Let me guess: you’re married, early 40s, two kids under ten. Both of you have solid jobs: one in medicine, the other in some corporate gig that forces you to say things like “circle back.” You’ve got a high savings rate, a Costco membership, and a dream: buy a cute little property and let strangers Venmo their way to your early retirement.
So you do some cursory research. A guy on Tiktok says he’s making $20k/month from a tiny home in Tiburon. Your sister-in-law raves about the “cap rate” on her A-frame in Asheville. Then you run the numbers (on a napkin at a brewery, natch) and project out healthy income after expenses, which you defined as the mortgage plus cleaning fees (but somehow forget taxes, insurance, repairs, utilities, subscriptions, HOA fees, the cost of your time, and the emotional trauma of Denise from Delaware complaining about the water pressure). You love the idea of being a real estate “investor,” but let’s be real. You didn’t just buy a property, you bought a job. A job you certainly don’t need.
In real estate investing, there’s a very clear line between fantasy and reality. The fantasy: buy a charming bungalow in a hot market, spend a weekend furnishing it with IKEA and Etsy finds, throw it on Airbnb, and watch the bookings roll in like a Taylor Swift pre-sale. The reality: That hot market now has 300 other listings. Your first guest clogs the toilet and messages you after dinner while you’re trying to watch The Pitt. Your cleaner cancels last-minute, so you spend a precious Sunday scrubbing someone else’s toothpaste off the mirror. Then the city council decides short-term rentals are the root of all evil and slaps a ban on your property. And suddenly your passive income requires active therapy.
While return on investment (ROI) calculations for short-term rentals vary widely, potential investors should conduct thorough due diligence and consult with qualified financial advisors before making investment decisions. Marketing materials and third-party testimonials may not reflect typical results. In included, specific financial projections should be clearly labeled as estimates and include appropriate disclaimers: “Historical data suggests that in many metropolitan areas, nightly rates of $250 or more with occupancy rates exceeding 70% may be necessary to cover basic operating expenses including principal, interest, taxes, and insurance (PITI). These figures are provided for illustrative purposes only and do not constitute a guarantee of future performance. And speaking of interest, that dreamy 3% mortgage rate is long gone. Now you’re buying in at 6–7%, which makes the math even tighter.
Consider this: Historical data indicates that certain broad market indices have shown long-term average returns, though past performance does not guarantee future results. No broken Keurigs. No angry reviews. No one asking if the hot tub has Bluetooth. If you were to consider allocating such capital to diversified investment vehicles such as exchange-traded funds (ETFs), subject to your individual circumstances and risk tolerance, you could check your statements once a quarter and go back to coaching your kid’s soccer team. Instead, you’re refreshing the Airbnb app during date night: “Oh look babe, we got a three-day booking! $179 after fees. Wanna celebrate by fixing the garbage disposal?”
Here’s the brutal truth: your time is more valuable than the potential return on this rental roulette. Every hour you spend dealing with guests, washing towels, or figuring out why the Nest thermostat stopped working is an hour you’re not making real money at your day job, spending time with your family, or sleeping. When you look back in 30 years, are you really going to regret not spending your weekends assembling bunk beds for strangers?
And let’s not ignore the mental toll of being a glorified landlord. Short-term rental ownership introduces new forms of anxiety you didn’t even know existed: What if someone throws a party? What if they light a candle? What if they leave a 2-star review because the towels weren’t soft enough? There’s something uniquely soul-crushing about working all day, only to come home and have to explain to your Belgian houseguest how American light switches work.
Short-term rental success may depend on various factors, including but not limited to: market timing, regulatory environment, operational efficiency, and management approach. There are only two types of successful short-term rental owners: 1) The Lucky Ducks that bought in 2014, before anyone knew what Airbnb arbitrage meant. The mortgage is low, the township has zero regulations, and they’re somehow immune to negative reviews even though the Wi-Fi password is still “admin123.” And 2) The Obsessed Workaholics that treat their rental(s) like a real business. They have systems, teams, dynamic pricing, and a spreadsheet for everything, including how much shampoo each guest uses. They’re the Jeff Bezos of beach cottages. You? You’re neither, just a well-meaning couple with a calendar that looks like a Mondrian.
Individuals seeking to build long-term wealth should consider consulting with qualified financial advisors to develop an investment strategy aligned with their personal financial goals, risk tolerance, and circumstances. Various investment options may include retirement accounts, diversified investment vehicles, and reinvestment strategies, not just building a castle in the side-hustle sky, here’s a radical idea: invest in boring things. Max out your retirement accounts. Buy low-cost ETFs. Reinvest your dividends. Let time and compound interest do the heavy lifting. Boring? Yes, but so is not handling property damage claims. Better yet, use your limited time to build your actual career, strengthen your relationships, or just go on vacation somewhere you don’t have to clean afterward.
