Short-Term Rentals: How They Can Benefit You in the Long Run

Written By DK Law Group Legal Team

Real Estate Maryland

Short-Term Rentals: How They Can Benefit You in the Long Run

What Maryland property owners should know before turning a home into a short-term rental

Written by DK Law Group Team

Short-term rentals have changed how many property owners approach real estate investing. Platforms such as Airbnb and Vrbo make it possible to rent a property for days or weeks rather than committing to a traditional year-long tenancy.

For Maryland property owners, that flexibility can create opportunities for additional income and greater control over how a property is used.

But short-term rentals also bring local regulations, taxes, insurance considerations, safety requirements, and operating costs that should be understood before listing a property.

When managed carefully, a short-term rental can become one part of a broader real estate investment strategy.

01

Why Property Owners Consider Short-Term Rentals

One of the biggest advantages of short-term rentals is flexibility.

Unlike a traditional long-term lease, owners may have greater ability to adjust availability and pricing between reservations.

DEPENDING ON THE PROPERTY AND LOCAL RULES, THAT FLEXIBILITY MAY ALLOW OWNERS TO:

  • Adjust rates based on demand and season
  • Reserve dates for personal use
  • Shift between short-term, mid-term, or long-term rentals
  • Sell the property without waiting for a long-term lease to expire
  • Adapt their rental strategy as the market changes

However, flexibility does not mean complete freedom. Local zoning, licensing rules, condominium or HOA restrictions, mortgage terms, and other legal requirements may limit how a property can be used.

02

Can Short-Term Rentals Generate More Income?

Potentially, but higher nightly rates do not necessarily mean higher profits. Actual profitability depends on factors such as location, season, occupancy, pricing, and operating expenses.

SHORT-TERM RENTAL OWNERS MAY HAVE EXPENSES THAT TRADITIONAL LANDLORDS DO NOT FACE AS FREQUENTLY, INCLUDING:

  • Cleaning
  • Furniture and supplies
  • Utilities and internet
  • Platform fees
  • Property management
  • Increased maintenance
  • Insurance
  • Licensing and taxes

The better comparison is net income after expenses, not simply nightly rates versus monthly rent.

If the numbers work, additional cash flow may help an owner pay property expenses, build reserves, reduce debt, or reinvest in other properties. Those outcomes, however, depend on the individual investment.

03

Start With Local Rules

This is one of the most important considerations for Maryland property owners.

Short-term rental rules vary by jurisdiction. Maryland counties and municipalities may regulate licensing, zoning, occupancy, inspections, and how or where short-term rentals may operate.

For example, Baltimore City requires a current short-term residential rental licenses, and its rules generally restrict licensing to a host’s permanent residence, subject to specified exceptions.

Rules in another Maryland jurisdiction may be different.

BEFORE PURCHASING OR LISTING A PROPERTY AS A SHORT-TERM RENTAL, CHECK:

  • Local zoning
  • Licensing or registration
  • Occupancy restrictions
  • Inspection requirements
  • HOA or condominium rules
  • Applicable taxes
  • Property-specific restrictions

Do not assume that because Airbnb or another platform allows you to create a listing, the property is legally authorized to operate as a short-term rental.

04

Important 2026 Maryland Safety Update

Maryland enacted the Jillian and Lindsay Wiener

Short-Term Rental Safety Act in 2026.

The law takes effect October 1, 2026 and establishes statewide safety requirements for covered short-term rental units.

AMONG OTHER REQUIREMENTS, HOSTS WILL NEED TO PROVIDE:

  • A conspicuously posted evacuation diagram
  • Posted emergency telephone numbers
  • A working fire extinguisher
  • Required working smoke alarms
  • Required working carbon monoxide alarms

Smoke and carbon monoxide alarms must also satisfy applicable installation, maintenance, and replacement requirements.

The law also directs counties and Baltimore City, unless short-term rentals are prohibited in the jurisdiction, to establish annual inspection requirements by July 01, 2028.

For anyone entering the Maryland short-term rental market now, these upcoming requirements should be part of the planning process.

05

Don't Overlook Taxes

Short-term rental income can create tax obligations.

