Easy Money? The Business of Renting in Vermont

Real Estate InvestingRevenue PotentialRental Management
Written By Julie Marks

Short-term rentals (STRs) have exploded in popularity over the past decade, with platforms like Airbnb and Vrbo easily enabling property owners to rent out their homes on a nightly basis, and travelers loving the extra amenities and unique spaces that STRs provide. This surge in popularity has led to a common belief that vacation rentals are an effortless way to generate passive income, providing "easy money" or "fast cash." However, the reality is far more complex. While short-term rentals can be profitable, they come with significant time, effort, and financial commitments that many new hosts underestimate.

The Illusion of High Income

One of the biggest attractions of short-term rentals is the potential for high nightly rates. A property that rents for $250 per night may seem far more lucrative than a long-term rental (LTR) earning $1,800 per month. However, the reality is it’s not an apples-to-apples comparison.

  • Occupancy Rates Matter: In Vermont, the average occupancy rate for vacation rentals hovers around 50% (according to data from PriceLabs) meaning that even with high nightly rates, actual earnings can be unpredictable. In contrast, long-term rentals typically have near-100% occupancy, providing consistent and reliable income.

  • Seasonality & Market Fluctuations: Many vacation rental markets experience seasonal highs and lows. Properties in ski towns may struggle in the summer, while lakefront homes may sit empty in winter. This fluctuation means income is inconsistent, requiring owners to plan for off-season slumps.

The Hidden Costs of Vacation Rentals

Unlike traditional rentals, short-term rentals require more than just a mortgage payment and occasional maintenance. To remain competitive, hosts must regularly invest in furniture, décor, and ongoing amenities. Additional costs include:

  • Furnishings & Upkeep: A well-decorated and fully equipped rental can cost thousands of dollars to furnish, often totaling $5,000-$15,000 per room. Regular updates are needed to keep the space appealing and replace worn or damaged items.

  • Cleaning & Maintenance: Unlike long-term rentals, which might require a deep clean only once a year at most, vacation rentals need professional cleaning between each guest stay, adding significant labor and costs. The average vacation rental cleaner charges $40-$60 per hour.

  • Utility Bills: Hosts are responsible for electricity, water, internet, and other utilities and services, that would typically be covered by long-term tenants. And who doesn’t take longer showers and leave all the lights on when they’re on vacation!?

  • Platform Fees & Taxes: Many platforms, like Airbnb and Vrbo, charge service fees, which eat into nightly profits. Additionally, STRs are required to collect and remit state and local taxes that long-term rentals are not required to pay. In some Vermont towns, such as Burlington, STRs are taxed even more than corporate hotels.

  • Marketing & Operations: Attracting guests to rent an STR requires much more spending on marketing than a long-term rental. STR owners often pay for website development, marketing software subscriptions, and other technology products that support their daily hospitality and management operations.

The Time Commitment of Hosting

Running a successful short-term rental is not a "set it and forget it" endeavor. Hosts must be actively involved in various aspects of guest management, including:

  • Guest Communication: Answering inquiries, coordinating check-ins and check-outs, and handling last-minute issues require constant attention.

  • Turnover & Cleaning: Ensuring the property is spotless between guests takes significant effort, especially with back-to-back bookings.

  • Handling Repairs & Complaints: More guests mean more wear and tear, increasing the likelihood of damages and maintenance requests.

  • Marketing & Reviews: Unlike long-term rentals that require tenant screening once a year, short-term rentals need continuous marketing, listing optimizations, and guest interaction to maintain good reviews and attract bookings.

Factors That Influence Vacation Rental Success

Not all short-term rentals perform the same. And often, the same STR will perform differently depending on its management. Several key factors that influence the revenue potential beyond occupancy rates and pricing include:

  • Location: Properties in high-demand tourist destinations generally command higher rates and occupancy. Proximity to attractions, dining, and entertainment can play a significant role.

  • Amenities: Features like hot tubs, pools, fireplaces, game rooms, high-speed internet, chef kitchens, child-safety locks, accessibility features, etc. can make a rental more attractive to certain types of travelers.

  • Rarity & Unique Appeal: Properties with a rare or one-of-a-kind feature (like a unique architectural design or breathtaking views) can offer the new experience that travelers look for in a vacation rental.

  • Rental Policies: Allowing pets can increase occupancy, as many travelers seek pet-friendly accommodations, but it can also lead to additional wear and tear and expenses for the homeowner. Other policies such as minimum length of stays, cancellation policies, smoking policies, etc. have an influence as well.

  • Marketing Strategies: Professional photography, compelling descriptions, dynamic pricing strategies, and active social media promotion can significantly impact a property's visibility and success.

The Reality: Short-Term Rentals Take Work

Unlike passive rental income from long-term leases, STRs function more like hospitality businesses. Success requires excellent customer service, constant attention to detail, and the ability to adapt to changing market conditions. Many hosts find that the time and effort required, make short-term rentals feel more like a full-time job rather than a passive investment. Industry statistics suggest that 1 long-term rental unit requires 1 hour of work per week on average, while 1 short-term rental unit requires 8 hours of work per week.

Short-term rentals can be profitable, but they are not a guaranteed source of "easy money" or "fast cash." Between high operational costs, fluctuating occupancy rates, and the significant time commitment required, being a STR Host is far from effortless. Homeowners considering this route should carefully assess whether they are ready for the demands of the hospitality industry before assuming short-term rentals will provide quick and easy wealth.

Comparing Revenue Potential: STR vs. LTR

Here’s an example scenario:

Long-Term Rental Income Potential

  • Property: Duplex in Burlington with 2 units renting at $1,800 each ($3,600 total monthly income)

  • Mortgage, Taxes & Insurance: $2,500 per month

  • Maintenance & Misc. Costs: $300 per month

  • Net Income: Around $800 per month ($9,600 per year)

Short-Term Rental Income Potential

  • Gross Income: Duplex in Burlington with 2 units renting at $250 per night for 15 nights per month each ($7,500 total monthly income)

  • Mortgage, Taxes & Insurance: $2,500 per month

  • Meals & Room Tax and Local Taxes (22%): $1650 per month

  • Cleaning, Utilities & Supplies.: $3,000 per month

  • Net Income: Around $350 per month ($4,200 per year)

In this scenario, the profit is significantly lower for the STR than for the LTR.

To STR or LTR, That Is the Question

Being a landlord in Vermont can be profitable, especially in high-demand areas. However, vacation rentals may not always offer the significantly higher income that some assume. While short-term rentals can have peak periods of high income, the lower occupancy rate and higher expenses can reduce overall earnings. The revenue potential of an STR depends on several factors. Whether you choose to rent long-term or short-term, understanding the financial dynamics and time commitment is key to maximizing your returns.

Additional Resources:

Julie Marks
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