Published on and written by Cyril Jarnias
The Puerto Rico short-term rental market has changed in scale in just a few years. What was still a niche market reserved for a few pioneering property owners in the mid-2010s has become a pillar of the island’s tourism economy and a veritable playing field for investors and individuals alike seeking supplemental income. The numbers speak for themselves: booked nights, overall revenue, the number of active listings, and even typical host earnings have skyrocketed, driven by record tourism numbers, an atypical tax framework, and the global rise of platforms like Airbnb and Vrbo.
To evaluate rental opportunities in Puerto Rico, it is essential to analyze several factors beyond just raw data: the island’s geography, seasonality, local regulations, traveler profiles, and operational requirements. The market is structured and segmented by destination, property type, and host professionalism, with significant performance gaps between a standard studio and a well-managed high-end villa.
A Short-Term Rental Market That Has Become Major
In less than ten years, short-term rentals have gone from a supplementary status to a pillar of tourism in Puerto Rico. Historical data shows the scale of the phenomenon. The average number of monthly booked nights rose from about 17,000 in 2015 to 109,000 in 2017 and then 149,000 in 2018. Over the same period, revenue from these rentals jumped from $18 million to $170 million. This growth did not “replace” traditional hotels: it came in addition to it, broadening the supply and attracting new customer segments.
In 2018, between 7,000 and 7,500 hosts were already using platforms like Airbnb and HomeAway to rent their properties in Puerto Rico.
Since then, the momentum has not slowed. The total median revenue for all hosts in Puerto Rico reportedly exceeded $235 million in 2021, a 130% increase from 2019. New hosts in that same year earned an average of over $6,000, a 155% increase from 2019, and new female hosts collectively received about $7.4 million. Short-term rentals have become a real economic buffer: over a third of hosts say they rent to “make ends meet” and nearly half to supplement their income, with more than half stating that this money helps them stay in their homes despite the rising cost of living.
A Growing Weight in the Island’s Tourism
The rise of short-term rentals accompanies a broader tourism boom. In 2024, nearly 6.7 million overnight stays were consumed across all categories, 7% more than the previous year, and lodging revenue neared $2 billion, up 9%. Demand for short-term rentals is growing even faster: +18% in one year according to aggregated data, in a context where the number of properties available for short-term rental now exceeds 25,000 across the territory.
Average price in dollars for a week’s short-term rental on the island, illustrating the model’s appeal compared to hotels.
In accommodations licensed by the Puerto Rico Tourism Company, the average daily rate was $157 in 2018, while short-term rentals averaged $186, but the latter host an average of 5.3 people, compared to only 1.74 for hotels. In other words, the cost per traveler remains, for many groups and families, significantly more advantageous for short-term rentals.
Who Rents, Who Profits, and How?
Behind the overall figures lies a highly segmented reality. In 2018, 68% of hosts operated only one property, but these small players accounted for only about a third of the inventory and 30% of total revenue. At the other end, 5% of hosts with portfolios of more than five properties concentrated 30% of the supply and 36% of the revenue. The middle half, composed of hosts managing between two and five properties, accounted for over a third of both properties and receipts.
Analysis reveals strong revenue concentration: the top 20% of most profitable accommodations capture about 73% of Airbnb revenue on the island. This phenomenon is explained by differences in quality and location, as well as the emergence of professional managers, like companies West Indies Vacation Rentals or Beatrice in Carolina, and many local operators, who optimize pricing, occupancy rates, and the customer experience.
For an investor or individual considering getting started, this structure means there are two main paths: a “heritage” model with one or two properties managed in a semi-artisanal way, generating supplemental income, and a resolutely professional model, requiring a heavier initial investment, a branding strategy, multi-channel distribution (Airbnb, Vrbo, Booking.com, direct site, etc.), and often revenue management tools like PriceLabs or AirDNA.
A Concrete Investment Example
The case of an investor who purchased a house in Puerto Rico illustrates the financial logic of a short-term rental project. They bought a house in 2020 for $135,000. Renovation cost $70,000, furnishing about $14,000, for a total investment of approximately $225,000. The property is then listed at $350 per night, entrusted to a management company that typically charges around 20% commission. Over the first four months of operation, gross revenue exceeded $14,000. Monthly fixed expenses (taxes, insurance, electricity, water, internet, waste, gardening) run around $700.
