These 5 STR Shifts Coming in 2026 (Use These Strategies To Adapt)

The short term rental industry is still a young industry, which means it moves quickly, it changes quickly, and so I'm excited to dive into why I think 2026 is going to be one of the best years we've had in years. As a short term rental investor, I'll be covering everything from technology changes to operation changes that you need to have in place, market trends and everything in between. Stay tuned. Welcome back to the Short Term Rental Riches podcast. I'm happy you're here again and I'm excited to do my outlook, my take on what to expect in 2026. Believe me, we got a lot of good changes coming. Well, you know, we started as a real estate podcast, but with a focus on short term rentals. I used to talk a lot about real estate investing in general and the fundamentals, but I haven't done so much of that in the last few years because it just hasn't been that great of a time to be investing. With interest rates, higher cash flow was down, with higher property values, things just got really competitive. And so I personally haven't purchased anything in several years. Yes, I've been building a new construction project for quite a while, excited to share updates on that in the near future. But I haven't actually acquired any new short term rentals. I've been focused on managing those properties that already have my portfolio as best as we possibly can. My team and I have also expanded to manage hundreds of your properties as well, and so that's been an awesome journey. We have a ton of insight and I'm excited to break down some of those details. But let's take a step back first and let's talk about the economy in general, because what happens in the long term rental or residential real estate world really affects short term rentals and we have some fundamental changes taking place as we speak. We talked about interest rates already recently on episode 318, so if you missed that one, go back and check it out. One of the highlights from that episode was that interest rates are going down. They've already gone down and they're forecasted to continue going down. So this is music to my ears. This is also part of the reason I've recently put up several properties for sale. I'm going to be doing some exchanges and finally moving some things around because as interest rates come down, that means more people can afford to buy properties and that means more properties are going to be changing hands. So we don't know exactly how far they're going to come down. But the good news is they're headed in the right direction. We also had a very significant tax change that happened in 2025, and that is that the return of 100% bonus depreciation came back. And that also great news for a real estate investor. That's also more incentive for someone to purchase real estate because as we know, real estate provides more tax benefits than any other investment class available. Now, a lot of you have also heard of Trump's proposal for a 50 year mortgage and you might think at first that someone will pay twice as much interest as they would with a 30 year loan. But as a real estate investor, this is good news. The whole idea of real estate investing as cash flow, right, we buy a property expecting to earn more than our expenses. And one of those really big expenses are our loan payment. And so if we can lower our loan payment on a fixed basis, then we have the potential to earn more cash flow. And the best part of the story is that you're not actually the person paying down that loan. That would be your long term tenants or your short term rental guests. And remember, with an investment loan, you also get to deduct all of your interest off of that loan. And so if you're paying more interest, you have more deduction. So whether you think 50 year mortgages is a great thing or a really stupid, stupid thing, the reality is that it's going to make properties more affordable for people because the monthly payment is going to be lower the more people will try to buy it. So my prediction for 2026 is that housing prices are going to continue to go up. And I know there's tons of doom and gloomers out there dedicated to freaking you out, but that's not my take and I actually don't even see how that's possible because we are at a historic low for inventory. There's a roughly 850,000 homes available for sale in the now that rates are going down, we have more tax advantages and we'll potentially have a longer loan term. And that simply means that prices should continue to go up. Now, with interest rates being lower and expected to continue to go down, this means that a lot of short term rental owners out there that maybe weren't performing that well are going to list their properties for sale. And this creates a really good opportunity for any of us savvy short term rental investors that really know how to operate a property and optimize its performance, optimize its reven. We're going to get into a few of the management changes happening nationwide in just a Quick second. So just because things are looking good in the economy doesn't mean that every market is good for short term rental investments. Of course, there have been lots of regulations passed. Barcelona just banned short term rentals, for example. I think that that will continue, but not overwhelmingly. I think it'll continue to happen in places that are more dense and that are higher priced a lot of times, like coastal areas, like Los Angeles, like Miami. Another trend that I see in the short term rental industry that I do not see going away and I see picking up speed is the trend in mid term rentals. And this in part comes from regulations, right? If you have a market