Short-term rentals (STRs) are no longer just a side hustle for individual hosts — commercial investors are buying entire buildings and running them like hotels.
The explosive growth of platforms like Airbnb has made it easier to market, manage, and even scale STR properties, creating new ways for CRE investors to earn in the hospitality space.
In 2024 alone, Airbnb recorded 133 million nights and experiences booked — the scale of the business has grown so much.
In fact, that travel activity on the platform supported about one million US jobs and contributed over $85 billion in economic activity in 2023.
Guest spending also generated more than $24 billion in tax revenue for governments.
Interested? In this blog, we break down practical strategies to help you maximize STR income and get more value from your CRE portfolio.
Why short-term rentals are a smart investment in 2025
The US short-term rental market remains on an upward trend because demand is high and digital platforms make it easier than ever to manage operations at scale.
Here’s why commercial investors are expanding into Short-term rentals:
Rise in remote work and flexible travel
More people can now travel for leisure while working. As remote and hybrid work models hold strong, these travelers look for places they can live in for weeks or even months instead of just a weekend. This trend has created a growing niche for mid-term stays.
Growing demand for unique, local experiences
Guests (especially younger guests) increasingly avoid generic hotel experiences. They’re looking for accommodations that help them feel part of a neighborhood or give them something unique.
Investors seeking faster returns vs. long-term rentals
Platforms like Airbnb make it easy to adjust rates in real time and charge more during peak travel periods. This is why short-term rentals earn significantly more than traditional leases in many markets.
The average daily rate for short-term rentals in the US sits at $163, but rates vary significantly by city.
In San Diego, for instance, nightly rates average $296 compared to just $119 in New York City. The length of stay also impacts pricing.
One-night stays often fetch a median price of $314, while week-long stays drop the per-night rate to $213 — a 32% discount that can help fill gaps and encourage longer bookings.
Between location, amenities, and guest preferences, investors have multiple ways to price strategically and fill calendars year-round.
Top strategies to maximize returns from short-term rentals
1. Choose the right location
The top US cities by Airbnb occupancy include both coastal hubs and inland metros, such as:
- New York City, NY
- Kissimmee, FL
- Austin, TX
- Atlanta, GA
- San Diego, CA
- Dallas, TX
- Paradise, NV
Choosing properties in areas with reliable demand and strong tourism infrastructure gives you more pricing flexibility and better long-term revenue potential.
But before acquiring a multi-unit property, you need to understand the regulatory environment. STR laws can vary not just by city but sometimes by neighborhood. Many jurisdictions require registration and inspections before you can legally operate.
Others impose restrictions on the number of nights you can rent or enforce strict noise ordinances and parking minimums.
You may also need to meet specific health and safety codes such as installing smoke detectors and fire extinguishers.
On top of that, most cities require property owners to collect and remit occupancy taxes. While some platforms handle this on your behalf, you’re still responsible for ensuring your own compliance.
Zoning is another potentially problematic area. Some districts explicitly allow short-term rentals and others prohibit them unless the property is your primary residence.
Enforcement has become more aggressive in recent years, so make sure your property’s zoning classification permits short-term rentals — especially for non-owner-occupied investments.
Use tools like AirDNA, Mashvisor, and Zillow for market research
You can’t afford to guess your way through a short-term rental investment. Use data tools like AirDNA to dive into STR-specific analytics.
It can show you neighborhood-level occupancy rates and let you track average daily rates so you can address revenue potential.
You’ll also find seasonality patterns and benchmarks for amenities or unit sizes in your market.
Mashvisor is another good investment property analysis tool if you want to assess potential cash flow, cap rates, and ROI before you buy.
Zillow is also handy — you can use it to evaluate property values and rental history, as well as to analyze local demographic trends.
While it’s not STR-specific, it offers sales comps and neighborhood insights that can guide acquisition strategy.
2. Optimize pricing strategy
Once you’ve handled the legal groundwork and completed your market research, it’s time to focus on pricing, which is one of the most important levers for improving your investment returns.
Implement dynamic pricing tools
With demand changing by the day depending on events and seasonality, it makes a lot of sense to use automated tools that can help you adjust pricing in real time.
Dynamic pricing platforms like PriceLabs and Wheelhouse use data and algorithms to analyze the following:
- Booking activity in your area
- Seasonal and holiday demand spikes
- Weekend vs. weekday patterns
- Major events (festivals, conferences, sports, etc.)
