Short-Term Rental Investment: Is It Still Worth It?

Are short-term rentals still a good investment?

Short answer: yes, but not in the way the 2021 version of this question assumed. Back then, a reasonable property in a reasonable market more or less printed money because supply was thin and rates were rising. Supply has since caught up in most popular markets, platform fees have settled at a higher level, and councils in a lot of places have tightened the rules.

What that changes is where the return comes from. The easy gains from simply owning a listed property have gone. The gains now come from operating it well — pricing it correctly, earning more per stay, and not leaving obvious money on the table. That is a very different skill from buying.

So the honest version of the answer: a short-term rental is a good investment if you are willing to treat it as a small business. It is a poor investment if you expect it to behave like a term deposit.

The cost stack nobody puts in the spreadsheet

Most first-time projections take nightly rate times occupancy and call it revenue. The gap between that number and what lands in your account is usually 35–50%. Here is what comes off:

• Platform fee — most hosts are now on Airbnb's 15.5% host-only service fee
• Cleaning and turnovers — recoverable in part through a cleaning fee, but rarely all of it, and never on the turnovers you do yourself
• Consumables and replacements — linen, toiletries, the endless small breakages. Budget a few percent of revenue
• Vacancy — the shoulder season is real. Annual occupancy of 60–70% is a healthy result in most markets, not 90%
• Furnishing and refresh — the upfront fit-out, then a rolling replacement cycle every few years
• Insurance, utilities, rates and tax — all higher than a long-term let, because the property is occupied, heated and cooled year-round
• Regulation risk — registration, night caps and permit costs vary by council and can change. Check yours before you buy, not after

Run those honestly and a lot of "great deals" turn into modest ones. That is useful: it tells you which properties you actually want.

What separates a profitable STR from a break-even one

Across the hosts we talk to, the properties that do well are rarely the ones in the hottest market. They are the ones where the operator is doing four things:

• Pricing to demand, not to a fixed number — see our pricing strategy guide
• Earning more per stay — early check-in, transfers, hampers and mid-stay cleans typically add $30–$80 per booking
• Building repeat and direct demand so they are not renting their own guests back from the platform every time
• Monetising the property beyond the calendar — guidebook commissions, local referrals, and renting idle space

None of that requires a second property. It requires knowing which levers your specific property has and actually pulling them.

How to invest in short-term rentals without guessing

Whether you are buying your first one or assessing the one you already own, the process is the same:

• Check the rules first. Registration requirements and night caps can kill a deal outright
• Estimate revenue from comparable listings, not from the optimistic end of a market report — our guide to estimating STR income walks through the maths
• Subtract the full cost stack above, then stress-test at 15% lower occupancy
• Compare the result against what the same property would earn as a long-term rental. If the gap is thin, the extra work is not worth it
• Only then look at the upside: what upsells, referrals and space hire could add on top

Why revenue per property beats buying another one

The instinct when returns flatten is to scale — buy a second property and double the revenue. But a second property also doubles the mortgage, the turnovers, the furnishing and the risk, while the return per property stays exactly as mediocre as it was.

Improving one property is cheaper and faster. Adding $50 a booking across six bookings a month is $3,600 a year with no capital outlay, no extra debt and no new council to negotiate with. Two or three of those changes stacked together move the return on the property you already own into a genuinely good investment.

The fuller picture of what one property can earn is in how to make money from your property, and the benchmark numbers are in how much Airbnb hosts actually make.

A sensible first 90 days

• Days 1–30 — get an accurate baseline. What does the property actually earn after every cost?
• Days 30–60 — fix pricing and add two upsells. These pay back fastest
• Days 60–90 — add one income stream beyond bookings and set up a direct rebooking path for past guests
• Then reassess the return. If it is now healthy, that is when scaling makes sense