Why Short-Term Rentals Are Risky in 2025 (and What to Do Instead)

Why Short-Term Rentals Are Risky in 2025 (and What to Do Instead)

If you’ve been considering investing in real estate, particularly through short-term rentals like Airbnb, you’ve likely heard the hype. Many people have turned to platforms like Airbnb to generate passive income, especially in popular vacation destinations. However, as we step into 2025, short-term rentals are facing increasing challenges and risks that investors need to be aware of. In this post, we’ll explore why short-term rentals are becoming riskier and what smarter, more sustainable alternatives like midterm rentals have to offer.

The Rising Risks of Short-Term Rentals in 2025

1. Increased Regulation and Licensing Requirements

One of the biggest challenges facing short-term rental investors is the rise in regulations. Cities and municipalities are cracking down on short-term rentals due to concerns about housing availability, noise, and the impact on local communities. In 2025, more regions are enforcing stricter rules, such as licensing requirements, zoning restrictions, and limitations on the number of nights a property can be rented.

For example, cities like New York, San Francisco, and Barcelona have already imposed stricter regulations on short-term rentals, making it harder for property owners to turn a profit. These regulations often come with expensive fines, restricted operating hours, and limited flexibility.

2. Increasing Competition and Lower Profit Margins

The short-term rental market has become increasingly saturated, especially in popular tourist areas. As more people jump into the Airbnb space, competition has become fierce, and the days of easy profits are disappearing. In 2025, many hosts are finding it harder to achieve high occupancy rates and are having to drop their rental prices to stay competitive. This leads to slimmer profit margins and less return on investment.

3. Rising Costs and Supply Chain Disruptions

With global supply chain issues and inflation on the rise, short-term rental investors are facing increasing costs. Furnishing and maintaining properties, managing guest turnover, and dealing with unexpected repairs can quickly eat into profits. These costs are especially challenging when occupancy rates decline due to increased competition or stricter regulations.

4. Shift in Traveler Preferences

As remote work becomes more normalized, travelers are seeking longer stays rather than quick, short-term vacations. Many prefer places that offer more comfort, privacy, and amenities, like home offices, high-speed internet, and fully furnished spaces—features typically associated with midterm rentals, not short-term stays.

What to Do Instead: The Rise of Midterm Rentals

In light of these challenges, many investors are shifting their focus to midterm rentals (MTRs) as a more stable and profitable option. Midterm rentals fill the gap between short-term vacation rentals and traditional long-term leases, offering 30 to 180-day stays.

Here’s why midterm rentals are a smart alternative in 2025:

1. Less Regulation and More Flexibility

Midterm rentals tend to have fewer regulatory hurdles compared to short-term rentals. Cities and towns are less likely to impose restrictive rules on midterm rentals, allowing you to maintain more control over your property and income. This makes midterm rentals a safer, more predictable investment in a rapidly changing real estate landscape.

2. Consistent Income and Targeted Demand

Midterm rentals attract a more consistent and predictable tenant base. Professionals on work assignments, medical staff, remote workers, and relocating families are all seeking midterm housing solutions. These tenants are often willing to pay a premium for the comfort and convenience of a longer-term stay, providing a steady, reliable income stream.

3. Lower Operating Costs and Less Turnover

With longer stays, midterm rentals experience fewer turnovers, reducing the time and cost associated with cleaning, repairs, and re-booking. This results in lower operational headaches and more time to focus on growing your business.

4. Targeted Amenities and Higher ROI

Midterm tenants are typically looking for fully furnished properties with amenities such as Wi-Fi, home offices, and comfortable living spaces. By offering these features, you can cater to a specific demand and increase your chances of achieving higher occupancy rates and better returns.

Conclusion

While short-term rentals have their place, the risks associated with them are growing as regulations tighten, competition intensifies, and profit margins narrow. In 2025, midterm rentals offer a more stable, profitable alternative for investors looking to generate consistent income without the headaches of short-term rental management.

If you’re ready to explore the midterm rental space and build a business that provides more flexibility and less risk, check out our free training on the MTR Formula to learn how you can succeed in this growing market.

Watch the Free Training Here

To your success,

Coach Nick