that's limited your property to a 30 night plus stay, well then you're no longer going to be a short term rental house. You're going to be a midterm rental host. If you missed our episode with the CEO of Furnish Finder, go back and check that out. That was episode 308. That episode was full of reasons that might lead you to want to go down the midterm rental route. But one of the main ones is, is that it's just easier to manage midterm rentals than it is short term rentals, right? Because you have less reservations. Maybe your guest is there for a month or three months versus two or three nights. We also know that a lot of short term rental markets, a huge increase in supply, tons of properties came on the market, and in a lot of the dense urban areas, the midterm rental strategy can become a really good one. Now, you don't necessarily need to go full midter rental, right? Your property may be in an area that's suited really well for short term rentals, but during the high season and then you switch to midterm rentals. So the goal is to optimize revenue with your property. But I do see midterm rentals continuing to grow in popularity and there'll be more and more and there's also going to be a lot to figure out on the operation side of that because we basically have two different segments, right? We have the long term rentals and short term rentals and they both have really good tools, but those haven't really merged yet into the mid term rental space. So excited to see what comes out in 2023. All right, let's jump into operations and management. And this is really the key success for any investment property. You can have the nicest property in the world, but if you don't know how to manage it well, it's not going to do well, right. And we see this over and over again with short term rentals where a property that maybe doesn't look as nice as the one right next door earns way more money. So it really comes down to the operations and we're seeing some really big trends happen, especially with the property managers like Vacasa. I've got some stats right from Air DNA. I'm just going to go ahead and read them off. From 2019 to 2024, the churn rate for property managers with a 4.7 average review score or higher is around 9 to 11% per year. That means they're losing 9 to 11% of their customers of their owners per year. Doesn't mean that are not adding properties. It just means that's how many they're losing. That's their churn rate. Now if we look at property managers that have a 4.7 lower last year in 2024, their turn rate was 24%. Imagine that. Imagine your vacasa and let's just say they had 10,000 properties. They have much more than that. That means they were losing 2400 properties per year. And it makes sense why. Right? If you don't have a at least a 4.7 review score, you're not going to earn as much money with your properties. We've seen that these large property managers do not do a great job locally, of course, not in all markets. Right. They can do a good job in a lot of them. But as a whole, we're looking at their average review score. It is going down and I expect those to continue to go down. So it's not looking good for large property managers or nationwide property managers that don't have a good grasp on their local management. That's one of the reasons my team and I have been partnering with owners like you across the nation to work with your local team. But to take all the headache away on the back end, we help you optimize your properties. We handle all the guest communication, we handle revenue management, listing setup, everything on the back end. And we've been seeing really, really good results. So if you're interested in chatting with us, you can head to strict. Com. There's a little partner with us button and we'd love to jump on a call with you and talk about your properties. Another trend that we've been seeing and I expect to continue our shorter booking windows. Guests are booking your properties with less and less time in advance. And that means that your revenue management strategy has to change. If your average booking window used to be Four weeks, but now it's two weeks and you have some last minute discounts set up in there. Well, you're leaving a lot of money on the table. So those are things you really need to understand about your specific property and your market. And another thing that we're seeing is that everyone's using a dynamic pricing tool now, right? So if everyone's using the same dynamic pricing tools, then how can you actually get your property to perform better? Well, you need to look at some things that the pricing tool aren't accounting for. Those would be things like your specific review score or your channel markups between the different OTAs. We're going to get to the OTAs here in just a second. You want to consider things like promos on those different travel sites. And of course you need to know who your ideal guest avatar is and make sure that the marketing on your property speaks exactly to that person. According to Airdna, supply has been growing nationwide around 3% per year. But that growth is slowing. A lot of people got into the short term rental market And I think 2026, there's going to be quite a few people getting out. They realize it's just way too hard. Maybe they're not making as much money as they wanted. So supply and demand is one of those other things that you're going to want to keep a very close eye on. If your market is losing supply, then you should be able to Increase your prices. 