Depending on the location and operation, owners may need to consider federal and state income-tax treatment as well as applicable sales, lodging, hotel, or local occupancy taxes.

Booking platforms may collect or remit certain taxes in some circumstances, but owners should not assume the platform handles every tax obligation.

06

Review Your Insurance Before Listing

Insurance should be reviewed before accepting short-term rental guests.

Tell your insurance provider how the property will be used and confirm that the policy provides appropriate coverage.

Depending on the situation, owners may need specialized short-term rental, landlord, commercial, or umbrella coverage.

07

Put Clear Rental Terms in Place

Even when guests book through a platform, clear written terms can help establish expectations.

DEPENDING ON THE PROPERTY, TERMS MAY ADDRESS:

  • Check-in and check-out
  • Occupancy limits
  • Guests and visitors
  • Pets
  • Smoking
  • Parties or events
  • Property damage
  • Parking
  • Cancellations
  • Property-specific rules

The terms should work alongside applicable platform policies and comply with Maryland and local law.

keep reading

What Every Maryland Landlord Should Include in Their Lease

For additional guidance on clear rental terms and property protections.
08

Consider How You Own the Property

Short-term rentals involve regular guest activity, which also means potential liability exposure.

Some investors consider holding rental real estate through a Limited Liability Company (LLC) as part of their broader asset-protection strategy.

An LLC may help separate certain business liabilities from an owner's personal assets when properly structured and maintained, but LLC protection is not absolute and does not replace appropriate insurance.

keep reading

Using LLCs to Protect Real Estate from Personal Liability

To learn more about how Maryland investors may use LLCs for rental and investment properties.
09

Think Beyond the Nightly Rate

Short-term rentals can potentially contribute to a long-term investment strategy, but owners should look beyond gross revenue.

Consider:

Cash Flow

Does the property remain profitable after operating expenses and vacancies?

Property Condition

Frequent guest turnover may mean more cleaning, maintenance, and wear.

Management

Short-term rentals typically require frequent communication, scheduling, cleaning coordination, and guest support.

Market Demand

Occupancy and nightly rates can fluctuate with seasonality, competition, tourism, and economic conditions.

Exit Strategy

Could the property work as a mid-term or long-term rental if short-term demand declines or regulations change?

A property that works under more than one rental strategy may provide an owner with greater flexibility over time.

10

Common Mistakes to Avoid

Preparation can make a significant difference when operating a short-term rental.

COMMON MISTAKES INCLUDE:

  • Listing before checking local rules
  • Assuming the platform handles all taxes and compliance
  • Using inadequate insurance
  • Ignoring HOA or condominium restrictions
  • Operating without required licenses
  • Failing to account for operating expenses
  • Using unclear guest rules
  • Treating projected gross revenue as guaranteed profit

Taking care of these issues before accepting reservations is usually easier than addressing them after a dispute, violation, or loss occurs.

10

Final Thoughts: Treat It Like an Investment, Not Just a Listing

Short-term rentals can offer flexibility, potential income, and another way to use investment property, but success is not automatic.

Property owners should evaluate the numbers, understand local restrictions, prepare for Maryland's changing safety requirements, obtain appropriate insurance, and establish clear operating rules.

The strongest strategy is one that works financially and is built on a legally compliant foundation.

KEY TAKEAWAYS

  • Short-term rentals can provide flexibility and income potential, but profitability varies.
  • Maryland short-term rental requirements can differ significantly by county and municipality.
  • New statewide short-term rental safety requirements take effect October 1, 2026.
  • Owners should confirm licensing, zoning, taxes, insurance, and property restrictions before listing.
  • Clear rental terms can help establish expectations with guests.
  • LLCs and appropriate insurance may be parts of a broader risk-management strategy.
  • Always evaluate net income and operating costs, not just nightly revenue.

Considering a Short-Term Rental in Maryland?

Whether you're exploring your first short-term rental or already own investment properties,

DK Law Group can help you understand the legal considerations surrounding your real estate strategy.

240-266-0291
/ right calls
DK Law Group Legal Team

At the heart of our practice, we provide strategic legal advice to businesses, families, and real estate professionals.

https://www.linkedin.com/company/dk-law-group-md/
Next

What Happens When a Real Estate Deal Falls Through?