all the tools to help us do that.

And we talk a lot about all those tools on this channel, from property management software to dynamic pricing tools, to digital guidebooks.

All of those great things are available to us today, and they weren’t a long time ago.

So if you choose the right market, if you operate your property really well, and you take advantage of all these tools, then yes, I definitely believe, and we see it time and time again, I see it with my personal portfolio, that the amount you’re investing in real estate and a short term rental versus a long term rental, you’re gonna have much higher gains.

And let’s just take a quick step back and just run a quick scenario.

These days, it’s really hard to find a long term rental to purchase it with today’s interest rates.

And to earn cash flow, that is just the reality.

But let’s say you happen to find those properties out there, maybe you’re earning $100 or $200 a month.

What happens when your AC goes out?

It costs you $7,000 to replace it.

Or what happens when you have to change the water heater, whatever it happens to be?

Imagine all of those months of profit earning $100 or $200.

Let’s just say you’re earning $200 a month for a whole year.

That’s $2,400.

You’re gonna be in the hole for the next three years just from that expense changing your AC or your HVAC.

And so with margins that thin in regards to cash flow, it’s really hard to make money with long-term rentals these days, except there are some other amazing benefits to real estate in general, and we’re gonna jump into those.

So my answer in a nutshell, yes, absolutely yes.

If you’re in the right market, if you know what you’re doing, if you have the right team in place, you’re using the right tools, then you can certainly earn more with a short-term rental than you can with a long-term rental in terms of cash flow.

Now, whether it’s a short-term rental or it’s a long-term rental, we have some other really amazing benefits investing in real estate.

I’ve dedicated years and hundreds of thousands of dollars through trial and error to figuring out how to manage my personal portfolio remotely.

And it wasn’t always easy, and it took a long time, but now my amazing team can professionally manage my properties without me.

And good news, our team can also manage yours.

Let us save you the stress and headaches and some money by offering you an industry low fee.

To find out more about partnering with us, head to strriches.com, hit the property management button, answer a couple of quick questions, and meet with me personally.

That’s strriches.com.

Rest easy knowing that with my team, your properties will be in excellent hands.

The next one is appreciation.

And yes, this isn’t something I would suggest banking on, right?

This isn’t something that we control in terms of market appreciation.

We can force appreciation on a property, right, if we’re improving it.

But in terms of the market, that’s not something that’s in our control.

But it is nice to have when we do choose the right market.

But I would venture to say that short term rentals in general tend to be in areas that are a little bit more desirable than maybe your plain Jane long term rental.

And that usually leads to a little more appreciation.

So take that with a grain of salt.

Make sure you do your research.

But typically, I found that to be the case.

Regardless whether you’re earning appreciation or not, there’s still three other areas that we earn money from real estates.

We talked about cash flow.

We talked about appreciation.

The other one is leverage.

So if you’re a US citizen, we have the best options for leverage throughout the world without a doubt.

We have still really competitive interest rates, which you might be thinking, gosh, Tim, these are really, really high.

But if we look at historical averages, we’re basically in line with the averages.

Will we go back to 2-3% interest rates?

I hope so.

And if you’re buying a property this year and rates go back down, well, you can always refinance.

But for now, we’re able to take advantage of leverage.

And if you’re borrowing 80% for the purchase price of a property, you’re leveraging the whole value of the property, right?

So if it’s a $500,000 property and it happens to appreciate 5% per year, $25,000, well, you just got a 5X on your money, right?

So there’s also some tax benefits to our mortgage interest.

We can deduct those things.

We can deduct the fees that we use to get a loan, appraisals, all those types of things.

Of course, check with your tax advisor.

But this is one of those beautiful investment areas where we can use leverage and secure leverage, right?

Where else can we get a loan for 30 years?

You can’t do that in the stock market.

Okay, so we talked about three of the five areas where we can actually make money from real estate.

The first one being cash flow and what most of us are going after.

Second one being appreciation.

Third one being leverage.

So being able to use other people’s money, being able to use the bank’s money.

The fourth one is a little trickier, but when we buy real estate, we have a hedge against inflation.

Part of that comes from borrowing money, right?

If we’re borrowing money today, at today’s prices, and we’re paying money back in the future, assuming that the dollar continues to devalue, as it has throughout its history, then we’re paying that loan back with cheaper dollars because of inflation, right?

And also our properties tend to increase with inflation, where our dollars devaluing, our properties are appreciating with inflation.

And not just the properties.

Remember, we’re renting these properties out, and as inflation raises the prices of everything, it also raises the prices of rent or our short-term nightly rents if we’re operating a short-term rental.

So inflation, as inflation hedge, real estate is one of the best assets we can have out there.

The last piece is our loan pay down, right?

So remember, we’re borrowing that money from the bank, assuming you’re using a loan, and we have other people paying that down for us.

So they’re paying down our loan principle, which means we have more equity in that property, whether it’s a long-term rental, whether it’s a short-term rental, the idea is that other people are paying that loan down for us.

So with that said, with those five reasons that help us become more wealthy through real estate, it doesn’t mean that it’s easy, right?

So yes, I still think there’s a ton of opportunity, but it’s not easy.

And the reality is short-term rentals require more work than long-term rentals.

You have to decide if you’re willing to put in some extra work to have, in my opinion, what we see in our partner’s portfolios, a much higher cash flow than you can with long-term rentals.

And lastly, I just want you to be thinking about your investments on a long-term basis, right?

If your short-term rental or your potential short-term rental has the ability to earn two, three times more than a potential long-term rental where you might be parking your money in another spot, well, over the long-term basis, that adds up to a lot, right?

If you’re earning two to three times more this year, and you plan on adding more properties, that’s really an exponential increase in your overall return.

So keep that in mind.

In a nutshell, yes, starting an Airbnb today is not as easy as it once was, but there is absolutely a lot of opportunity out there.

You just have to make sure that you’re starting in the right market, you’re starting with a good property, and you know how to set it up properly, and that you operate it really, really efficiently, and you have incredible guest experiences.

I know that sounds like a lot, but it’s worth a lot in the end.

And so I hope you’ve been finding value in the show.

If you have, if you wouldn’t mind heading over to Apple or Spotify and leave us a quick review, I’d really, really appreciate it.

Until next time, I hope you have a fabulous week.

Whether you’re just getting started or you have dozens of properties, one thing remains the same.

Poor management can crush your investment returns.

Our team has learned a lot managing over 40,000 guests, and we’ve compiled our biggest takeaways into a handy guidebook to help you better manage your property.

Equipped with checklists for guest verification to pricing strategies, it breaks down our whole process from start to finish.

Best of all, it’s free for you for being one of our loyal subscribers.

You can get your copy by going to strriches.com.

That’s strriches.com, and I hope it helps you earn higher returns with less headache.