• Dana Bull has invested in long-term rentals throughout her entire career.
• She's experimenting with a mid-term rental in 2025 to combat high interest rates.
• Generally, mid-term rentals offer higher revenue but require more management than long-term leases.

Dana Bull started building her real-estate portfolio in 2012 when she bought her first property.

Over the next decade, she expanded to more than 20 units in her Massachusetts market and hit financial independence by sticking to the same general strategy: buying quality properties with upside and filling them with long-term tenants.

Bull, who is also a real-estate agent and consultant, told Business Insider that she "swore off investing a couple of years ago." Managing properties is time-intensive, noted the mother of four.

But when a charming single-family in Marblehead came on the market in the fall of 2023, she broke her promise.

"This little place in my town caught my eye, and I really wanted somebody else to buy it," said Bull. "It was when the interest rates were the highest that they've ever been, like 7.75%, so nobody wanted to buy anything. And I was like, 'You know what, I'll do it.'"

Listing it as a mid-term rental to combat high rates

Higher interest rates mean a higher monthly payment. For an investor, that can make it more challenging to generate positive cash flow.

To make the numbers work on her latest acquisition, Bull decided to experiment with a "mid-term rental," which targets people looking to stay for one month or more, but less than a year.

"It's my first experience with something other than a long-term rental. I'm kind of in uncharted waters, but it's been great," said Bull, who plans to test out the mid-term rental strategy for at least 18 months. It's more work than managing a long-term tenant, but she said she's bringing in more revenue doing shorter leases.

She could earn even more if she had more time and could lease the unit herself, rather than working with an agent.

"I have a leasing agent who I pay a lot of money because it's a lot of work to continue to keep it leased," she said. "It's a great strategy for anybody that has the availability to do the leasing on their own."

The leasing aspect of the mid-term rental strategy is the most challenging because it's less mainstream than the short- and long-term strategy.

"If you want a long-term rental, you know you're going to be on Zillow or work with a real-estate agent. If you want a short-term rental, you also have set channels: You have Airbnb, Vrbo," Bull explained. "There's a website called Furnished Finder geared toward mid-term rentals, but it's not very well known, and it's not nearly as big as something like Airbnb."

She advertises her place on Furnished Finder, takes it on and off Zillow depending on when it's available, and sends neighborhood mailers.

It helps that she's starting to understand her typical tenant, she added: "The trend is that grandparents want to come and help out with the kids, but the parents don't have room in their home, or the grandparents want their own space, so that has been my target audience."

Mid-term rentals as a viable strategy for 2025

Bull doesn't expect mortgage rates to drop in 2025. She also doesn't advise letting rates or other factors outside your control dictate when you buy real estate.

"I wouldn't base my whole plan around, 'Well, I keep hearing rates are supposed to drop,'" she said, noting that current rates are in line with the historical average. "This is kind of where rates sit. So, if they were to drop, that would be great, but I wouldn't be banking on it."

If you're financially prepared to invest in real estate in 2025, rather than waiting, run the numbers to see if a short- or mid-term rental could make sense in your market.

"Look at some alternative leasing approaches. Usually, they're more lucrative if they're shorter," said Bull. "One idea would be to start with something like an Airbnb, with the goal of transitioning after two or three years into something more passive, like a long-term rental."

Real estate is a long-term game, she added: "You have to look beyond year one — the numbers are always going to be tight year one, no matter what the market conditions are — so, what are your projections going to be by year five?

"And then, what can you do in the interim to maybe make this property work? That would be focusing on neighborhoods and communities where you can balance both of these plays: It's going to attract a short-term rental tenant but, down the road, you can pivot into a longer-term tenant."

That's likely what she's going to do, especially if she can refinance again.

Bull has already refinanced once, which shaved about $250 off her mortgage, she said: "I'd love it if they dropped again and I could save another 250. At that point, I probably would transition it to a long-term rental because it would be lucrative enough and less of a headache, but right now I'm just experimenting for my own curiosity and I want to understand more about this niche."