Quality furnishing can increase rental revenue by about 30%. The break-even point on such an investment is generally reached between 12 and 18 months, or even 8 to 12 months for high-end properties, which aligns with industry benchmarks.
A Geography of Opportunities: San Juan, Carolina, Isabela and the West
Puerto Rico is a compact island (approximately 160 km long by 65 km wide), but its short-term rental market is far from homogeneous. The capital and its metropolitan area concentrate a large part of the supply, but the western part of the island, neighboring islands like Vieques and Culebra, and the eastern resort areas offer very different risk and profitability profiles.
San Juan: Engine and Testing Ground
San Juan is the leading hub for short-term rentals in Puerto Rico. The most recent data indicates over 5,000 active listings on Airbnb for the city alone (5,027 as of December 20, 2025), compared to about 3,900 a year earlier, a sign of a market still expanding. Over a recent reference period, the average annual revenue per property is $38,000, with a median occupancy rate of 72% and an average daily rate around $158. A typical property is rented for nearly 263 nights per year, corresponding to an average monthly revenue of about $3,250. Compared to the previous year, this revenue increased by over 34%, in a market described as having “strong” seasonality and largely considered “investable” (grade B+).
San Juan also stands out regionally. In the Caribbean basin, the city ranks in the top 25% for revenue, top 38% for average rate, and top 5% for occupancy. This performance is explained by a combination of factors: a busy international airport, a major cruise port, the historic richness of Viejo San Juan, the nightlife energy of Condado or Santurce, and a dense offering of cultural and culinary activities.
Neighborhoods are not interchangeable, and analysis of specific sub-markets reveals significant gaps between them.
| San Juan Neighborhood | Active Listings | Average Annual Revenue | Occupancy Rate | Average Daily Rate |
|---|---|---|---|---|
| Condado | 661 | $53,556 | 76% | $190 |
| Viejo San Juan | 548 | $54,590 | 70% | $210 |
| Miramar | 184 | $37,288 | 69% | $145 |
Condado and Viejo San Juan stand out with annual revenues above $50,000 per property, solid occupancy rates, and high rates, driven by strong international demand (nearly 80% of San Juan travelers come from abroad according to some datasets). Miramar, a more residential neighborhood, offers more moderate yields but remains very attractive for investors targeting business clientele or long stays.
The supply structure confirms the dominance of the “entire home/apartment” segment: nearly 9 out of 10 listings in San Juan are entire homes. More than three-quarters are apartments or condos, with houses representing only about 16%. Small units dominate, with almost half of listings having one bedroom, and an average capacity of 3.8 travelers. For many hosts, the target clientele is couples or small groups, often young (half of travelers belong to the post-2000 generation) and mostly North American, with a strong over-representation of travelers from New York.
Carolina and Isla Verde: The Strength of the Waterfront
Bordering San Juan, the municipality of Carolina, which encompasses the famous Isla Verde waterfront and Carolina beach, is the second major hub for short-term rentals. Over 2,100 active listings are counted there. Here too, the majority of supply consists of apartments or condos as “entire places,” often small (one or two bedrooms), with an average capacity of just over four people.
Performance figures reveal a solid but highly segmented market.
| Key Indicators (Carolina) | Approximate Average Value |
|---|---|
| Median Monthly Revenue | $2,533 |
| Median Occupancy Rate | 59% |
| Average Daily Rate (ADR) | $149 |
| Top 10% Monthly Revenue | ≥ $7,251 |
| Top 10% Occupancy Rate | ≥ 87% |
| Top 10% ADR | ≥ $357 |
The best properties, often large villas or beachfront penthouses, exceed $7,000 in monthly revenue with occupancy rates close to 90% and very high rates. “Average” properties are around $2,500 per month, but dispersion is significant: the bottom quarter of the market falls to around $1,400, with occupancy around 38% and an ADR barely above $100.
Seasonality is very pronounced, with revenue peaks in March, July, and August (approx. $4,275, 66.5% occupancy, ADR ~$200). In the low season (September to November), revenue drops (~$2,400) and occupancy falls (~43%), despite still high prices (~$180). The average booking lead time is 41 days, varying from 61 days in August to 31 days in October. Hosts can use this data to anticipate demand and adjust their prices dynamically.
