Investors are always looking for new ways to grow their wealth. If you want to boost your passive income, you may have heard of or even considered investing in home-sharing rentals, like Airbnb. Short-term real estate rentals (STR) have become very popular in recent years, and owning short-term real estate properties through home-sharing platforms can be a potentially profitable venture. 

However, before investing in this particular vehicle, consider comparing it with another popular real estate investment strategy: multifamily private placement investing. Let’s explore the ins and outs of short-term rentals and how they differ from and are similar to private placement.

WHAT IS THE SHORT-TERM RENTING MODEL?

Federal Housing Administration (FHA) regulations classify rentals of less than 30 days as transient or short-term occupancy; however, the FHA does not finance Airbnb rentals, which is an important distinction. [1] Active real estate investors can tap into the growing demand for temporary accommodations like vacation homes by strategically acquiring properties in desirable locations. 

These short-term rentals are fueled by tourism, business travel, and transitory housing needs. Platforms like Airbnb and Vrbo have revolutionized how travelers find lodging, opening up a new and dynamic platform for active investors. They can showcase their properties online and attract more guests or renters. [2]

The key to success in the STR model often lies in optimizing occupancy and nightly rates, adapting to changes in seasonal demand, and ensuring a positive guest experience. Active investors should take care of their investment property and consider adding amenities to enhance its appeal. This can even help command higher prices. [2]

DISADVANTAGES OF SHORT-TERM RENTALS

Despite their popularity, short-term rentals are not welcome in every city or town. Some places prohibit rentals of less than 30 days unless the primary resident or property owner stays in the property along with the guest. These are referred to as owner-occupied residences. Other areas may require property owners to register their short-term rentals and pay a corresponding fee. As the short-term rental market evolves, savvy investors must learn how to navigate these new waters to reap returns. [2]

Another downside of homeshares, such as Airbnb, is the fluctuation in income. Frequent turnovers at these properties can lead to increased maintenance, cleaning, and potential wear and tear. Short-term rentals must also adhere to income tax laws. 

So, while Airbnb hosts generate income through ancillary fees (such as booking, cleaning, and late check-out fees) and other additional costs, like airport pickup, meal preparation, and guided tours, they miss out on the convenience of a long-term lease and the consistent rental income that comes with it. [3]

ADVANTAGES OF SHORT-TERM RENTALS

There are plenty of advantages to this investment vehicle. As mentioned above, short-term rentals are partly fueled by tourism. Investors can target high-traffic tourist destinations or areas with strong rental demand for a potentially higher return on investment (ROI).

Ancillary income is one of the most important yet often overlooked revenue drivers for owners/operators. This income source comprises several revenue streams, including—but not limited to—parking fees, laundry facilities, and pet fees. [3]

Even short-term rentals, such as corporate housing or those in the home-sharing marketplaces, can take advantage of resident or guest reimbursement. According to the Airbnb Help Center, hosts can request reimbursement from their guests if someone they invite, a pet, or they cause damage to the property during their stay. [3]

By passing certain expenses on to residents through the rates charged, owners can better manage their cash flow and budget for property-related expenditures. Landlords and property owners must be transparent, fair, and compliant with local governance when writing reimbursements into their lease terms. [3]

WHAT IS MULTIFAMILY PRIVATE PLACEMENT?

Multifamily properties tend to generate more cash flow than single-family homes, since the rent from multiple units can be combined to create a significant stream of income.

Unlike Airbnb rentals, which have an uncertain occupancy rate, well-located multifamily properties tend to experience this problem less frequently. Even if one or two units become vacant, investors could still enjoy a consistent cash flow through monthly rental income thanks to the remaining occupied units.

Private placement, also known as syndication, is a real estate deal in which multiple investors pool their funds to purchase a property, typically an apartment building or other commercial property. Passive investors are led by a general partner, also known as a sponsor, who is responsible for identifying the property, facilitating the transaction, and managing the property after it is purchased.

SHORT-TERM RENTALS VS. MULTIFAMILY PRIVATE PLACEMENT

When deciding between short-term rentals and multifamily real estate investing, you must weigh the pros and cons. Determining which is a better model is challenging, as it depends on various factors, including individual financial goals, risk tolerance, market conditions, and investment strategy.