- Lead time before check-in
- How has your property performed historically
- Competitor pricing and occupancy
They plug directly into Airbnb or Vrbo to help you adjust your rates automatically.
With the right setup, you can increase your income during high-demand periods and maintain occupancy during slow seasons — all without constantly checking calendars or spreadsheets.
You can still set minimum and maximum prices to stay within your target range.
Offer discounts for longer stays or off-season bookings
Weekly or monthly discounts appeal to digital nomads, traveling workers, and guests who might be relocating or transitioning between homes — basically guests who tend to stay longer.
Catering to them can help you reduce your turnover costs and give you more consistent occupancy.
You can also use off-season discounts to attract budget-conscious travelers during shoulder months to maintain volume when competition is tight and demand is lower.
Monitor competitor rates and adjust based on demand fluctuations
Pricing doesn’t exist in a vacuum. Your short-term rental is constantly competing with nearby listings offering similar amenities, so you need to stay on top of local pricing trends.
Start by identifying your true competitors — those with a comparable number of bedrooms, guest capacity, amenities, and location. Check how they price their units during weekends, weekdays, and during peak seasons.
You can browse this manually on Airbnb or Vrbo, but you can (as mentioned) also use PriceLabs and Wheelhouse to pull this data directly into your dashboard.
To match your pricing with the market:
- Watch for events or holidays driving up local demand.
- Review your competitors’ calendars to see when they’re booked.
- Track your own lead time (how far in advance you get booked).
- Adjust rates based on whether you’re filling up early or too slowly.
In some cases, undercutting slightly can help you fill units quickly — especially if you’re trying to build reviews or stay competitive during slower periods.
Upgrade property features for higher appeal
- Invest in quality furniture, Wi-Fi, air conditioning, and smart locks — most travelers now expect these basics when booking a short-term rental.
- Post Instagram-worthy pictures of your interiors and highlight amenities like hot tubs or outdoor seating.
- Offer extras like early check-in, welcome kits — these small touches increase the chances of positive reviews and repeat bookings.
- Allow pets. This can widen your pool of potential guests, especially for longer stays.
Professional photography & listing optimization
- Use high-resolution photos and virtual tours to increase click-through rates and set the right expectations before guests arrive. Virtual tours are very effective in explaining the layout especially for multi-unit properties.
- Write SEO-optimized descriptions using clear and engaging language that includes relevant keywords. This helps your listing rank higher on booking platforms.
- Include local recommendations and unique selling points such as nearby attractions and dining options that travelers may not discover on their own.
Automate & streamline operations
- Use property management software such as Guesty, Hostaway, and Hospitable to centralize your bookings, calendars, and communications across multiple platforms. They also reduce errors and save time so you can scale your operations across several units.
- Automate check-in/out, cleaning schedules, guest messaging to cut down on manual tasks and reduce miscommunication.
- Work with local cleaning and maintenance vendors who can quickly reach and service your property between guest stays to reduce the risk of cancellations or negative reviews.
Encourage reviews & build social proof
- Provide exceptional guest experiences to generate 5-star reviews. Exceeding expectations gives guests a reason to leave positive feedback, which ultimately boost your listing’s visibility and credibility on booking platforms.
- Send automated follow-ups requesting feedback. Many platforms allow you to schedule this automatically, so it becomes part of your standard workflow.
- Feature positive testimonials across your listings and website to build trust with new guests and reinforce the strengths of your property.
Common pitfalls to avoid
Overpricing during low seasons – Pushing rates too high when demand is soft can drive potential guests away from your property and to more competitively priced listings.
Failing to research local laws and HOA restrictions – Always confirm zoning rules and HOA policies before listing a unit. Make sure to secure any licenses required or you risk getting fined — or worse, being ordered to stop your STR operations altogether.
Not setting aside a maintenance and vacancy reserve fund – unexpected repairs and vacant periods are part of the business. Budget for both to stay financially stable and avoid cash flow gaps that can eat into your ROI.
Conclusion
It takes more than location and luck to maximize returns on a short-term rental investment. You also need to manage the property well, set your prices based on demand and seasonality, and automate booking, communication, and cleaning schedules to reduce overhead and protect your long-term profitability.
Continue refining your approach and make adjustments based on what the data tells you. Strategic planning and consistent execution can turn your short-term rentals into a high-performing segment of your commercial property portfolio.
If you’re looking to finance your next short-term rental investment, connect with our team of private commercial real estate lenders here at Private Capital Investors.
