Real-estate investors agree: Short-term rentals bring in more money but cause headaches. Here's the 'sweet spot' some are shifting to.

• Investors agree: Short-term rentals are more lucrative but require more time than long-term rentals.
• Some are shifting to offering mid-term rentals, which are typically defined as 30- to 90-day stays.
• Mid-term rentals offer a balance, providing steady income with less stress and management.

When Business Insider caught up with Amberly Grant in October 2024, she admitted that it had been "a total s--- week and a half."

The 36-year-old is on track to retire early thanks to smart investments, including real estate, but her short-term rentals were causing her extra stress at the time of the interview.

"I had someone trash my unit, steal the TV. I had a cleaner not show up," she told BI. "This week, for whatever reason, is like every five seconds I'm turning around and I'm losing money and having to deal with a problem. And then I could go a whole month and everything's OK and on autopilot. That's the problem with short-term rentals: It just blows up from time to time."

Grant puts up with the occasional blow-up because her Airbnb units bring in a lot more money than her long-term rentals. Comparatively, those properties are "simple," said the Colorado-based investor. "You have one person you're dealing with."

That's the consensus among real-estate investors: Hosting shorter stays throughout the year is more lucrative than having tenants sign a 12-month lease.

Especially with higher interest rates, which increase your monthly mortgage payment, "long-term rentals are just hard," said seasoned real-estate investor Zeona McIntyre. "In a lot of places with high home prices, and with the higher interest rates, often the mortgage is going to be more than what you could even charge for rent."

In her experience, the same property that may produce $200 in cash flow a month from a long-term tenant could earn up to $1,000 a month from tenants doing shorter stays.

The trade-off is time and effort. You're managing bookings and multiple guests a month, constantly optimizing your listing, keeping up with local regulations, and coordinating with cleaners.

Full-time real-estate investor Avery Heilbron categorizes short-term and long-term rentals as "two completely different things."

He manages a mixture of both. Two of Heilbron's 14 total units are Airbnbs. He focuses on unique stays — he has a cabin with a fire pit and hot tub, and a tiny home with a sauna — and says he brings in close to $5,000 a month from each.

"The Airbnb is definitely more work, definitely not what I would consider a passive activity. You're actively thinking about it — how to make it better — and checking pricing and all that stuff, whereas the long-term, you just sign a tenant and might have a couple of maintenance issues or requests throughout the year," he said.

It also requires a separate skillet. He considers the short-term rental business "more of a hospitality business than real-estate investing."

The 'sweet spot' of real-estate investing: Mid-term rentals

Short- and long-term rentals aren't the only options for real-estate investors. There's an in-between — mid-term rentals, which are typically defined as 30- to 90-day stays — and it could offer the best of both worlds: generous cash flow for relatively passive work.

McIntyre is convinced that mid-term rentals are the "sweet spot" in real-estate investing.

The strategy didn't come on her radar until 2020 when the COVID-19 pandemic hit and sent her Airbnb business into a tailspin.

"I was ramping up for a busy summer season. Some of my places were booked all the way through May. But when Covid came around in March, Airbnb said, 'We're going to let everyone cancel for free,'" said McIntyre. "I saw one or two cancellations at first, and then it was everything — all of my bookings canceled at once."

That's what led her to experiment with mid-term rentals, which she'd heard about through one of her friends who was having success catering specifically to travel nurses.

She listed her properties on Furnished Finder, which helps traveling professionals find temporary housing, and was surprised with the result: "I realized there are tons of people looking all the time for longer stays — and longer stays are kind of awesome because people don't need as much from you. They're OK to go buy their own toilet paper and change the batteries because they're living there. It was a whole different vibe from short-term rentals and way less stressful."

Today, more than three years after the pandemic hit, "it's my preferred method," said McIntyre, who wrote "30-Day Stay," to help other investors find and operate mid-term rentals. "I want a longer tenant in there, and I don't want to have to think about it for three months."

Heilbron is interested in adding some mid-term rentals to his portfolio. He's converting a 750-square-foot detached garage on his primary home's property into a rental that will help offset his current mortgage. He plans to list the garage for "30 plus days stays," he said.

Seattle-based investor Peter Keane-Rivera says he's changing his strategy heading into 2025 and "hybridizing" his Airbnb unit, a 70s-themed "Groovy Guest House," which he's operated as a short-term vacation rental for about two years. He also rents two single-family homes by the room to long-term tenants.

He enjoys the work that goes into managing a short-term rental. "It does allow you to provide a unique service and really to have control over the quality of that service," he said, explaining that he is more interested in offering 30-plus day stays to create more consistent revenue during the slow season.

"In the summertime, it pulls in a lot — in June and July, I made almost $5,000 on a one-bedroom in the outskirts of Seattle, so I'm fairly satisfied with that — but in the wintertime, there are lower margins," said Keane-Rivera. "I'd rather get something closer to market rent rates, not have to worry about it for four to five months during the slowest seasons, and then spin it back up for spring, summer, and fall to maximize the return."

He believes the ability to toggle between short- and mid-term rentals "is a real asset," he said, adding that if he expands to a second Airbnb unit, he'd use the same strategy: "For eight months out of the year I'd run it as an Airbnb and then during the low season, run it as a mid-term rental."