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The Future of Short-Term Rentals: Trends to Watch in 2025

• David (Viacheslav) Davidenko

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The landscape of Airbnb investing is evolving, and our latest episode dives deep into the major shifts happening as we approach 2025. As the short-term rental market continues to grow, now valued at a projected $21.6 billion in the U.S., investors must navigate a landscape full of opportunities and challenges. Join us as we explore critical factors like occupancy rates, regulatory hurdles, and the importance of location in crafting a successful strategy. 

We tackle the complexities that come with property management in the era of technology, highlighting how AI and data-driven tools are reshaping the investment landscape. From understanding niche markets that yield higher returns to coping with new regulations, this episode is packed with actionable insights every investor should know. Discover how to enhance guest experiences, improve communication, and foster positive reviews that will set your rental apart from the competition.

In the end, the world of short-term rentals is equally filled with risks and rewards. But with the right strategies and a proactive approach, anyone can thrive in this continually changing market. Don’t miss out on your chance to seize the opportunities that await. Join the conversation, and let’s unlock the potential of Airbnb investing together! Subscribe, share, and let us know your thoughts!

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Disclaimer: The content provided on this channel is intended for educational and informational purposes only and does not constitute investment, financial, or tax advice. We strongly recommend that you consult with qualified professionals before making any financial decisions. Past performance of investments is not indicative of future results. The information presented here is not a solicitation or offer to buy or sell any securities or investments. Our firm may have conflicts of interest, and we do not guarantee the accuracy or timeliness of the content provided. Investing involves risks, and you should carefully consid...

Speaker 1:

All right, so we're diving into this report today Airbnb investing in 2025.

Speaker 2:

A short-term rental analysis? Yeah.

Speaker 1:

Short-term rental analysis. You know, for anyone listening thinking about you know making some investments and we're going to break it all down.

Speaker 2:

Yeah, you've picked a really interesting time to be looking at this market.

Speaker 1:

Oh, is that right? It is Okay.

Speaker 2:

Because we're kind of past the boom, the wild, wild west days of Airbnb.

Speaker 1:

Right.

Speaker 2:

Things are more stable now, but it's way more competitive.

Speaker 1:

So it's not just like list your property and watch the money roll in anymore.

Speaker 2:

Not so much. No, ok, the report actually says the US short term rental market. It's going to be worth twenty one point six billion dollars by the end of 2025.

Speaker 1:

Wow, that's a lot.

Speaker 2:

Yeah, it sounds impressive, right, yeah, but the growth is slowing down compared to like right after the pandemic, when it was booming.

Speaker 1:

Oh, interesting. So investors have got to be a little more strategic these days, a little more strategic than maybe, say, five years ago. For sure, yeah Got it.

Speaker 2:

What worked then might not work so well now.

Speaker 1:

Right.

Speaker 2:

Like, take occupancy rates.

Speaker 1:

Okay.

Speaker 2:

The national average is 54.3%.

Speaker 1:

Okay.

Speaker 2:

But to make money you need more than that. Usually it depends on your costs, but Right right. So places like Pigeon Forge Tennessee, they're getting 61% occupancy.

Speaker 1:

Wow. That's why investors are looking there 61% occupancy Wow, that's why investors are looking there. So location, location, location still applies.

Speaker 2:

Oh, yeah, big time More than ever.

Speaker 1:

Even in this digital age.

Speaker 2:

Especially in the digital age Right. And speaking of location, you've probably seen those headlines about cities cracking down on short-term rentals.

Speaker 1:

Oh, yeah, definitely.

Speaker 2:

That's a huge thing to think about regulations, especially in those big cities.

Speaker 1:

Yeah, big cities, huge thing to think about regulations especially in those big cities.

Speaker 2:

Yeah, big city. Think about what happened in New York in 2023.

Speaker 1:

Oh yeah.

Speaker 2:

They banned almost all the non-hosted rentals. 80% of the listings were gone just like that.

Speaker 1:

Really 80%.