Isabela and the West Coast: More Modest Growth, Different Potential
At the other end of the island, the west coast – from Rincón to Aguadilla and Isabela – has been attracting a clientele of surfers, families, and couples seeking less urban beaches, spectacular sunsets, and a more relaxed pace of life for a few years. Isabela, for example, has about 700 active listings on Airbnb. Performance there is lower than in the capital, but the entry price in terms of purchase price is often much lower, which can improve net returns for investors.
| Key Indicators (Isabela) | Approximate Average Value |
|---|---|
| Average Annual Revenue | $28,600 |
| Median Occupancy Rate | 56% |
| Average Daily Rate (ADR) | $144 |
| Nights Booked per Year (Typical) | 204 |
| Average Monthly Revenue | $2,386 |
| Annual Revenue Growth | +9.3% |
Isabela’s market is modest in size and characterized by strong seasonality: the months of June and July are the busiest, linked to summer vacations and increased attendance at beaches like Jobos. Nearly 40% of travelers there are international, but the main clientele remains local, from mainland Puerto Rico, which partially protects against the fluctuations of international air travel.
Aggregated data indicate an average ADR around $250 for an occupancy rate near 43%, with professionally managed waterfront properties capable of far exceeding these averages during peak season. Announced returns on investment for the best products there oscillate between 9 and 12%, gross.
Rincón, Caribbean Surf Capital
An Ecosystem of Towns and Niches
Beyond these main centers, short-term rentals in Puerto Rico have become denser in a multitude of localities: Cabo Rojo and its beaches on the southwestern coast, Luquillo and Fajardo to the east (gateways to El Yunque and the islands of Vieques and Culebra), Humacao and the large gated community of Palmas del Mar, Dorado and its golf resorts, or Rio Grande, Aguadilla, Arecibo, Mayagüez, Ponce…
A regional ranking highlights several strong markets, in terms of average monthly revenue:
| Market (selection) | Listings (approx.) | Average Monthly Revenue | Average ADR | Average Occupancy |
|---|---|---|---|---|
| San Juan | ≈ 3,900–5,000 | $3,213 | $224 | 54% |
| Carolina | ≈ 2,175–2,184 | $3,055 | $199 | 55% |
| Rincón | ≈ 1,134 | $3,049 | $263 | 43% |
| Luquillo | ≈ 741 | $2,847 | $190 | 54% |
| Cabo Rojo | ≈ 925 | $1,795 | $195 | 35% |
These averages hide very diverse local realities. Luquillo, for example, benefits from proximity to El Yunque and its beaches lined with food kiosks, while Cabo Rojo operates largely on long weekends with a local clientele, leading to occasional spikes in attendance but lower midweek occupancy. Vieques and Culebra, accessible by ferry, boast ADRs well above the average (sometimes over $250) and occupancy rates nearing or exceeding 80%, but in a context of more challenging logistics.
Platforms and Tools That Structure the Supply
The development of short-term rentals in Puerto Rico is closely linked to major international platforms. Airbnb largely dominates the market: in 2018, about 74% of short-term accommodations were listed there, versus just over 20% for HomeAway (now Vrbo) and 6% in double-listing. Today, a large portion of the island’s 25,000 to 30,000 listings are still visible on Airbnb, but the strategy of many managers involves multiplying channels: Airbnb, Vrbo, Booking.com, Expedia, TripAdvisor, even a direct booking site.
Airbnb offers support tools like the ‘What’s My Place Worth’ simulator to estimate potential revenue. The ‘AirCover’ protection includes substantial damage coverage, subject to a strict report within 14 days after the guest’s departure.
Vrbo, on the other hand, caters more to families and groups seeking entire homes for extended stays, often with a higher nightly budget. For a Puerto Rico property owner, combining both platforms allows targeting different segments: younger, more ‘experiential’ and urban explorer clientele on Airbnb, and family, older, or more affluent clientele on Vrbo, often during high season and for villas or large houses.
The percentage increase in rental searches from the United States during major events like the LULAC convention.
Regulation, Taxation, and Business Climate
The success of short-term rentals in Puerto Rico has logically attracted the attention of authorities. Tax-wise, short stays are subject to an overall occupancy tax of approximately 11%, comprising a 7% Room Occupancy Tax and an additional 4% at the municipal level. Airbnb states it has already collected and remitted over $70 million in lodging tax for the island, making it a non-negligible revenue source for public finances.
Property owners in Puerto Rico must register with the Puerto Rico Tourism Company, obtain a rental permit, register with the SURI tax system, and, in many municipalities, hold a business license and a use permit. In San Juan, an ordinance mandates registration and an annual paid license ($100 to $500 USD), with a penalty system for non-compliance.
