2025 STR Investment Guide

Why Short Term Rentals Are the Smartest Investment in 2025

Real data. Real returns. Real tax advantages. Discover why savvy investors are building wealth through vacation rentals and Airbnb properties.

$81.6B Projected Market Size by 2033
11% Annual Market Growth (CAGR)
2.2x More Income vs Long-Term Rentals
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The STR Market at a Glance

Key performance indicators driving investor interest in 2025

$0B
2025 US Market Size
+11% YoY
0%
Average ROI Target
8-12% healthy range
0%
US Avg Occupancy Rate
70%+ is excellent
$0B
Airbnb Q3 2025 Revenue
+10% YoY Growth

STR vs Long-Term Rental Income

See the dramatic difference in monthly cash flow potential

$4,800 Avg Monthly STR Income
$2,200 Avg Monthly LTR Income
+118% Revenue Increase

*Based on comparable properties in high-demand STR markets. Individual results vary by location, property type, and management quality.

The STR Tax Loophole: Your Biggest Advantage

How short term rentals offer tax benefits unavailable to traditional landlords

100% Bonus Depreciation Restored

The One Big Beautiful Bill (July 2025) permanently restored 100% bonus depreciation for qualifying property. Write off 25-30% of your purchase price in year one.

Example: $1M Property $250,000 First-Year Deduction ~$87,500 Tax Savings (at 35%)

No Real Estate Professional Status Needed

Unlike long-term rentals requiring 750+ hours, STR owners with average stays under 7 days can qualify through material participation alone—just 100-500 hours annually.

Keep your W-2 job + enjoy real estate tax benefits

Cost Segregation Studies

Accelerate depreciation by reclassifying property components from 27.5-39 years to 5-15 years. Identify 25-30% of purchase price for immediate write-off.

High-Income Investors $50,000+ First-Year Savings From cost segregation alone

Section 179 Increased

Section 179 expensing limits increased from $1M to $2.5M with phaseout thresholds rising from $2.5M to $4M. Immediately expense furniture, appliances, and equipment.

Furnishing costs can be fully deducted in year one

Tax benefits require meeting specific IRS qualifications under Passive Activity Loss Rules and the Short-Term Rental Exception. Consult a qualified tax professional to determine your eligibility.

Top STR Investment Markets 2025

Data-driven analysis of the highest-performing short term rental markets

#2

Broken Bow, OK

$333,000 Median Price
$69,700 Annual Revenue
21% Gross Yield
#3

Pittsburgh, PA

$198,000 Median Price
+12% Revenue Growth
+11% RevPAR Growth
#4

Gulf Shores, AL

$420,000 Median Price
$112,000 Annual Revenue
Beach Market Type
#5

Columbus, GA

Low Competition
Emerging Market Status
High Growth Potential
#6

Pawleys Island, SC

Beach Market Type
8-10% Gross Yield
Top Beach Market

*13 of the top 15 STR markets have average home prices under $500,000. Data from AirDNA, Mashvisor, and Chalet analytics.

Booking Platform Comparison

Understanding OTA fees and direct booking advantages

Market Share 2025

Platform Fee Breakdown

15.5%
Host-only fee (Oct 2025)
8%
5% + 3% processing
0%
Platform fees

Direct bookings grew to 28% market share in 2025 as hosts invest in their own channels to maximize profits.

Operating Expenses Breakdown

Understand the true costs of running a profitable STR

Property Management 15-40%

Full-service: 25-40% | Self-managed: 10-15%

Platform Fees (OTAs) 8-16%

Airbnb: 15.5% | VRBO: 8% | Direct: 0%

Cleaning (per turnover) $50-$150

Varies by property size; often passed to guests

Utilities & Internet 5-10%

Electric, water, gas, high-speed internet, cable

Maintenance & Repairs 5-10%

Routine upkeep + capital reserves for major items

Supplies & Amenities 2-5%

Toiletries, linens, coffee, welcome items

STR Total Operating Costs 50-65% of gross revenue
LTR Total Operating Costs 35-40% of gross revenue
STR Net Still Higher +40-80% vs long-term rental net

Ready to Run Your Own Numbers?

Connect with an STR-specialized realtor who can analyze specific markets and properties for your investment goals.

Market-specific revenue projections
Cash-on-cash ROI calculations
Local regulation guidance
Tax strategy recommendations
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Data Sources

Market data compiled from AirDNA, Mashvisor, Chalet, Airbtics, Rabbu, and industry reports. Tax information references IRS guidelines and the 2025 legislative updates. Individual investment results will vary based on property, location, and management. Consult qualified professionals before making investment decisions.

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