Vacation Rentals vs. Long-Term Rentals: Which One Makes More Money?
- Scott Sweeney
- Apr 16
- 3 min read
If you’re exploring real estate investing, one of the first big decisions you’ll face is choosing between short-term vacation rentals and long-term leasing. Both can be profitable, but which one truly makes more money? Let’s break it down by comparing the key differences, pros and cons, and what affects profitability in each strategy.
💰 Income Potential
Vacation Rentals (Short-Term):
Can generate significantly higher income per night.
In popular tourist areas or high-demand cities, you can earn 2–3x more than a long-term lease.
Dynamic pricing strategies (like adjusting rates for weekends or holidays) boost revenue.
Long-Term Rentals:
Offer consistent, predictable income.
Easier to budget with monthly rent payments.
Less seasonal variation—but typically lower gross income than a successful short-term rental.
🛠️ Expenses & Management
Vacation Rentals:
Higher operational costs: cleaning fees, utilities, furnishing, restocking supplies.
Requires ongoing active management or a short-term rental property manager.
Booking platform fees (Airbnb, VRBO) can cut into profits.
Long-Term Rentals:
Lower day-to-day costs—tenants usually cover utilities.
Less wear and tear from turnover.
Fewer ongoing tasks once the lease is signed.
📈 Occupancy Rates
Vacation Rentals:
Profitability depends on high occupancy rates.
Vacancy risks increase during off-seasons or economic downturns.
Marketing and great reviews play a big role in bookings.
Long-Term Rentals:
Usually leased for 12 months or more.
Low vacancy if priced right and in a desirable area.
Fewer headaches between tenants.
🔧 Maintenance & Wear
Vacation Rentals:
More frequent use means more cleaning and faster wear and tear.
You must maintain a hotel-like standard at all times.
Long-Term Rentals:
Less frequent turnover = less maintenance and fewer costs.
Tenants are often more responsible for basic upkeep.
📍 Location Matters
Vacation rentals perform best in high-tourism areas like near beaches, downtowns, or entertainment hubs.
Long-term rentals are better in stable neighborhoods, close to schools, jobs, and public transit.
💡 Taxes & Regulations
Short-term rentals are often heavily regulated. Some cities require permits, limit the number of days rented, or ban them outright.
Tax implications differ too. Vacation rental income may be subject to lodging or hotel taxes.
So...Which One Makes More Money?
It depends on your: ✅ Location ✅ Risk tolerance ✅ Availability for management ✅ Financial goals
Short-term vacation rentals may bring in more income, but they come with more work, expenses, and regulatory challenges. Long-term rentals are more passive, stable, and easier to scale—especially for first-time investors.
Final Thought:
Want the best of both worlds? Some investors “hybrid” their strategy—using a property as a short-term rental during peak seasons and switching to long-term tenants during the off-season.
Need help deciding which strategy works best in your area? Let’s run the numbers together based on current Sacramento rental trends.
Scott Sweeney
Your NorCal Realtor
M&M Real Estate
BRE Lic# 01938720
Cell: Call/Text 707-330-2324
About Scott Sweeney
SweeneySells
Full Time Realtor 13 Years +
Over 100 Families Served
Top 5% Producing Agent
Buying & Listing Specialist
Contract & Negotiation Ninja
CSUS Business & Marketing Graduate 2006
With quickly serving over a 100 families, Scott Sweeney has become a top 5% producing Realtor in the greater Sacramento area who has helped clients from the Bay Area to South Lake Tahoe. Scott has a Bachelor Of Science in Business Administration, with a concentration in Marketing from CSUS. His education, and extensive background in the hospitality, marketing, and real estate industries, have helped Scott to become one of the leading, and most sought after agents in the area.
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