A short-term rental is used at multiples of residential frequency by people with no ownership stake. Knowing what fails, roughly when, lets you replace items on a schedule rather than during a booking, which is where the cost multiplies.
Year one
- Cheap bed frames. Particleboard and low-cost metal frames fail within a season or two of turnover. Buy solid wood or quality metal from the start.
- Lock batteries. Smart lock batteries die faster than expected and a dead battery is a locked-out guest at 11pm. Replace on schedule.
- Glassware and ceramics. Treat as consumables. Buy inexpensive and replace continuously.
- Cheap knives. The most complained-about kitchen item. Replace annually regardless of apparent condition.
- Small appliances. Toasters, kettles and blenders are consumables at rental frequency.
Years two to three
Mattresses in the most-used bedrooms. A residential mattress rated for ten years is doing several times the work in a rental, and sleep quality is the most common driver of negative reviews.
Upholstery on primary seating. This is why performance fabric is not optional. Standard upholstery in a group property shows wear inside two years.
Linens and towels. Three sets per bed is what makes same-day turnovers possible, and they wear at commercial laundry rates. Budget continuous replacement rather than a periodic purchase.
Outdoor furniture in harsh climates. Sun, salt and freeze all shorten the life substantially compared with residential use.
Years three to five
Flooring in traffic areas, particularly carpet, which in a short-term rental is effectively a two to three year consumable. Hard surfaces last far longer and are the reason we recommend them in traffic areas.
Paint, especially in stairwells, hallways and around doorways where luggage makes contact. A repaint every three to four years is normal and is cheap relative to how much it affects photography.
Hot tub components. Covers, pumps and heaters have finite lives and hot tub failure in peak season is both a refund and a review.
Refrigerator ice makers and dishwashers, which run at multiples of residential frequency.
Years five to ten
HVAC systems, water heaters and major appliances all reach end of life in this window under rental use. Each one fails expensively if it fails during a booking.
The discipline is to replace on age rather than on failure for anything whose failure would displace a guest. An HVAC unit replaced in a shoulder month costs the unit. The same unit failing in a Phoenix July costs the unit plus refunds plus relocation plus a review.
Roofs, decks and exterior finishes follow their normal schedules, accelerated somewhat by climate exposure in coastal and mountain markets.
Why the reserve exists
A capital expenditure reserve of a few percent of gross revenue annually, on top of a maintenance reserve of 1 to 2% of property value, is what turns these events into line items rather than crises.
Most proformas include neither, which is a substantial reason projected returns exceed actual ones. A property producing 10% cash-on-cash before maintenance and capital reserves is producing considerably less after them.
Budget the reserve as money that leaves the operating account monthly, the same way a mortgage payment does. Money that stays in the account gets spent.
The prevention that actually works
- A photographic turnover checklist that includes running taps, checking hot water, testing the lock, running the dishwasher and confirming the hot tub reads correctly.
- A seasonal maintenance calendar with HVAC before summer, gutters before autumn, freeze protection before winter.
- Remote temperature monitoring in any market with freeze exposure.
- A vendor bench established in the first month of ownership rather than during the first emergency.
- Model numbers on file so replacements can be ordered without a site visit.
The purchase implication
Deferred maintenance in an older property is the most commonly underestimated cost in short-term rental acquisition. A property that needs $120,000 of work to reach the comparable set is not a $120,000 discount, it is a project with a construction schedule that eats a season.
Older lake houses are the worst offenders, frequently carrying septic systems near capacity, well water issues, bank erosion and non-permitted additions that are invisible in summer photography.
This is part of why we reject about 98% of the deals we screen. A property that looks like a bargain and needs a year of work before it can compete is not a bargain, and the gap is rarely visible in listing photographs.
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Frequently asked questions
What breaks first in a short-term rental?
In year one, cheap bed frames, lock batteries, glassware and knives. In years two to three, mattresses, upholstery and linens. In years three to five, flooring, paint and hot tub components. In years five to ten, HVAC, water heaters and major appliances.
Should I replace appliances before they fail?
For anything whose failure would displace a guest, yes. An HVAC unit replaced in a shoulder month costs the unit. The same unit failing in peak season costs the unit plus refunds, relocation and a review.
How much should I reserve for capital expenditure?
A capital expenditure reserve of a few percent of gross revenue annually on top of a maintenance reserve of 1 to 2% of property value. Most proformas include neither, which is why projected returns exceed actual ones.