Multifamily vs. Short-Term Rentals: Which Model Works in 2025?

As the rental market evolves in 2025, real estate investors and landlords are considering which model offers better long-term returns: Multifamily Rentals or Short-Term Rentals (STRs). Both options present unique opportunities and challenges, and deciding which is best depends on market conditions, location, and investment goals. Let’s break down the pros and cons of each model to determine which one is the smarter move in 2025.

Multifamily Rentals: Stability and Long-Term Growth

Multifamily properties—apartment complexes, duplexes, and other multi-unit buildings—have been a staple investment for landlords seeking consistent rental income and long-term equity growth.

Pros of Multifamily Rentals:

• Stable Cash Flow: Long-term leases ensure predictable monthly income.
• Lower Vacancy Risk: Even if one unit is vacant, others generate income.
• Easier Financing: Lenders favor multifamily properties due to lower risk.
• Economies of Scale: Maintenance and property management costs are spread across multiple units.

Cons of Multifamily Rentals:

• High Initial Investment: Acquiring a multifamily property requires significant capital.
• Intensive Management: Handling multiple tenants, maintenance, and regulatory requirements can be time-consuming.
• Rent Control & Regulations: Some cities impose strict rent control laws, limiting income potential.

Short-Term Rentals (STRs): Higher Returns but Increased Risks

Short-term rentals, such as Airbnb and VRBO properties, offer higher per-night income but come with fluctuating demand and operational challenges.

Pros of Short-Term Rentals:

• Higher Revenue Potential: STRs can generate 2-3x the monthly income of long-term rentals in prime locations.
• Flexibility in Pricing: Owners can adjust rates based on demand and seasonality.
• Personal Use: Owners can block dates for personal use or switch back to long-term rental if needed.

Cons of Short-Term Rentals:

• Market Volatility: STR income depends on tourism trends, economic conditions, and seasonal demand.
• Strict Regulations: Many cities have implemented restrictions or outright bans on STRs.
• High Operational Costs: Cleaning, marketing, and guest management require more effort than traditional rentals.
• Occupancy Uncertainty: Unlike multifamily units with leases, STR bookings can fluctuate significantly.

Key Market Factors Influencing 2025 Decisions

1. Demand Trends

• Multifamily Demand: With rising mortgage rates, more people are choosing to rent, increasing demand for multifamily housing.
• STR Demand: While tourism is recovering, some markets are oversaturated with STRs, leading to lower occupancy rates.

2. Local Regulations & Restrictions

• Multifamily: More favorable zoning and financing options make multifamily a safer investment.
• STR: Short-term rentals face increasing regulation, permit requirements, and city-imposed restrictions.

3. Maintenance & Management

• Multifamily: Requires steady maintenance but can be handled by a property manager.
• STR: High turnover increases cleaning, maintenance, and customer service efforts.

Which Model Works Best in 2025?

• For Stability & Long-Term Growth: Multifamily rentals are the better option due to lower risk, steady demand, and fewer regulatory challenges.
• For Higher Income Potential (With More Risk): STRs can work in high-demand tourist areas but require active management and adaptability.

How Scout Peak Can Help

If you own a multifamily rental or a short-term rental and are considering selling, Scout Peak Home Buyers offers fast, fair cash offers. We specialize in buying rental properties, whether fully leased or facing management challenges.

Why Work with Scout Peak?

• Quick Closings: Get cash for your property without the hassle of listing.
• No Repairs Needed: Sell your property as-is.
• Flexible Offers: Whether it’s a multifamily unit or an STR, we provide competitive offers.

Final Thoughts

The best rental model in 2025 depends on your financial goals, location, and management preferences. While STRs can offer high returns, they come with volatility and regulatory risks. Multifamily properties provide steady income and long-term appreciation, making them a reliable investment for landlords.

If you’re looking to sell or transition out of rental management, Scout Peak Home Buyers can help make the process seamless and profitable.