Owning a short-term rental isn’t as glamorous as it seems. And it’s definitely not passive. It’s a distraction wrapped in a fantasy. Sure, it may work out in the end, but are you willing to take that risk? The safer (and probably more lucrative) bet is a portfolio of boring ol’ stocks. But boring is where wealth lives. Boring buys back your time. Boring compounds. So ditch the dreams of becoming the next real estate mogul, and put your money to work – so you don’t have to.
If you’re serious about building wealth without the headaches of being on call for clogged toilets and late-night lockouts, it’s worth having a real plan—one built around your goals, your risk tolerance, and your timeline. That’s where Equilibrium Wealth Advisors comes in. Our team can help you create a strategy that works just as hard as you do, without requiring you to scrub someone else’s toothpaste off your mirror. Give us a call at (412) 991-1385 or request an appointment today to start mapping out a smarter path toward financial freedom—one that buys back your time and lets you focus on what really matters.
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Important Disclosures:
Securities and advisory services offered through EWA LLC dba Equilibrium Wealth Advisors (a SEC Registered Investment Advisor).
* Contents for information purposes only and nothing herein shall constitute an offer to buy or sell securities, nor does it amount to tax, legal or investment advice.
* Government bonds and Treasury Bills are guaranteed by the U.S. government as to the timely payment of principal and interest and, if held to maturity, offer a fixed rate of return and fixed principal value. However, the value of fund shares is not guaranteed and will fluctuate.
* Corporate bonds are considered higher risk than government bonds but normally offer a higher yield and are subject to market, interest rate and credit risk as well as additional risks based on the quality of issuer coupon rate, price, yield, maturity, and redemption features.
* The Standard & Poor’s 500 (S&P 500) is an unmanaged group of securities considered to be representative of the stock market in general. You cannot invest directly in this index.
* All indexes referenced are unmanaged. The volatility of indexes could be materially different from that of a client’s portfolio. Unmanaged index returns do not reflect fees, expenses, or sales charges. Index performance is not indicative of the performance of any investment. You cannot invest directly in an index.
* The Dow Jones Global ex-U.S. Index covers approximately 95% of the market capitalization of the 45 developed and emerging countries included in the Index.
* The 10-year Treasury Note represents debt owed by the United States Treasury to the public. Since the U.S. Government is seen as a risk-free borrower, investors use the 10-year Treasury Note as a benchmark for the long-term bond market.
* Gold represents the afternoon gold price as reported by the London Bullion Market Association. The gold price is set twice daily by the London Gold Fixing Company at 10:30 and 15:00 and is expressed in U.S. dollars per fine troy ounce.
* The Bloomberg Commodity Index is designed to be a highly liquid and diversified benchmark for the commodity futures market. The Index is composed of futures contracts on 19 physical commodities and was launched on July 14, 1998.
* The DJ Equity All REIT Total Return Index measures the total return performance of the equity subcategory of the Real Estate Investment Trust (REIT) industry as calculated by Dow Jones.
* The Dow Jones Industrial Average (DJIA), commonly known as “The Dow,” is an index representing 30 stock of companies maintained and reviewed by the editors of The Wall Street Journal.
* The NASDAQ Composite is an unmanaged index of securities traded on the NASDAQ system.
* International investing involves special risks such as currency fluctuation and political instability and may not be suitable for all investors. These risks are often heightened for investments in emerging markets.
* Yahoo! Finance is the source for any reference to the performance of an index between two specific periods.
* The risk of loss in trading commodities and futures can be substantial. You should therefore carefully consider whether such trading is suitable for you in light of your financial condition. The high degree of leverage is often obtainable in commodity trading and can work against you as well as for you. The use of leverage can lead to large losses as well as gains.
* Opinions expressed are subject to change without notice and are not intended as investment advice or to predict future performance.
* Economic forecasts set forth may not develop as predicted and there can be no guarantee that strategies promoted will be successful.
* Past performance does not guarantee future results. Investing involves risk, including loss of principal.
* The foregoing information has been obtained from sources considered to be reliable, but we do not guarantee it is accurate or complete.
* There is no guarantee a diversified portfolio will enhance overall returns or outperform a non-diversified portfolio. Diversification does not protect against market risk.
* Asset allocation does not ensure a profit or protect against a loss.
* Consult your financial professional before making any investment decision.
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