When Mike Kelly set up his first few Airbnbs in Fort Wayne, Indiana, in 2023, he figured it would be a successful move. It was meant to be an investment project for him and his daughter to work on together. But as more people moved away from bustling and expensive urban centers and landed in the Midwest, their hopes were quickly shattered.

The Fort Wayne housing market boomed. High demand for homes, coupled with the city's low housing stock, has kept costs relatively high — a Redfin analysis of housing data found home prices were up 9.2% in October compared with last year. The hot housing market has translated into higher property taxes, which is throwing off the short-term-rental business model. "The houses we purchased to turn into Airbnbs have been assessed so much higher than what we put into them that we almost can't afford to keep them," Kelly said. "The return on equity wouldn't be as high."

Owners of short-term rentals across the country have faced a similar reality, sharing stories of declining revenues over the past few years as the market was flooded with new rentals. AirDNA, an analytics firm that tracks the short-term-rental market, found that revenue per rental decreased by nearly 2% in 2022 and by more than 8% in 2023 due to an overabundance of units available for rent. AirDNA forecast that revenues would move back into the green in 2024 as the market corrected. But as short-term-rental owners felt signs of an "Airbnbust," some realized they needed to pivot.

On one end of the market, however, it's a different picture. While overall demand for short-term rentals rose just 1.8% in 2023, according to AirDNA's data, demand for stays priced at $1,000 or more increased by nearly 8%. For stays over $1,500, demand jumped 12.5%. In fact, demand for rentals costing over $1,000 a night has increased by 73% since 2019. While cheaper rentals are slowing down, luxury, niche, and themed stays are filling their place. Wealthy vacationers are increasingly going after luxe properties such as a secluded Malibu beach mansion or a modern cabin beset by pristine woods — like something off Cabin Porn. Meanwhile, Airbnb alternatives are jumping into the market to cater to the growing demand. A lust for luxury is propelling the short-term-rental market to new heights.

Over the past few years, more travelers have pushed back against the Airbnb model, complaining of outrageous cleaning fees, extensive cleanup requirements, and outright scams. As a result, some travelers have opted to stay in good old-fashioned hotels thanks to their consistent service.

These complaints, however, tend to focus on rentals on the low end of the market — the $200-a-night stay you might book to visit a family member or get out of town for a weekend. The luxury end of the rental market fills a different role. These spots boast plenty of hotellike amenities — such as contactless check-in, high-speed internet, bathroom toiletries, and coffee makers. Because of the high price point, luxury rentals also tend to standardize their cleaning services. Unlike a hotel room, though, a house or apartment comes with a lot more room to host guests, plus amenities such as a kitchen or private pool. When split between multiple guests for a night or weekend, some of the eye-popping price tags end up being surprisingly affordable.

Among high-income travelers, who made up an increasingly large share of vacationers this year, hotels are on the way out. Deloitte's 2024 summer-travel report found a 17-point drop in people who earn over $200,000 opting to stay at full-service hotels compared with the summer before. While middle-income travelers moved toward budget accommodations like bed and breakfasts and RV rentals, high earners shifted toward private-home rentals.

One brand capitalizing on the growing demand is Wander. Launched in 2022, Wander owns all of its 200 properties, each beautifully designed with stunning landscaping. Its founder and CEO, John Andrew Entwistle, had the idea of making a vacation rental feel like a luxury hospitality brand after a disastrous ordeal renting a cabin in Colorado. "The whole experience felt broken, the type of thing all of us has had at a vacation rental one time or another: The place didn't look like the photos. The beds were uncomfortable. The list goes on and on," he said.

He wanted a rental home with heart and soul, where the building was designed around the landscape and high-speed internet flowed across the house. Wander rentals are often in remote spots to give guests a sense of privacy and quiet. The cleaning service is standardized so guests don't have to worry about cleaning up after themselves, and customers can check in on their own through their smartphones. Every unit, which costs an average of $900 a night, also features sleek workstations for digital nomads.