This regulatory ramp-up occurs in a context where the island has 78 municipalities, each potentially adopting its own rules, creating a patchwork difficult for hosts to follow. Organizations like Viva Puerto Rico Short-Term Rental Alliance advocate for a unified framework at the island level, with reasonable license fees, streamlined procedures, and incentives for compliance rather than a strictly punitive approach.
The law exempts qualified long-term rental income from local income tax until 2040. This exemption explicitly excludes short-term rental income. Although the tax framework thus favors long-term rentals, short-term rentals remain attractive due to higher rental rates, pricing flexibility, and, for some foreign or American investors, the incentives of Act 60.
The Role of Act 60 Incentives
Act 60 consolidates several former regimes (including the famous Acts 20 and 22) and offers very advantageous tax conditions to tax residents who establish themselves in Puerto Rico. Among these benefits are a 4% tax rate on eligible business income, exemptions on dividends and interest, and a total exemption on certain passive income (including capital gains) until 2035 for individuals who obtain an exemption decree.
For investors who become residents, real estate income can, in some cases, fall under these schemes, although short-term rentals are not automatically covered by all incentives and remain subject to local tax and occupancy tax. The recent requirement for Act 60 beneficiaries to purchase a primary residence on the island within two years further strengthens demand for residential properties, impacting prices and potential returns for rental projects.
Choosing Your Property and Positioning Wisely
Market data shows that certain property types dominate the short-term rental supply in Puerto Rico. Over 40% of listings are apartments, with an average of 1.5 bedrooms, 1.4 bathrooms, and a capacity of 4.5 travelers. Houses represent just over one-fifth of the market, with a higher average rate ($234 per night) and a capacity of nearly seven people. Villas, which only account for about 7% of listings, peak at an average ADR around $428, host an average of over eight people, and generated about $24 million in revenue in 2018.
For an investor, the choice between a one or two-bedroom apartment in an urban neighborhood, a family house by the sea, or a luxury villa with a pool and beach access is not just a budget question: it’s a strategic decision that commits the type of target clientele, seasonality, distribution channels, and the level of operational effort.
In San Juan, properties located in neighborhoods like Condado, Santurce, or Viejo San Juan, near business centers, nightlife, and historical sites, are ideal for short stays, business trips, ‘city breaks,’ or remote work. These properties, often studios or small apartments, have an average stay duration of a few nights and a high turnover rate. Their management requires optimized processes: efficient cleaning, self-check-in systems, multilingual communication, and quick incident resolution.
Houses and villas on the waterfront or in resort areas (Isla Verde, Dorado, Palmas del Mar, Rincón, Aguadilla, Isabela, Luquillo) attract more families, groups, and higher-spending travelers, often for one or two weeks. Requirements are different: pool, direct or close beach access, equipped kitchen, large outdoor spaces, leisure equipment (surfboards, kayaks, games, etc.), and, for the most high-end properties, concierge services, private chef, private transfers.
The Cost and Impact of Furnishing
Furnishing a short-term rental property is the second largest expense after the purchase itself. Depending on the size of the property and the target tier, the bill can range from $5,000 to over $50,000, or even far beyond for large luxury villas. For a standard project, a complete “mid-range” furnishing of a house can cost between $10,000 and $30,000. A Puerto Rico property owner furnishing a 170 m² house from scratch spent nearly $17,000 on furniture and equipment, in addition to nearly $48,000 in works (roofing, windows, air conditioning, kitchen, bathrooms, exterior).
A well-equipped and cohesive rental property generates on average up to 30% additional revenue.
Here is an order of magnitude for furnishing costs for a typical property for short-term rental:
| Room / Area | Indicative Cost Range |
|---|---|
| Primary Bedroom | $1,500 – $10,000 (or more) |
| Guest Bedroom | $1,000 – $6,000 |
| Living Room | $1,500 – $10,000 |
| Kitchen (excluding major works) | $1,000 – $10,000 |
| Bathroom | $200 – $3,000 |
| Balcony / Small Terrace | $200 – $4,000 |
| Garden / Outdoor Area | $500 – $20,000 |
| Pool (excluding civil engineering) | $500 – $12,000 |
In Puerto Rico, the constant proximity of sea air, sun, and humidity makes material choice crucial, especially for beach properties. Outdoor furniture in teak, aluminum, quality composites, or marine-grade stainless steel resists corrosion better and reduces long-term replacement costs. Textiles must be chosen for UV and salt resistance, and air conditioning systems adapted to intensive use.