Speaker 2:

Yeah, overnight practically. Wow it was a hard lesson for a lot of investors.

Speaker 1:

That's crazy. So are big cities off limits for Airbnb now.

Speaker 2:

Not necessarily, but there's definitely more risk with the regulations, right, Right. And then there's oversupply too. It's not just the laws Right. Like Austin and Phoenix, last year they had a 20% jump in listings.

Speaker 1:

Wow.

Speaker 2:

Rove the prices down.

Speaker 1:

Oh, interesting.

Speaker 2:

It's line demand Classic.

Speaker 1:

Makes sense, so maybe diversify your portfolio.

Speaker 2:

It's worth thinking about.

Speaker 1:

yeah, Beyond just the major cities. Okay, I mean, this is all kind of daunting so far.

Speaker 2:

Yeah, it can be.

Speaker 1:

Isn't there anything? Any good news there is, Okay, let's hear it.

Speaker 2:

Some good news, some real positives, about short-term rentals.

Speaker 1:

Okay.

Speaker 2:

Say you have a property in Asheville, North Carolina, a popular spot. Tourists love it. As a short-term rental you could earn, let's say, $40,000 a year. Okay, Long-term lease, maybe $18,000.

Speaker 1:

Wow, that's almost double.

Speaker 2:

Right, it's a big difference.

Speaker 1:

Yeah, big time.

Speaker 2:

And there's more flexibility with short-term rentals too. Oh like how, so you can change your strategy with the market, even block off time if you want to use the place yourself.

Speaker 1:

That's nice.

Speaker 2:

Right and the returns in the good markets at least 10, 12% annually, great hedge against inflation. So there's definitely still potential, even with the challenges.

Speaker 1:

Yeah, and the way people travel these days, it seems to be working in favor of short-term rentals too.

Speaker 2:

Absolutely Remote. Work is huge and bleisure travel.

Speaker 1:

Bleisure travel. That's a new one, yeah.

Speaker 2:

Mixing business trips with vacation. People need spaces for both.

Speaker 1:

Right, so you're saying workations are driving demand?

Speaker 2:

Exactly In 2024, 35% of travelers booked Airbnbs for work trips.

Speaker 1:

Wow, it's becoming the norm, then. Seems like it, wow.

Speaker 2:

It's becoming the norm, then Seems like it, but they're not exactly passive income, right. No, not really. Definitely more hands-on than regular rentals.

Speaker 1:

So what's involved? What kind of things?

Speaker 2:

Cleaning, talking to guests, maintenance, it's all going on.

Speaker 1:

Right.

Speaker 2:

I can see how that could be a lot. And if you don't want to do it all yourself, you hire a property manager, but that takes a bite out of your profits. 20, 30 percent oh wow, that's a significant chunk.

Speaker 1:

Yeah, and you have to remember the market can change. Things happen In what?

Speaker 2:

way.

Speaker 1:

The economy for one downturns, oversupply, travel trends changing.

Speaker 2:

Right right.

Speaker 1:

All that affects your bottom line.

Speaker 2:

So it's not a guaranteed win.

Speaker 1:

No, not at all. Like Phoenix last year their prices dropped 15%. Wow, too many listings, oversaturated market.

Speaker 2:

Got it, so planning is key here.

Speaker 1:

Absolutely. And those costs, you got to be ready for those too.

Speaker 2:

Like what specifically?

Speaker 1:

Well, mortgage rates are still high 6%, 7%. And insurance, short-term rental insurance, that can be a real surprise.

Speaker 2:

How so.

Speaker 1:

It could be 25, 40% more expensive than regular rental insurance.

Speaker 2:

Really.

Speaker 1:

Yeah, so you have to crunch those numbers carefully.

Speaker 2:

Okay, so there's definitely some financial hurdles there.

Speaker 1:

There are.

Speaker 2:

But it sounds like, for me at least I'm hearing. You know you got to balance the optimism with being realistic.

Speaker 1:

Well said yeah.