2026, your review scores are going to continue to be more important than ever. And I know I say this all the time, but we can see just the way the OTAs are set up now that they're really prioritizing their top properties. Airbnb created their guest favorite badge, for example, which means they're no longer looking at the host's ability to manage a portfolio properties, but they're breaking it down to specific properties. And we know that the guest favorite badge goes a long way in your visibility. According to airdna, the difference in average revpar from a top performing property to an average performing Property is over 15%. And now that is an average. So it's really hard to bucket all the properties together. And we know that there are some that are earning way more, even twice as much as a similar type property because they're doing an excellent job of revenue management, their listing set up perfectly and they have excellent review scores. So to sum up the operations and management, we're seeing these national property managers basically lose all their business because they're not doing a good job and on the flip side, it means that if you're doing a really good job, there's a lot of opportunity to outperform your competition. Okay, onto technology. I couldn't do an outlook or a forecast for 2020 without including artificial intelligence. And we've done episodes on this in the past, But I believe 100% 2026, there's going to be way more AI in the short term rental industry than there has ever been, and for a couple reasons. First of all, it doesn't forget anything. And if it knows all the details about your property, then it can respond much faster than you can. And one of the big ones is its tone, the way that actually can. And I say can because it really depends on how you have this set up, how it can communicate with guests. It's not going to get upset when it receives a message from a guest that's mad because maybe they miss their flight or whatever it happens to be. It's always going to respond with the best tone possible. Humans, for example, we don't have that luxury. We're emotional creatures, right? And so if we get a response from a guest that says they didn't like our property, but we love our property and we put our heart and soul into it, well, we might be inclined to respond in a way that's not perfect. I guess you could say it could be emotionally driven where AI does not have that downfall. The other big place that we're going to be seeing AI is actually in the way that people find our properties. So I don't know about you, but I haven't used Google in a long time. I use ChatGPT or Claude or Gemini. You pick your favorite to do all of my web browsing these days. And I'm sure you've noticed when you search for something, it gives you links to websites. So SEO, the old search engine optimization, is kind of going out the window, right? And now we have what they're calling aeo, which is content driven. And AI is going to be searching for answers that they can provide all of their users. So having some specific keywords is less important than actually providing a good overall answer. Hopefully you have a direct booking website, and on that direct booking website, you're going to want to have some really good content that a potential guest would be searching for in your market. One other place that AI is going to affect search is actually directly on the OTAs like Airbnb or booking.com. you've probably noticed that on Airbnb they ask you for a lot of personal information. Now, you don't have to give it all away, but the idea behind that is that they want to start matching guest profiles with host profiles. Booking.com is doing the same thing. And so the properties that are now showing up on these search results are all driven by some algorithms and AI in the background trying to make the perfect match. And that leads me to the next trend that we're already seeing, and that is definitely not going away in 2026, and that is the rise of other OTAs, not just Airbnb. Booking.com is a lot of headway. We get tons and tons of really great reservations from booking.com so if you're not on there yet, go to striches.com check out our prior episodes. We've done lots of episodes just on booking.com and how to get set up on their platform the right way. We know that booking.com is releasing a damage protection program similar to Airbnb, so I expect them to gain a lot more traction in the US in 2026. But it's not just booking.com that's going to be growing. Google Vacation Rentals, Whim Stay or Hopper. If you're not on these platform, well, it's very likely that your property management software already has a connection with them. And we want to get maximum visibility on all of these OTAs. Of course, you can have different channel markups between the different channels. We know that Airbnb just changed their host fee, so it's much higher than it used to be. You want to make sure that you have those markups in place. Assuming you have those markups jump on the other platforms, you're going to get more visibility and more visibility means more demand. More demand for your property means more bookings. 2025 has been an awesome year, but I'm really excited for 2026. Not just because of the real estate fundamentals allowing US investors to have more opportunity, potential for more cash flow, but also because there's just going to be a lot of properties changing hands. Right. And so if you've been on the sideline and you haven't quite got your first short term rental yet, 2026 is your year. But remember, just because you find a good property at a good price doesn't mean it's going to perform well. You have to make sure you've crossed your T's and dotted your eyes and you know what you're doing when it comes to operations. I hope this show has helped provide you some tips. That is my goal. And until next week, I hope you have a fabulous week.