What do you know about the short-term rental market? This quick read will give you a knowledge-packed brief history of the market:

1. Where it came from

2. Where we are now

3. How it will look in the future

4. And most importantly, give you the knowledge to see whether it could be a potential opportunity for you.

Short-term rentals (STR) have completely changed the way people travel. It shook the hospitality industry so abruptly that it’s comparable to what Uber did to the transportation industry.

This shift in consumer preferences gave rise to one of the fastest-growing segments of real estate over the past decade.

How We Got Here

The STR market had already been growing steadily before 2020, but COVID-19 accelerated the trend dramatically.

As airlines reduced flights and international travel slowed, Americans began looking for destinations they could drive to. Mountain cabins, lake houses, beach homes, and weekend getaway destinations experienced an explosion in demand.

And investors quickly recognized the opportunity.

Between 2021 and 2022, the supply of STR grew by nearly 20% annually as thousands of investors purchased homes specifically to list on Airbnb and Vrbo. For many owners, occupancy rates and nightly prices reached record highs.

The market today, although still growing, is slower than it was 5 years ago. However, there has been a revitalization for high-earning medical providers with the passing of the One Big Beautiful Bill in July 2025.

Where We Are Now

The passing of the One Big Beautiful Bill permanently restored 100% bonus depreciation for qualifying property improvements and assets placed into service… That means if you purchase a property and use it as a STR, you can write-off 100% of the costs associated with operating it. That includes:

• Furniture

• Appliances

• Flooring

• HVAC

• Security systems

• Turnover costs

• Even some landscaping qualifies

And here’s the real kicker:

You can offset these expenses on your W-2 income.

How is this possible? Because if tenants are staying for 7 days or less, it requires more work on your part, therefore it is considered “active income”, which is categorized as the same type of income as on your W-2. This is one reason many physicians, dentists, CRNAs, and other high-income professionals have been taking a closer look at short-term rentals.

A Quick, Real Life Case Study

Recently, I spoke with a physician in California who purchased a small multifamily property in Columbus. We were on the phone talking about a property manager we both utilize and how we could all potentially do a deal in the future.

One of her kids, who is now attending Ohio State University, was moving to Ohio. So, being a Savvy Investor, she purchased a duplex. Her kid now lives in one unit while she hired a property manager who operates the other as a STR. The investment provides cash flow, allows her child free housing, while also creating thousands of dollars in tax advantages when Uncle Sam comes around next year.

What the Future Looks Like

The STR market is now considered a mature market, competition for tenants is fierce, pricing has reduced, and consumers have more options than ever. However, this doesn’t mean it can’t be a profitable venture. What’s most important today is the cliche we’ve all been told about real estate: Location, location, location.

Your choice in STR location should be based on well educated decisions. Wherever you choose, you should know the area well enough to know if it is safe, what activities are nearby that will drive bookings, and how you will manage finances during lower occupancy in slow seasons.

What I like:

• Active income allows you to write off expenses on your W-2 income

• More profitable than long-term rentals

• Market is still growing at a steady pace

• Tenants will have to have a credit card on file to stay, meaning if there is damage, they will be charged for it. Repair and Maintenance costs are therefore lower.

What I don’t like:

• More work than a long-term rental

• Mature market, lots of competition, so tenant experience is paramount

• Most profits are found in specific neighborhoods near areas with high concentration of activities/local gems

• Profits are seasonal

As always, I encourage you to assemble the right team before making your next investment. Speak with a CPA who specializes in real estate taxation, consult an experienced real estate agent, and run the numbers conservatively before making an offer.

Remember: The most successful investors aren't the ones chasing every trend—they're the ones making informed, disciplined decisions. If short-term rentals fit your financial goals and lifestyle, this could be an exciting strategy to explore as you continue building long-term wealth.

I am not a CPA, and this is not legal or investing advice.
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