Speaker 2:

Okay. So how about looking ahead? Then let's do it. Being realistic, well said yeah, okay. So how about looking ahead? Then let's do it. What's the report say about the future? Well, they predict moderate growth, about 3-5% a year until 2027.

Speaker 1:

Okay.

Speaker 2:

But investors have to be flexible. Flexible. They think niche properties are going to be really important.

Speaker 1:

Niche properties. Okay, tell me more.

Speaker 2:

Like luxury rentals, pet friendly places, homes set up for workations.

Speaker 1:

Right.

Speaker 2:

They cater to specific needs and they're getting way more bookings 20, 30 percent higher than average.

Speaker 1:

Wow, so targeting a specific type of traveler.

Speaker 2:

That's the smart move, yeah. Ok, interesting and international travel is coming back strong too. That's good news, great news for short term rentals.

Speaker 1:

More potential guests. Yeah.

Speaker 2:

Exactly, and domestic leisure travel in the US that's supposed to grow almost 4% in 2025. Wow, over a trillion dollars spent back to pre-pandemic levels.

Speaker 1:

That's fantastic news. Yeah, it is Anything else, any other trends on the horizon we should be watching for?

Speaker 2:

Oh yeah, technology is a game changer. Okay, in what way? Platforms like Airbnb. They're using AI and personalization, now Interesting Matching travelers with listings based on what they like.

Speaker 1:

Oh, it's boosting booking rates already 10, 15 percent, so it's not just about having a great property anymore.

Speaker 2:

No, it's how you use tech to market it. Reach the right people Makes sense. But there are risks too. We can't ignore those. Like what a recession, for one that could hit travel spending hard. And those stricter regulations? They could spread to smaller markets.

Speaker 1:

Oh, okay.

Speaker 2:

And then there's the climate. You know those big disasters we've seen.

Speaker 1:

Right the wildfires, hurricanes.

Speaker 2:

Exactly, they're affecting places like Florida and California, disrupting travel.

Speaker 1:

Yeah, scary stuff.

Speaker 2:

Yeah.

Speaker 1:

So it really sounds like I mean investing in short-term rentals in 2025, it's a bit of a maze Opportunities everywhere, but got to watch your step.

Speaker 2:

That's a good way to put it.

Speaker 1:

So bottom line yeah, should someone invest in short-term rentals in 2025?

Speaker 2:

Honestly, there's no one right answer for everyone. Okay, it depends your goals, how much risk you're comfortable with your strategy.

Speaker 1:

Right Makes sense, but can we offer any guidance?

Speaker 2:

We can definitely give some pointers based on what we've learned.

Speaker 1:

OK, let's do that. What are the green lights? The things that make it attractive.

Speaker 2:

OK, so first location, that's huge, always Like Nashville or Asheville, strong occupancy, short term rentals are welcome there.

Speaker 1:

So research your market.

Speaker 2:

Yeah, absolutely.

Speaker 1:

Don't just jump in blindly, no way, ok, what else?

Speaker 2:

Being prepared to manage it yourself or having a good property manager lined up.

Speaker 1:

Right that hands-on element.

Speaker 2:

Yeah, and then having some financial cushion for slow season surprise expenses, even if the regulations change.

Speaker 1:

So a safety net.

Speaker 2:

Exactly. You never know.

Speaker 1:

Okay, that makes sense.

Speaker 2:

So know your market, be ready to manage and have a backup plan.

Speaker 1:

Got it. Now what about the red flags, the things that might make someone say, hmm, maybe not?

Speaker 2:

Okay. So if you want truly passive income, this is probably not it. Okay, long-term rentals, maybe REITs.

Speaker 1:

those might be better To know your investment style Right, what else?

Speaker 2:

If a city has lots of regulations or too many listings already those are risky, got it. And if you have a big mortgage, you really need that cash flow, so be extra careful.

Speaker 1:

So weighing the potential but being aware of the risks.

Speaker 2:

Exactly.

Speaker 1:

All right. Well, we've covered a lot of ground today, from those trends, investment strategies to practical tips.

