Short-Term Rental Market Update: Q2 2025

Q2 2025 in short-term rentals. 2025 was the year the acquisition date on your closing statement started to matter enormously, and april through june has its own shape on top of that. Here is what moved, what it meant for an owner, and what the quarter was actually for.

What was happening across the market

2025 was the year the tax calculation split in two. Property acquired on or before 19 January stayed on the old phase-down at 40%. Property acquired after that date, once OBBBA passed in July, qualified for 100% bonus depreciation again. The same property, the same buyer, a different acquisition date, and a materially different first-year deduction.

Supply growth had slowed enough that well-selected markets were producing consistent results again, and the gap between markets widened as regulation diverged.

Financing costs had settled into a range buyers had learned to underwrite around rather than wait out.

The seasonal shape of Q2

Q2 is when the summer-peaking markets wake up and the winter-peaking ones go quiet. Spring break carries the Gulf into April, the Smokies and the Poconos ramp through May and June, and the desert markets begin their descent toward a trough that will last until October.

Reading a quarter in isolation is how owners talk themselves into bad decisions. A thin quarter in a seasonal market is not underperformance, it is the shape of the asset, and it should have been in the model at purchase.

What Q2 is actually for

Q2 is the last window to fix anything before peak season. Furnishing refreshes, photography, amenity gaps and maintenance all cost far less in May than in July, because in May they cost money and in July they cost bookings.

For anyone buying after 19 January 2025, the restoration of 100% bonus depreciation returned the strategy to full strength for the first time since 2022.

The Q2 checklist

1. Reshoot photography if anything changed, and reshoot regardless if the images are more than about two years old.
2. Audit the amenity gap against the current comparable set rather than the one that existed at purchase.
3. Set minimum stays and premium floor rates across the peak weeks before demand arrives, not after.
4. Confirm the cleaner bench has depth for same-day turnovers in peak season.
5. Check the reserve. Peak season is when a failure is most expensive and most likely.

The risk carried into Q2 2025

The risk in 2025 was assuming the restored bonus depreciation applied to a property already owned or already under contract before the cut-off. Acquisition date, not placed-in-service date alone, governs which schedule applies.

2025 rewarded buyers who confirmed with their CPA which schedule their specific acquisition fell under before modelling a deduction.

The consistent thread across every quarter on this site is that the environment changes and the discipline does not. Twelve individual monthly revenue figures, a complete expense stack including reserves, and a stress test at 75% of projection that still covers debt service.

What to carry into the next quarter

April through June is one quarter of a business that is measured annually. The number that matters is not what this quarter produced but whether the year is tracking to the model, and whether the reserve is intact.

If the year is behind the model, the useful question is which input was wrong: revenue, cost, or the assumption about the market. Each has a different fix, and discounting is the right answer to only one of them.

If the year is ahead, the useful question is whether that is the property or the market. A property outperforming a flat market is a property to buy more of. A property matching a rising market has told you nothing yet.

Frequently asked questions