A short-term rental that cannot get a permit is worth nothing, however well it pencils.

People bring us short-term rental deals with the revenue projection on page one. Occupancy, average daily rate, a seasonality curve, a number at the bottom. It is almost always the wrong page to start on.

Start with whether the city will let you operate at all.

New York's Local Law 18 cut short-term listings by roughly 83% in its first year. Long-term listings rose about 29%. Nothing about the buildings changed.

Every one of those owners had a working model the week before. The model was never the risk. The permit was.

The market underneath is actually steady

Once you are past the regulatory screen, 2026 is a reasonable year to be operating. AirDNA forecasts average occupancy of 57.4%, slightly above the pre-pandemic 57.0%, with demand and available listings both growing about 2.7% and RevPAR up 2.9% on stronger nightly rates.

Listing growth of 4.6% against a peak near 20% is the whole reason rates are holding. Mortgage rates back above 6% delayed the new supply that lower borrowing costs were expected to bring, which is good news if you already own and a harder entry if you do not.

Rate growth accelerated through the year, from 0.7% year over year in January to roughly 3% by spring. The strongest RevPAR moves were in supply-constrained cities — San Francisco +12.1%, Anaheim +11.0%, Philadelphia +10.1% — while the fastest supply growth is expected in small-city, rural and mid-size markets. Those two facts belong in the same sentence: where supply can arrive, it will.

What we would actually check

• The ordinance, in full, before the LOI. Permit caps, primary-residence requirements, minimum-night rules, whether permits transfer on sale.
• Whether the state preempts local bans, which can make a dull market the safer one.
• Pending legislation, not just current law. A deal underwritten on today's rules and closed under tomorrow's is not a deal.
• The long-term rent as a floor. If the property does not work as a boring annual lease, you are not buying a building, you are buying a permit.

The last point is the whole discipline. A short-term rental that also works as a long-term rental has a downside. One that only works nightly has a regulatory cliff instead.