Speaker 2:

It has been a deep dive.

Speaker 1:

It has, but hopefully it's given our listeners some things to think about some steps to take. I hope so too this market. It's constantly changing right.

Speaker 2:

All the time.

Speaker 1:

So staying informed, adapting that's key to success.

Speaker 2:

Couldn't agree more.

Speaker 1:

All right Now before we wrap up. All right Now, before we wrap up. I want to go back to that question about the future of short-term rentals.

Speaker 2:

Okay.

Speaker 1:

And specifically the role of technology, because it feels like we're on the cusp of some big changes.

Speaker 2:

It's pretty wild to think about, right.

Speaker 1:

It is.

Speaker 2:

Like how is AI and personalization going to change travel in the next few years?

Speaker 1:

I can already picture it like AI travel assistance. Oh yeah, planning everything, finding those hidden gems based on what you like, totally, even booking your flights, arranging all the transportation.

Speaker 2:

Seamless right.

Speaker 1:

Seamless yeah.

Speaker 2:

And imagine you walk into your Airbnb.

Speaker 1:

It's a smart home. Knows what you want before you even ask.

Speaker 2:

Oh, wow.

Speaker 1:

Temperature's perfect lights are set, music's playing.

Speaker 2:

That sounds so futuristic.

Speaker 1:

It does, but I think it's closer than we realize, I think you're right. It makes you wonder, though, right About what happens to the host then.

Speaker 2:

Yeah.

Speaker 1:

Do we even need property managers if everything's automated? Good question. And what about the guest experience? Will it be even better, super personalized?

Speaker 2:

Right.

Speaker 1:

Or will we lose that personal touch that makes travel so special?

Speaker 2:

That human connection.

Speaker 1:

Exactly.

Speaker 2:

It's a lot to consider.

Speaker 1:

It is.

Speaker 2:

As we enter this new era of travel.

Speaker 1:

Yeah, the future of short-term rentals. It's full of potential.

Speaker 2:

I'm excited to see where it goes.

Speaker 1:

Me too. It's a really exciting time to be part of this industry.

Speaker 2:

So let's shift gears a bit, okay, and talk about the practical steps.

Speaker 1:

Right.

Speaker 2:

Someone wants to get started with Airbnb investing.

Speaker 1:

Yeah.

Speaker 2:

Where do they begin?

Speaker 1:

Well, the first thing always is market research. Okay, don't just jump in because you heard a city's hot Right.

Speaker 2:

Dig into the data. Occupancy rates, average daily rates. What are the regulations? Who's the competition?

Speaker 1:

So avoid the hype.

Speaker 2:

Exactly Do your homework. Okay, what's?

Speaker 1:

next.

Speaker 2:

Think about your ideal guest. Who are you trying to attract? Families, business travelers, digital nomads Right Tailor your property, your marketing, to that specific group.

Speaker 1:

Like we talked about, with those niche properties.

Speaker 2:

Exactly Cater to their needs and wants.

Speaker 1:

Got it. So market research target audience. What else is on the checklist?

Speaker 2:

Time to crunch the number.

Speaker 1:

Oh yeah, the budget.

Speaker 2:

Create a realistic financial plan. Include everything Mortgage payments, property taxes, insurance, utilities, maintenance and don't forget those platform fees Airbnb and VRBO. They take their cut Right. They do no rose colored glasses here. Be honest with yourself.

Speaker 1:

Okay, no sugarcoating.

Speaker 2:

And think about the time commitment too.

Speaker 1:

Okay.

Speaker 2:

Managing a short-term rental. It's hands-on.

Speaker 1:

It is.

Speaker 2:

Are you ready to handle all that?

Speaker 1:

Guest communication, cleaning, maintenance, all of it.

Speaker 2:

All of it, if not factor in hiring a property manager.

Speaker 1:

So it's not just money, it's time too.

Speaker 2:

Exactly, you're investing both.

Speaker 1:

Okay, now let's talk about the property itself.

