Short-Term Rentals Are a Real Business: Why Success Requires More Than a Good Property

Short-term rentals (STRs) have exploded into mainstream investing, and the explosion is accelerating near the end of the year. The idea of owning an Airbnb is now so common that people talk about it the way they talk about starting a new hobby. But beneath the popularity and the glossy marketing, STRs are fundamentally operating businesses, not passive investments, and certainly not “set it and forget it” ventures (unless you turn it over to a property manager and are not concerned about material participation and the STR loophole).

Short-term rentals demand time, attention, resilience, and a genuine entrepreneurial streak—not just a down payment and a positive attitude.

For anyone considering an STR, the real dividing line is simple: Do you want the reality of an STR or the idea of an STR? The idea is charming. The reality is competitive, sometimes messy, and deeply dependent on the operator’s ability to run a hospitality-oriented business with consistency and calm. When you understand that core truth, the STR world becomes both more realistic and more exciting, because you can finally evaluate it for what it truly is.

Abundance, Not Scarcity: The STR Marketplace Has Changed

One of the first misconceptions STR owners face is the belief that demand automatically flows to a good property. While location, amenities, and pricing still matter, the modern STR marketplace is flooded with supply. In many cities, suburbs, and vacation destinations, guests have dozens—sometimes hundreds—of nearly identical options. Airbnb and Vrbo act as hyper-efficient comparison tools, allowing travelers to conduct side-by-side evaluations of properties with remarkable precision.

This abundance leads to an unexpected dynamic: Guests often choose between two similar listings based on extremely small, even whimsical differences. Operators consistently report that travelers obsess over features that barely affect the stay but heavily influence perceived value, such as the availability of free pool heat, the type of coffee setup, the theme of a children’s bedroom, or whether checkout is at 11 a.m. or noon. These micro-preferences might feel irrational to real estate investors, but in a crowded marketplace, they play a meaningful role in conversion, pricing power, and overall performance.

Sidebar: After the sexiness of a big tax deduction from your cost segregation study paired with the short-term rental loophole, you are still left with a business that needs a lot of your attention.

Successful operators understand that STR competition is not about overwhelming differentiation—it is about subtle enhancements that create a sense of value. This is the idea of a “distinction without a difference,” and while the improvements may seem trivial, they often determine which property rises to the top of the search results and which one lingers at the bottom of the screen.

You need to embrace this, and let your maverick side show. The guy across the street from your Airbnb rental, you know, Bob, the STR owner who helps you out from time to time, is your competition.

The Entrepreneurial Bone: Why STRs Require Grit, Not Just Capital

People often enter the STR world imagining they are investing in real estate. What they are actually doing is entering the hospitality business. Running an STR requires constant problem-solving, expectation management, and rapid communication. It takes someone who can adapt quickly, remain calm when things go wrong, and see patterns in guest behavior rather than react emotionally to every review or request. Even the most beloved airline or hotel chain has bad reviews. Learn. Deploy. Move along.

The operators who succeed tend to be those with an entrepreneurial bone—a natural comfort with the uncertainties and demands of a business that runs every day, not once a month. STR owners must demonstrate a blend of roles that look more like a startup founder than a landlord:

• customer support representative
• logistics coordinator
• marketer
• inventory manager
• pricing strategist
• cleaning and turnover supervisor
• conflict resolver
• hospitality experience designer

For some people, this blend is energizing; for others, it is exhausting. There is no moral judgment either way, but misalignment between personality and STR demands is one of the leading causes of burnout. Realistic awareness of one’s own temperament is just as important as financial modeling. Read that again. So the math checks, neat, but does your heart and guts check?

If it were easy, everyone would do it (but it wouldn’t have meaning, would it?). STRs are hospitality startups, not rentals. Do you brag it up at a party that you own a startup? Maybe. When owners treat their STR like a startup—with iteration, customer feedback, and strategic upgrades—they outperform the market.

The Emotional Challenge: When the STR Becomes an Extension of You

A unique wrinkle in STR investing is the emotional connection many owners feel toward the rental property, especially when they use it personally or choose finishes based on their own preferences. This attachment is natural, but it can lead to decision-making that prioritizes owner taste over guest appeal or operational efficiency. The property begins to feel like a personal reflection, and criticism—whether fair or not—starts to feel personal as well.

Emotional attachment often leads to over-spending on décor, furniture, or design elements that guests neither notice nor value. It can also result in underpricing due to a desire for high occupancy, or ignoring guest feedback because it conflicts with the owner’s preferences. STRs reward operators who treat the property as a product rather than a personal project, analyzing data and reviews with objectivity and adjusting accordingly. When hosts remain emotionally neutral, the STR becomes easier to manage, easier to improve, and far more profitable.

Sure, one day you might take it offline, spritz up the flooring, spray on some new paint, and make it your second home. That’s wonderful! On the way there, however, be agnostic and emotionally detached.