The decision between short-term and long-term rental is often made looking only at the gross yield advertised for short-term rentals, which almost always appears higher. But the real net yield, once management costs, vacancy and regulatory risk are subtracted, tells a different story.
1. Gross vs net yield comparison. Short-term rental typically shows a 20-40% higher gross yield compared to long-term rental on the same property. But management costs (cleaning, linens, booking management, more frequent maintenance, 15-20% platform commissions) significantly reduce this advantage. The real net yield of short-term rental, after all operating costs, is often only 5-15% higher than long-term — not the 30-40% that appears gross.
2. Vacancy rate: the most underestimated factor. Long-term rental typically has a vacancy rate under 5% annually with a good tenant. Short-term rental, even in strong tourist destinations, has realistic average occupancy between 55% and 75% annually outside a few top locations — the rest of the year the property generates no income while fixed costs (mortgage, condo, utilities) continue running.
3. Regulatory risk: the variable changing the rules. Cities like Rome, Florence, Lisbon, Barcelona and Amsterdam have introduced or are introducing growing restrictions on new short-term rental licenses. An investment based exclusively on short-term rental model is today more exposed to regulatory risk than 5 years ago. Whoever invests only for this model must consider a forced conversion scenario to long-term as base hypothesis, not as improbable extreme case.
4. Operational management load: time, not just money. Short-term rental requires continuous active management — guest communication, check-in/check-out, cleaning between stays, review management. Even outsourcing to a property manager (typical cost 20-25% of revenue), it remains an investment with structurally higher operational load than long-term, where management reduces to a few annual tenant interactions.
5. The practical decision criterion. Choose short-term rental if: the location has structural and stable tourist demand, local regulation is favorable and stable, and you are willing to manage (or pay to manage) continuous operations. Choose long-term rental if: you seek passive income with minimal management load, local regulation is tightening, or the primary objective is cash flow stability more than yield maximization.
FAQ. Does a hybrid model (short-term in high season, long-term the rest of the year) work? In destinations with marked seasonality it can work, but introduces additional contractual and regulatory complexity — always verify if local regulation allows it without double license. How is the true net yield of a short-term rental calculated? Gross yield minus platform commissions, cleaning/management costs, extra utilities, tourist tax if not passed to the guest, and a realistic occupancy rate based on historical zone data.
If you are evaluating which rental model to apply to a property you have or want to buy, let us book a call: we build together a realistic ROI analysis based on specific data from your area.