Speaker 2:

All right.

Speaker 1:

What are today's guests looking for?

Speaker 2:

Well, high-speed internet is a must-have these days.

Speaker 1:

Especially for those bleacher travelers.

Speaker 2:

Absolutely, and a dedicated workspace is a huge plus, makes sense and don't underestimate outdoor space a balcony, patio, even a small yard.

Speaker 1:

Oh yeah, Especially in cities.

Speaker 2:

People crave that connection to nature.

Speaker 1:

So think about what would make you want to stay there.

Speaker 2:

Yeah, Create a space that's comfortable inviting.

Speaker 1:

Okay, any other tips for finding that perfect property?

Speaker 2:

Location, location, location. Of course, is it close to things people want to see and do.

Speaker 1:

Attractions, restaurants, transportation.

Speaker 2:

Exactly Is the neighborhood to things people want to see and do. Attractions, restaurants, transportation Exactly, is the neighborhood safe, walkable?

Speaker 1:

Right. All those things can affect your bookings.

Speaker 2:

Absolutely Happy guests. Good reviews, it all matters.

Speaker 1:

So you found the perfect property. Now, how do you make it stand out online?

Speaker 2:

Great question. High quality photos are crucial. Maybe even hire a professional photographer. Showcase the best features.

Speaker 1:

Right, make it look amazing.

Speaker 2:

And the description. That's important too. Don't just throw something together.

Speaker 1:

So what makes a good description?

Speaker 2:

Be detailed. Highlight those unique amenities. Use language that speaks to your target audience.

Speaker 1:

So paint a picture with words.

Speaker 2:

Exactly, capture the essence of the space, the experience.

Speaker 1:

Got it. Now what about pricing?

Speaker 2:

That's the tricky part. It's a bit of an art and a science.

Speaker 1:

How.

Speaker 2:

Research. What other places are charging in your area? Okay, think about seasonal changes and be ready to adjust your prices based on demand.

Speaker 1:

So stay flexible.

Speaker 2:

Yeah, there are dynamic pricing tools too. They use real-time data to help you optimize Interesting, so you're always competitive.

Speaker 1:

Okay, so we've got the property, the listing, the price. Now how do you create those five-star experiences?

Speaker 2:

Ah, that's where the magic happens.

Speaker 1:

So what's the secret?

Speaker 2:

Communication is key. Be responsive to inquiries. Give clear instructions. Be available to answer questions. Go the extra mile. A welcome basket. Personalize recommendations for local spots.

Speaker 1:

Those little touches.

Speaker 2:

Yeah, they make a difference. Create a memorable experience.

Speaker 1:

It's that personal touch.

Speaker 2:

Exactly. And, of course, don't forget the basics Cleanliness, comfort, functionality, right. Make sure the place is spotless, beds are comfy, everything works.

Speaker 1:

The non-negotiables.

Speaker 2:

Absolutely no cutting corners there.

Speaker 1:

Okay, so we've covered a lot, from market trends and strategies to practical tips for getting started and creating a great listing.

Speaker 2:

It's been a deep dive, for sure.

Speaker 1:

It has, but hopefully we've given our listeners a lot to think about.

Speaker 2:

I hope so.

Speaker 1:

Some concrete steps they can take.

Speaker 2:

Yeah, that's the goal.

Speaker 1:

This market, it's dynamic, it's always changing All the time. So staying informed, adapting that's how you succeed.

Speaker 2:

Couldn't agree more.

Speaker 1:

Absolutely. It really is constantly evolving, and I think that's one of the key takeaways here. Yeah, short-term rental, investing it can be really rewarding.

Speaker 2:

It can.

Speaker 1:

But it's not a passive thing.

Speaker 2:

No.

Speaker 1:

It takes work, it takes research, for sure. You got to be willing to adapt. You do. Things are changing all the time, all the time. For those who are willing to put in that effort, though, the rewards can be significant.