The most significant risk of investing in an Airbnb rental is the uncertainty of occupancy rates. The success of your investment depends on the ability to rent out your property consistently. If you have low occupancy rates, it may take longer to recoup your investment and generate a profit.

Additionally, you must keep the property in good condition to continuously attract renters and guests and maintain a high occupancy rate. This translates to higher maintenance costs. Active investors also face increasing competition due to the growing popularity of home-sharing platforms. 

Active investing isn’t exactly a walk in the park. Managing a property can be time-consuming. But this applies to any real estate investment that involves owning and operating a property. Even a traditional rental property can be time-consuming to manage because you must deal with long-term residents. However, with an Airbnb, for example, you must clean it and manage repairs each time you have a new guest. [4]

WORK WITH BAM CAPITAL FOR MULTIFAMILY PRIVATE PLACEMENT

Airbnb is a platform for short-term rentals of properties, enabling property owners to rent out their homes or rooms to travelers. It can be a lucrative investment for those who own a property in a desirable location, but it also comes with certain risks, such as fluctuating demand and regulatory challenges. 

Ultimately, both Airbnb and multifamily investing have their risks and benefits, and the best model for an individual will depend on their specific investment goals and circumstances. Consult with a financial advisor before making any investment decisions.

While Airbnb rental investing and multifamily real estate investing have their advantages and disadvantages, real estate investors may be pleased to know that there’s an even better alternative. Multifamily private placement offers investors the benefits of investing in a multifamily property without the hassle of becoming a landlord or incurring the higher upfront costs associated with traditional ownership.

Working with a trustworthy operator like BAM Capital is essential when investing in a multifamily private placement. BAM Capital partners with accredited investors who want to enjoy passive income and all the other benefits of multifamily private placement. As the private equity arm of The BAM Companies, BAM Capital has been focusing on buying assets targeted as having strong profitability potential and staying disciplined in its investment thesis. BAM Capital’s investment strategy aims to create forced appreciation while mitigating investor risk. To date, the brand has successfully managed over $1.7 billion in assets across ~9,000 apartment units. [17]

Remember that no investment is without risk. Before making financial decisions, consult your investment advisor and schedule a call with a BAM Capital investment team member.

For additional multifamily real estate insights, visit Pathways to Passive Wealth, BAM Capital’s new platform designed to make real estate investing more accessible, transparent, and achievable for aspiring and experienced investors.

Disclaimer: All investments carry risk, including potential loss of capital. This content is for informational purposes only and is not financial, legal, or investment advice, nor an offer or solicitation to buy or sell any security. Consult an independent advisor for personalized guidance and contact BAM Capital for details on current offerings. BAM Capital and its representatives are not fiduciaries or investment advisors. The information provided is general and may not reflect individual financial goals. Any financial terms, projections, or forward-looking statements contained herein are hypothetical in nature and should not be interpreted as guarantees of future performance or safety. Such statements reflect BAM Capital’s opinion and are subject to market fluctuations, economic conditions, and investment risks. Past performance does not predict future results. BAM Capital and its affiliates do not guarantee the accuracy or completeness of this information. BAM Capital offers investment opportunities under Rule 506(c) of Regulation D exclusively for accredited investors as defined by the SEC. Verification of accredited investor status is required prior to participating in any investment.

© 2025 BAM Capital. All rights reserved.

SOURCES:

[1]: FHA.com. (2023). “FHA Loans, Air-B-n-B, and Rental Units.” https://www.fha.com/fha_article?id=2297 

[2]: BAM Capital. (2025). “Do real estate investors make money buying houses?” https://bamcapital.com/do-real-estate-investors-make-money-buying-houses/

[3]: Pathways to Passive Wealth. (2025). “Topic 2.1: How Properties Generate Income.” https://learn.bamcapital.com/courses/multifamily-real-estate/lessons/topic-2-how-multifamily-real-estate-works/topics/topic-2-1-how-properties-generate-income/ 

[4]: Lodgify. (2022). “Investing in Airbnb Properties: Pros, Cons and Best Cities.” https://www.lodgify.com/blog/investing-airbnb-properties/

[5]: BAM Capital. (2025). “Current portfolio.” https://bamcapital.com/