Short-term rentals are furnished self-contained properties that are rented for short periods of time, as opposed to annual rentals in the unfurnished apartment rental market. They are seen as an alternative to hotels. "Short Stay" rentals are an offshoot of the corporate housing market. Companies such as Airbnb and VRBO have brought the short-term rental market into the mainstream. This has made it easier than ever for investors to profit from real estate ownership. Investors no longer have to get tied into long-term leases, instead property owners can capitalize on local demand for temporary and vacation rental housing.

The main advantage of investing in a short-term rental property is that an owner can charge more per month than a typical, long-term rental. Other advantages include but are not limited to the following: The property owner does not have to deal with long-term tenants. The transitions are mostly immediately paid. Typically, money is paid up front at the time of the reservation. This transaction style cuts down on money lost due to tenants failing to pay their rent. There are built-in platforms for starting to market your property, such as Airbnb.com. This provides an easy means for seeking customers. ​

Short-term rental investors have flexibility in deciding when to rent or when not to, based on seasonality. This allows investors to cash in on the highest rental rates. Also, the investor can choose the rates at different time periods. As an example, the investor can charge more on a weekend, holiday or during the busy season and drop prices in slow seasons to increase property demands. This active and dynamic pricing allows the investor to create a better return on investment.

There are several hurdles for short-term rental properties, including: Legal Restrictions - Owning real estate for rental purposes means monitoring state and local legislation to ensure compliance. It is important to understand how local regulations can shape the short-term rental market. There are several municipalities that have put a stranglehold on short-term rentals. Cities and towns may dictate that rentals have to be weekdays only or that rental agreements cannot be any shorter than one month or weekly. As an example, New York City, for instance, has exceptionally strict short-term rental laws. These laws prohibit apartment rentals lasting less than 30 days. San Francisco and Los Angeles, require property owners to obtain a business license and/or register as a business entity to rent on a short-term basis. The understanding of these rules and restrictions in your area is a necessity. However, these rules can change and are dynamic. Investment Costs - Investors in the short-term rental world should consider all the expenses that they will incur to set-up their property. The investor needs to furnish the property, decorate it, list it, etc. prior to starting to receive revenue. Investors should also consider all of the operational costs involved with managing a short-term renal property. These operating costs include maintenance, repairs and upkeep as well as property taxes, homeowner’s insurance and mortgage payments for a property that’s financed. Hospitality – Short-term rental property investors should realize that they are not entering a passive business. The short-term rental market is like owning a small hotel. The property lives and dies based on ratings. It is of upmost importance to give your guests a high-quality experience. This requires a significant amount of effort including welcoming guests, cleaning, hosting guests, etc.

Setting up and managing a short-term rental isn’t something you can do overnight. It takes a lot of time to get started and cultivate. Dealing with guests means that you must respond to inquiries, screen guests, and finalize arrangements. Terram utilizes a company called Ordo I, LLC that specializes in short-term rental management to take the guess work out of the process.