Short-Term Rental

A short-term rental is a furnished house or apartment let by the night or the week, typically booked through an online platform. Gross income can beat a long-term lease by a wide margin, yet expenses and vacancy climb too, which is why an honest cap rate needs NOI built from actual booking data.

Expenses a long-term landlord never pays come into NOI: cleaning, platform fees, furnishings and their replacement, utilities, supplies and often a higher management fee. Occupancy swings with the season. Gross yield comparisons with long-term rentals are misleading for that reason.

Local rules matter more than for most rentals. Plenty of cities restrict or prohibit short-term rentals, and one rule change can wipe out the income overnight. A buyer paying a price based on short-term NOI should also know the long-term rent the property would earn if that happened.