Other travel brands have found similar success in the luxury market. There's Mint House, a cross between a hotel and short-term rental that has 12 properties across 10 major US cities. Visitor experiences are personalized — for instance, guests can request that the refrigerator be stocked with their favorite groceries before they arrive — and there's 24/7 customer care. The apartments, which can be studios or have multiple bedrooms, are priced similarly to hotels and feature bespoke furniture and decor, along with all the necessities of modern accommodations. To explain the brand's success, Christian Lee, the CEO of Mint House, pointed to the company's ability to provide consistent experiences. "Unlike other short-term listings that lack security and guest care and often require a guest to perform chores at checkout, all of our properties are professionally managed to ensure the utmost safety, security, and cleanliness," he said.

The luxuriousness only goes up from there. Rental Escapes, a full-service luxury-villa-rental company founded in 2012, offers over 5,000 villas in more than 70 destinations worldwide. They start at $500 a night — though most go for tens of thousands. Amase Stays, a collection of $10 million rental estates founded this year, creates bespoke experiences for its top-of-the-line properties, with dedicated concierges who can arrange everything from private chefs and spa services to customized excursions.

Chris Lema, a business coach and product strategist, is a Wander superfan. "These are places that are architecturally beautiful, and the land that they sit on feels like a national park," he said. He likes that the company provides attainable luxury — he's stayed in 13 different Wander locations and hopes to "collect them all," he said. He has even started planning trips around Wander rentals.

"I thought this is where Airbnb was going to go with its business model," he said. "If you go to Airbnb's website now, they have these different categories like 'amazing views' or 'lakefront.' But none of these rentals push forward on the issue of experience. There's the Luxe category — but it's not the same thing."

In Airbnb's Luxe category, homes might cost anywhere between $200 and hundreds of thousands of dollars a night. When the category launched in 2019, an Airbnb press release said the homes would have to pass a slate of design and experience criteria, including higher standards for cleanliness and amenities like towels and toiletries. Unlike at other Airbnb properties, a company representative has to walk through Luxe properties to verify them. Despite that, Lema hasn't been impressed.

"They seem to rank Luxe based on the niceness of the residence," Lema said, "but that isn't really the point of what that kind of experience should be."

An Airbnb spokesperson said, "We're proud to be the only travel platform that offers stays for nearly any desired travel experience." They added: "We're also proud of the growth of our Luxe category supply and look forward to expanding the offering."

So far, Wander's model is working out. It launched with only three locations, and two years later, it has 200 houses and an average occupancy rate of 80%, Entwistle said. By the beginning of 2025, Entwistle hopes to launch locations in Mexico and Canada.

Back in Fort Wayne, Kelly ended up pivoting his Airbnb business to cater to this demand for luxury. "We focus on four-bedroom-plus homes where groups can gather for weddings or reunions," he said. Houses with pools and hot tubs are especially desirable, he's found. Kelly has also amassed a thriving collection of themed Airbnbs. He designed one house to look like the childhood home of the fictional character Fawn Liebowitz from the cult classic film "Animal House." He's working on another rental themed around Indiana University sports teams.

"At the end of the day, the 'luxury' houses are more affordable than staying in multiple hotel rooms," he said. Plus, offering something unique, like a theme, helps homes stand out from the crowd. With the new focus, Kelly's Airbnbs are rarely empty, he said.

Part of the shifting demand stems from people viewing luxury rentals as a destination unto themselves — if the place you're staying is cool enough, you don't need to get out much. Others are drawn to them as a means to get away from the hubbub. "In today's globalized world, travel destinations have become more and more homogenous and tourist-burdened," Spencer Bailey, the editor of the new book "Design: The Leading Hotels of the World," said. "People are seeking out distinctive experiences away from the crowds and searching for a certain sense of intimacy, craft, and care." It's not just about top-rate service, intricate design, or even a Michelin-starred restaurant. "It's about being in nature, engaging in local culture, and creating discrete, felt experiences that encourage quietness and slowness, not an Instagram moment," Bailey says.