Speaker 2:

They can be. Yeah, it's not just about making money, though, right, it's about building a business you know, yeah, treating it like a business. Exactly. And one thing to always remember this market, it never stands still Right. New trends are always popping up. Regulations change. Technology throws us curveballs All the time. You got to be ready for anything.

Speaker 1:

So staying informed is key.

Speaker 2:

Absolutely.

Speaker 1:

Being flexible, adapting to whatever comes your way.

Speaker 2:

Couldn't agree more Continuous learning. That's essential.

Speaker 1:

Yeah, in any investment really, but especially this one.

Speaker 2:

Especially this one. Yeah.

Speaker 1:

Okay, well, before we wrap up completely, I want to circle back to something we touched on earlier, that question about the future of short-term rentals. Okay, and specifically the role of technology.

Speaker 2:

Yeah, because it really feels like we're on the verge of some major shifts. It does, doesn't it? It does. It's exciting, but kind of scary too, you know.

Speaker 1:

It is a little bit of both.

Speaker 2:

Like how is AI going to change everything?

Speaker 1:

Yeah, and personalization.

Speaker 2:

It's fascinating to think about.

Speaker 1:

It is. I mean, I could already picture it like AI-powered travel assistants.

Speaker 2:

Oh yeah.

Speaker 1:

Planning our trips, curating these hyper-personalized itineraries.

Speaker 2:

Right, like finding those hidden gems you'd never discover on your own.

Speaker 1:

Exactly Based on your unique interests and maybe even handling all the logistics.

Speaker 2:

Booking your flights, arranging transportation the whole nine yards.

Speaker 1:

Seamless, effortless travel.

Speaker 2:

That's the dream, right.

Speaker 1:

It is, and then you arrive at your Airbnb and it's a smart home.

Speaker 2:

Oh yeah.

Speaker 1:

It anticipates your needs, adjusts the temperature.

Speaker 2:

The lighting, the music, everything.

Speaker 1:

To create that perfect ambiance.

Speaker 2:

The ultimate personalized experience.

Speaker 1:

It sounds so futuristic.

Speaker 2:

It does, but honestly I think it's closer than we realize.

Speaker 1:

I think you're right. It's just around the corner.

Speaker 2:

Yeah, and it raises some interesting questions, doesn't it About? Well, like what happens to the role of the host in that scenario? Yeah, do we even need property managers in a world where everything's automated?

Speaker 1:

That's a good question.

Speaker 2:

And what about the guest experience?

Speaker 1:

Right.

Speaker 2:

Does it become even more seamless and personalized? Yeah, or do we lose something in the process?

Speaker 1:

That human touch, that connection.

Speaker 2:

Exactly, it's a delicate balance.

Speaker 1:

It is A lot to think about as we navigate this new frontier.

Speaker 2:

Yeah, the future of short-term rentals.

Speaker 1:

it's full of potential and challenges for sure.

Speaker 2:

But it's definitely exciting.

Speaker 1:

It is. It's a really exciting time to be part of this industry.

Speaker 2:

Well folks, we've reached the end of our deep dive into Airbnb investing in 2025.

Speaker 1:

We have.

Speaker 2:

We've explored the trends, the opportunities, the challenges, the potential risks.

Speaker 1:

And hopefully we've given you some food for thought.

Speaker 2:

Yeah, some actionable insights to help you on your own investment journey.

Speaker 1:

Absolutely.

Speaker 2:

Remember do your research plan carefully.

Speaker 1:

Be prepared to adapt because this market it's constantly evolving. It is, but the potential is there for those who are willing to put in the work.

Speaker 2:

It is. The short-term rental market is waiting for you.

Speaker 1:

Go out there and make it happen.

Speaker 2:

And hey, if you find success, come back on the show, tell us your story.

Speaker 1:

We'd love to hear it.

Speaker 2:

Until then, happy investing.

Speaker 1:

Happy investing.

Speaker 2:

And remember, sometimes the best investment is a well-deserved vacation.

Speaker 1:

Couldn't agree more Safe travels everyone.

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David (Viacheslav) Davidenko

Host