Every operator who has held a long-term lease and watched a neighbor outperform them on Airbnb has run this math. STR looks like the obvious winner. Then you add in turnover costs, OTA fees, the time spent coordinating cleanings at 11pm on a Sunday, and the months the calendar sits empty between peak seasons.
The math is more complicated than either side wants to admit. Here is what it actually looks like.
The decision is not binary
The right strategy for a property is not a one-time choice. It is a function of three variables that change over time.
Market demand density.
How many potential STR guests are searching within a reasonable drive? Tourism markets, coastal destinations, mountain retreats, urban metros have consistent demand. Suburban and rural markets typically do not.
Regulatory environment.
Does your city, HOA, or building permit STR? Some markets cap at 90 to 180 nights. Others banned it. LTR faces far fewer obstacles in most jurisdictions.
Owner management tolerance.
STR generates more revenue per unit but requires more management or a fee that eats into it. Owners who want truly passive income often end up at LTR even when STR would net more.
A 2BR unit, side by side
A furnished 2BR in a mid-size tourism market, moderate seasonality. Think Myrtle Beach, Asheville, or a mid-tier Colorado ski town. LTR comparison is a standard unfurnished lease at market rate in the same metro.
Gross annual revenue: STR runs $48K to $72K. LTR runs $24K to $36K. STR wins on gross.
Occupancy: STR runs 65 to 80%. LTR runs 95 to 100%. LTR wins on fill.
Then the costs land. OTA fees on STR: $4.8K to $10.8K. Turnover and cleaning: $4K to $9K. Higher maintenance wear: $2.4K to $5K. Off-season vacancy: $6K to $12K. Owner-paid utilities: $1.2K to $2.4K. Management fee if outsourced: $4.8K to $10.8K.
LTR carries almost none of that. Tenant pays utilities. Tenant cleans. Cleaning cost between leases is essentially zero. Maintenance is a fraction. Vacancy is one month max.
Net operating income: STR lands at $24K to $38K. LTR lands at $18K to $30K. STR wins by 25 to 35% in a favorable market. That gap compresses to near zero in low-demand or heavily regulated markets, or where PM fees run 25 to 30%.
"STR wins on gross. LTR wins on fill. Net depends entirely on market, regulation, and how much management the owner can absorb."
When STR wins
High tourism density. Properties within 30 minutes of a destination with consistent visitor traffic. Beach towns, ski resorts, major metros with strong weekend leisure demand. Even moderate seasonal demand at 200+ occupied nights at $180 ADR generates $36K gross before fees and beats LTR.
Premium nightly rates with no LTR equivalent. A 2BR downtown condo at $250 a night during a conference weekend generates $750 in three nights. The equivalent monthly rent might be $2,200.
Owners with in-house operations. PM companies with existing cleaner networks, handyman relationships, and guest comms have lower marginal cost of running STR than a solo owner. The revenue premium is fully captured.
Seasonal markets. Ski towns, lake communities, beach destinations dead 4 to 6 months under LTR can switch to LTR or mid-term in the off-season.
When LTR wins
Low STR demand markets. Suburban neighborhoods, college towns outside walk radius, mid-sized cities without tourism. STR in a market where 40% of nights sit empty is the worst of both worlds.
Strict regulation. If your market caps STR at 90 to 180 nights, requires owner occupancy, or bans it in residential zones, the math is settled.
Hands-off owners. If the owner does not want to manage guest comms, coordinate cleaners, or deal with lockouts, STR is the wrong fit unless they are paying 20 to 30%. At that rate in a moderate market, LTR often wins on net.
Remote properties. Mountain locations, rural settings, no reliable cleaner availability. Turnover logistics break down, costs spike, satisfaction suffers.
The hybrid is usually the right answer
The sophisticated operators do not pick STR or LTR. They mix both at the portfolio level, assigning each property to the strategy that fits its characteristics and the owner.
STR assets: beachfront and waterfront, units near major venues, downtown mixed-use, renovation-grade properties commanding premium rates.
LTR assets: suburban family inventory, properties in regulated zones, units where the existing tenant relationship is strong, furnished units near universities (mid-term to grad students is a hybrid play).
Seasonal rotation. STR in the high-demand window, LTR in the shoulder. Captures peak revenue while eliminating off-season vacancy risk. The math works when peak STR generates enough to offset breaking the LTR lease.
Mid-term rentals. Monthly corporate, traveling nurse leases, family relocations. Higher per-night than LTR, lower turnover than STR. Increasingly attractive as corporate and digital nomad demand grows in secondary markets.
How Pacer thinks about it
Pacer manages the revenue strategy layer across pure STR, pure LTR, and hybrid portfolios. For STR books we run booking pace, ADR, and channel mix against comp sets, adjust rates daily, and handle gap-fill automation. For hybrid portfolios we track portfolio RevPAR as the common metric across strategies.
If you want a property-by-property look at which assets in your book should be STR, LTR, or seasonal hybrid with real market and regulatory data, we run a free portfolio audit. No commitment. We will tell you where the strategy is leaving money on the table.
Adapted from Pacer’s editorial archive, May 2026.