What Is a Short Term Rental? A Complete Beginner’s Guide for New STR Hosts
A short term rental is a furnished home or room rented for fewer than 30 nights at a time—often on platforms like Airbnb or Vrbo. Hosts earn by balancing nightly rates with occupancy, while managing guest turnover, cleaning, and compliance. Think hospitality meets real estate: flexible pricing, higher potential income, and hands-on operations.
What you’ll learn from this blog
- How a short term rental actually makes money (and what numbers matter most)
- The permits, taxes, and insurance you need to stay compliant
- Setup essentials that impress guests without overspending
- Listing, pricing, and booking tactics that drive occupancy
- Day-to-day operations and automation to keep things smooth
- A simple profitability check to decide if STR is right for you
The money math comes first (and it’s simpler than you think)
Summary: Profit lives where pricing meets occupancy. Start here before décor, before logos—before anything.
Details:
- Core formula: Revenue = ADR (average daily rate) x Occupancy x Bookable Nights.
- Example: If ADR is $160 and occupancy is 68% on 30 days, revenue ≈ $3,264. Subtract cleaning, supplies, utilities, platform fees, taxes, and your mortgage or rent to find net income.
- Quick sanity check: Break-even occupancy = Monthly costs / (ADR x Days in month).
A day-one story: Jordan launched a one-bedroom downtown. He aimed for 70% occupancy at $175 ADR. After two months, he realized weekends sold fast but weekdays lagged. He cut weekday rates by $15 and added a 3-night minimum on high-demand weekends. Net result? Weekday bookings rose, weekends held strong, and his RevPAR jumped 12%.
Priority checklist to price with confidence:
1) Study comps within 0.5–1 mile and similar size/finish.
2) Set a realistic launch rate: 10–15% below comps for the first 10 reviews.
3) Use dynamic pricing to flex rates with demand.
4) Protect margins with cleaning fees and minimum stays when demand surges.
5) Revisit pricing weekly; adjust like a thermostat, not a light switch.
Rules, permits, and not-so-fun-but-essential stuff
Summary: Do this right once and sleep better for years.
Details:
- Do I need a permit for a short term rental? Often, yes. Cities may require an STR license, proof of primary residence (in some markets), and occupancy limits.
- HOA/strata rules can override city allowances. Always confirm with your building or neighborhood association.
- Taxes: Expect lodging taxes (transient occupancy tax), sales tax, and income tax. Many platforms collect some taxes, but not all.
- Insurance: Standard homeowner policies rarely cover STR use. Get a short term rental or commercial policy; ask about liability, contents, loss of income, and guest-caused damages.
- Safety and compliance: Smoke/CO detectors, fire extinguishers, emergency info, and clear egress. Some markets require posted license numbers and noise rules.
Set up smarter, not pricier
Summary: Guests remember comfort, cleanliness, and clarity—sprinkles of style help, but the basics win.
Details:
- The “boutique hotel in a backpack” approach: durable furniture, easy-to-clean textiles, and two comforts guests rave about—great mattresses and blackout curtains.
- Amenities that beat the listing next door:
- Fast, tested Wi-Fi (post the speed in your listing)
- Quality linens and two pillow types
- Stocked kitchen basics (oil, salt, pepper, coffee, tea)
- Phone chargers, steamer/iron, hair dryer
- Thoughtful local guide (food, transit, hidden gems)
- Safety upgrades that double as selling points: smart lock with unique codes, motion-activated exterior lights, and a small first-aid kit.
A short anecdote: I once swapped a squeaky barstool and added a $35 luggage rack—suddenly two reviews mentioned “thoughtful touches,” and future guests booked longer stays. Tiny tweaks, big perception.
Your listing is your storefront—make it irresistibly clear
Summary: Photos and words do the heavy lifting; your calendar and pricing seal the deal.
Details:
- Photos: Lead with the money shot (bright living area), then bedroom, kitchen, bathroom, and any standout amenity (balcony, view). Daylight only; hide cords and clutter.
- Title: Combine location + top feature + ideal guest. Example: “Sunny Downtown 1BR with Free Parking—Steps to Convention Center.”
- Description: Speak to use-cases and long-tail questions:
- How does a short term rental work for business travelers?
- Is the kitchen stocked for a week-long stay?
- How far is it from X venue or transit?
- House rules: Friendly but firm. Clarify quiet hours, max guests, visitor policy, pet rules, and parking. Boundaries prevent headaches.
- Pricing tactics:
- Launch discount until 5–10 solid reviews.
- Weekend/weekday splits.
- Event pricing for concerts, conferences, holidays.
- Last-minute and orphan-night discounts to fill gaps.
Step-by-step to publish confidently:
- Draft your listing → Add 20–30 photos → Write a scannable description → Set house rules → Connect a dynamic pricing tool → Preview taxes/fees → Publish a soft launch rate for the first 30 days.
Operations on autopilot (well, almost)
Summary: Smooth turnovers and reliable communication turn one-time guests into your marketing engine.
Details:
- Automations that save your sanity:
- Scheduled messages: booking confirmation, pre-arrival info, check-in, mid-stay check, checkout, review request.
