VaultSTRThe revenue gap is real
Across the 230 active properties on our underwriting desk, median projected gross revenue runs about $60,000 a year — for properties whose long-term market rents would typically land between $1,800 and $2,800 a month. That’s the headline STR premium: roughly 2–3x gross in leisure markets. Nobody disputes the gross; the argument is over what survives expenses.
What each side keeps
The long-term rental keeps most of its smaller number: one tenant, one utility handoff, ~35–45% expense ratios including management and reserves. The STR gives back 35–50% of gross before debt service — cleaning not fully passed through, utilities, supplies, software, OTA fees, lodging taxes, furnishing reserves — and still typically nets more in markets with real demand. Our host income breakdown walks the full gross-to-net path. The honest summary: a good STR beats a good LTR on cash flow; a mediocre STR loses to a good LTR after you price your own time.
Effort is the real currency
A long-term rental is measured in hours per month; a self-managed STR in hours per week. Guest messaging, turnovers, pricing, restocking — it’s a hospitality business, and the hours you put in are also what unlock the tax treatment. Software collapses the workload (our PMS and pricing-tool research covers the standard stack), and full-service management converts effort back into a 15–25% fee — pushing STR economics closer to LTR-plus.
Taxes quietly favor the STR
For high-income owners this is the sleeper factor: STRs with average stays of seven days or less sit outside the passive-loss rules, so bonus depreciation and cost segregation losses can offset W-2 income with ordinary material participation — no real estate professional status required. The same losses on a long-term rental sit passive for most W-2 earners. Year-one after-tax returns on comparable properties can diverge dramatically because of this alone.
Risk: regulation vs. tenancy
The STR’s existential risk is regulatory — a permit cap or ordinance change can convert your business into a long-term rental overnight, which is why regulation checking is step one of our underwriting and why buying in hostile cities at aggressive prices is how people get hurt. The LTR’s risks are tenant-shaped: non-payment, eviction timelines, turnover damage. A useful frame: the STR carries policy risk you can research before buying; the LTR carries counterparty risk you manage forever. Hybrid exits — mid-term furnished rentals — are the hedge in between.
Put this to work
Three ways to move from reading to doing: browse today’s underwritten deals and get three more in your inbox every morning via the Daily Deal newsletter below; run your own numbers in the free pro forma builder or revenue calculator (unlocking the full report creates your free VaultSTR account); or tell our desk what you’re looking for and we’ll point you to a vetted agent and the right tools for your situation.
Bottom line
Buy the STR when the market’s revenue premium survives honest expenses, the regulations are stable, and you’ll actually run it (or pay management and still clear the LTR). Buy the LTR when you value your hours above the spread or the market’s STR premium is thin. Underwrite both on the same property — the pro forma builder makes the comparison a ten-minute exercise.