A private rental is often more secluded, meaning travelers can prioritize spending more time alone with their loved ones. "Travelers are increasingly wising up to the fact that time — and where, how, and with whom you spend it — is the greatest luxury," he said. Michelle Steinhardt, the founder of the luxury travel blog The Trav Nav, wrote about her recent stay at a secluded beachfront property rental in Punta Mita, Mexico: "Even though we were only a few minutes from the local town, our party felt like everyone else was miles away."

Increasingly, getting away from home isn't enough. We also want to get away from other people. For those who can afford it — or have enough friends — luxury-travel companies are more than happy to accommodate.

Michelle Mastro covers lifestyle, travel, architecture, and culture.

The tourism and travel industries are finally back on track, expected to make a “full recovery” to pre-pandemic levels of activity, the UN said earlier this month. As an indicator of that, Hostaway, one of the bigger software startups in the space, is announcing a giant round of funding to double down on growth.  The […]

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• I've learned to spot red flags while booking a lot of vacation rentals online during my travels.
• Diving deep into reviews provides the opportunity to learn from previous guests.
• I'm skeptical of listings with photos that use wide-angle lenses to make spaces look bigger.

I've been traveling full-time for the past two years.

In that time, I've stayed in more than 40 unique rental units for a total of more than 380 nights across 16 countries. (The other nights were spent on cruises, hotels, or at friends' houses.)

A never-ending vacation may sound relaxing but it means I'm always looking for my next accommodation and hoping it's good.

I've stayed in gorgeous farmhouse lofts, high-rise city apartments, and desert hideaways — but I've also booked a few duds along the way.

Here are five questions I use to spot red flags when booking lodging, no matter which website or app I use.

Do the photos reflect reality?

I love high-quality photos, but I try not to let them cloud my judgement. Great staging doesn't always equal a comfortable stay.

Plus, a good photographer can make a home seem more spacious than it really is, especially if they use the right lens.

When looking at listing photos, I analyze whether the furniture looks comically elongated, like a reflection from a funhouse mirror. It could be a sign the photo was taken with a wide-angle lens that's making the space look bigger.

I'm also apprehensive to book a place if I can't decipher its layout by looking at the photos.

How high is the overall rating?

I use overall ratings to quickly weed out rentals. In my experience, staying somewhere with less than four-and-a-half stars can be risky — especially if I'm booking a month-long stay.

If enough guests are providing ratings less than five stars, there's likely something amiss. (Airbnb can even remove hosts who have an average of less than four-and-a-half stars.)

Reviews can also yield other red flags. I find crowdsourced feedback sheds light on important items like cleanliness, rental location, and outside noise.

It can also be risky to book a place that doesn't have any reviews yet. Instead, I save unreviewed listings I like and check them until others have stayed and left feedback.

If you want to book a place with no reviews, I recommend at least looking into the host. Do they have other properties with tons of positive reviews? That might be a good sign.

Are all the reviews old?

It can be difficult to trust the accuracy of a rental listing if the latest review is over two years old.

After all, I've read horror stories about trusting travelers staying in rentals that they didn't realize had been vacant and uncared for for months.

If a nice-looking rental only has old reviews I'll sometimes just save it and check on it until someone writes about a more recent stay.

How has the host responded to feedback?

There is no greater red flag than when a host berates a previous guest for leaving feedback.

How an owner responds to reviews is one of the most important items I look for. If they disrespect or talk down to guests I'm staying clear of their property.

Are the listed amenities available?

I use search filters to find lodging with my desired amenities, but before booking, I perform a keyword search of the reviews for those specific features.

For houses with a jacuzzi or pool, I look to see if recent guests have mentioned any issues with it. There's nothing worse than showing up to swim, only to find out the pool has been drained for repairs.

For Wi-Fi, I check to see if anyone has complained about unreliable service. Whatever experience others have had, I might expect the same issues during my stay.

Additionally, I share in my introduction message to the host that I'm looking forward to the specific amenity. That way, they know I'm serious about that item and expect it to be available and in working order.