- Smart lock codes that change per reservation.
- Cleaner notifications with calendar sync and task checklists.
- Noise monitoring (legal, privacy-safe) for party prevention.
- Cleaning and restocking: Keep a par inventory (e.g., 3 sets of linens per bed), label shelves, and standardize supplies.
- Review strategy: Respond to all reviews. If something goes wrong, own it, explain the fix, and move on. Future guests read how you handle bumps, not just that they happened.
- Guest screening: Require government ID (through platform), decline third-party bookings, and watch for red flags (local one-night weekend stays with vague intent).
Is a short term rental worth it for you?
Summary: Match the model to your market, property, and time.
Quick scenario:
- ADR: $150
- Occupancy: 65% on 30 days → Revenue ≈ $2,925
- Expenses: Mortgage $1,600; Utilities/Wi-Fi $250; Cleaning (6 turns x $90) $540; Supplies $80; Platform fees $175; Insurance/permits $100 → Total ≈ $2,745
- Estimated net: $180/month before reserves and maintenance.
When is it great?
- Strong weekend/event demand, limited hotel competition, professional photos, and responsive hosting.
When is long-term leasing better?
- Tight regulations, high HOA resistance, or if you prefer minimal involvement and predictable cash flow.
Pro tip: Run a sensitivity test. If occupancy drops 10% or ADR falls $15, does the deal still work? If yes, you’ve got a viable cushion.
Conclusion and next steps
Short term rentals can be a rewarding blend of hospitality and investment—if you lead with the numbers, respect the rules, and systemize the details. If you’d like tailored guidance on pricing, setup, and compliance in your market, HostCoach is here to help. Tell us about your property and goals, and we’ll map your next steps together. Contact Us to get started.
Meta Description
What is a short term rental? Learn how STRs work, from permits and pricing to setup and operations. A beginner’s guide for hosts ready to launch confidently.
Rich Media Suggestions
- Image gallery near “Your listing is your storefront”: Before-and-after photos of a staged living room, plus a flat-lay of essential amenities (linens, chargers, coffee setup).
- Infographic in “The money math comes first”: A simple visual showing ADR x Occupancy x Nights = Revenue, with a sample budget breakdown and break-even occupancy.
- Short video under “Operations on autopilot”: A 60–90 second walkthrough of a smart check-in flow—guest messaging snippet, smart lock code creation, cleaner task list.
Frequently asked questions (quick answers for new hosts)
What if my city bans short term rentals?
Check local code, HOA rules, and any grandfathering clauses. If bans exist, consider long-term leasing, corporate rentals, or converting to a hybrid model (long stays with occasional short-term exceptions where allowed). Do I need to be on multiple platforms? Not required, but listing on 2–3 marketplaces (Airbnb, Vrbo, Booking.com) increases visibility. Use a channel manager to prevent double-bookings and keep calendars synced. How much should I budget for initial setup? Plan for upfront costs: professional photos ($150–$400), basic furnishings ($2,000–$8,000 depending on unit size), linens and kitchenware ($300–$800), and safety/compliance upgrades ($200–$1,000). Factor in 2–3 months of operating expenses as a cash buffer. Can I manage an STR while working full-time? Yes. Automations, a reliable cleaner, and a co-host or property manager make it feasible. Expect some hands-on time for guest issues and maintenance. How do I handle cancellations and refunds? Set a clear cancellation policy in your listing. For disputes, document communications, and be familiar with platform mediation procedures. A simple launch checklist (day-by-day) Day 1–3: Legal & insurance - Verify local regulations and secure permits. - Update insurance to cover STR use. - Register for required taxes. Day 4–10: Prepare the space - Deep clean, repair, and declutter. - Buy essentials: quality mattress, linens, towels, kitchen basics. - Install safety items: smoke/CO detectors, fire extinguisher, smart lock. Day 11–14: Listing assets - Take 20–30 bright, staged photos. - Write a scannable title and description with clear house rules. - Set initial pricing (10–15% below comps) and minimum stay rules. Day 15–30: Soft launch - Publish with a launch rate and promote to local markets. - Gather feedback from first guests; tweak photos, amenities, and messaging. - Implement automations for messaging and cleaning. Tools and resources to speed progress Dynamic pricing: PriceLabs, Beyond Pricing, Wheelhouse. Channel management: Guesty, HostAway, Lodgify. Messaging & automation: Your Porter, Smartbnb (called Hospitable), Host Tools. Cleaning & operations: TurnoverBnB, Properly. Compliance & taxes: Host Compliance (city-level data), consult a local CPA familiar with lodging taxes. Performance KPIs to track weekly/monthly - ADR (Average Daily Rate) - Occupancy % - RevPAR (Revenue per Available Room) - Net operating income (after all expenses) - Average length of stay - Guest review score and response rate - Turnover time and cleaning cost per turnover Final takeaway Short term rentals reward hosts who treat the business like a small hospitality company: measure the numbers, follow the rules, and design systems that scale. Start conservatively, iterate from real guest feedback, and protect your downside with permits, insurance, and a cash buffer. With discipline and thoughtful hospitality, an STR can become a reliable income stream and a meaningful asset in your portfolio.