Demand, Seasonality, and Traveler Profiles
Demand for short-term rentals in Puerto Rico is fueled by several drivers: classic beach tourism, remote workers and “workcationers” taking advantage of no passport requirement for U.S. citizens, cell coverage from major carriers, and pleasant weather year-round.
The high tourist season generally runs from mid-November to mid-April, with a particularly marked peak around the holiday period, New Year’s, and major events like the Fiestas de la Calle San Sebastián in San Juan or the Ponce carnival. During these months, rates can be 30 to 40% above the annual average, with occupancy rates nearing saturation in the most in-demand areas.
Percentage drop in monthly revenue during the low season in San Juan and Carolina compared to tourist peaks.
Adapting Your Offer to Season and Clients
To make the most of this seasonality, hosts in Puerto Rico typically leverage several levers. In high season, the challenge is less about “filling at all costs” and more about maximizing revenue per night, by modulating prices upward on weekends, holidays, or events, and sometimes imposing longer minimum stays. In low season, the strategy often involves offering substantial discounts for weekly or monthly stays, targeting the remote worker market, making cancellation conditions more flexible, and intensifying marketing efforts on non-beach experiences (hiking, gastronomy, culture, mountains).
The distribution of travelers in Puerto Rico varies by region. In urban coastal areas like San Juan and Carolina, over 85% of visitors are young Americans, mainly from large East Coast states like New York. In contrast, on the islands of Vieques and Culebra or in inland rural areas, the proportion of Europeans and Latin Americans is higher. Accommodations also reflect these differences: families and groups mainly book villas in the west and resorts in the east, while couples and ‘digital nomads’ opt more for studios and small apartments in the city.
Professionalization and Management: Do It Yourself or Outsource?
Operated part-time, a short-term rental can quickly become a second job. It is commonly estimated that a short-term property requires 10 to 15 hours of work per week to manage traveler communications, check-in, cleaning, maintenance, price adjustments, and unforeseen events. This is why many property owners in Puerto Rico rely on local management companies.
Local rental management providers and services for owners, with a full range of offers and variable fees depending on the rental type.
Tropical Stay Management, PMI Puerto Rico, Nomad Property Management, Houzze PR, and larger regional groups offer these services.
From simple cleaning coordination to full management: marketing, revenue management, work supervision, guest welcome, concierge, dispute handling, and administrative compliance.
Management fees are typically between 20% and 30% of the gross rental revenue generated.
Management fees are typically between 8% and 10% of gross revenue for this type of rental.
The example of an owner in Luquillo who entrusted his house to a management company illustrates the effect of this professionalization. Before management, his property rented for $89 per night with a 45% occupancy rate. After staging, new photos, activation of dynamic pricing tools, and listing optimizations, the average price rose to $190, occupancy to 67% in low season and up to 78% in high season. Most clients of similar agencies see revenue increases in the order of 30 to 50%.
Between Opportunity and Responsibility
The meteoric rise of short-term rentals in Puerto Rico inevitably raises societal questions. The concentration of tourist accommodations in certain neighborhoods, the impact on long-term rents, neighborhood cohesion, intensive use of infrastructure, and competition with traditional hotels fuel a lively debate, both at the municipal level and in Parliament.
Local authorities seek to balance the economic benefits of tourist rentals, such as supplemental income for households, job creation, and redistribution of tourist flows, with its drawbacks, such as risks of gentrification, pressure on affordable housing, noise nuisances, and saturation of certain neighborhoods.
Industry players, united in associations like the Viva Puerto Rico Short-Term Rental Alliance, advocate for “fair, reasonable, and harmonized” regulation rather than sudden bans or drastic caps on rented days, as seen in some major international cities. They also emphasize the importance of individual responsibility of hosts and travelers: respecting neighborhood rules, noise management, parking, waste, transparent communication with condo associations and local communities.
To secure a short-term rental investment in Puerto Rico, it is essential to anticipate legislative changes, participate in local discussions, and join host networks. Implementing noise prevention measures and guest codes of conduct with neighbors helps sustain the activity in an increasingly regulated environment.
An Attractive, Yet Selective Market
Available data shows that the short-term rental market in Puerto Rico is, despite its growing maturity, still an expanding market, supported by robust tourist demand, quality infrastructure, a particular tax climate, and the lasting appeal of the destination, perceived as one of the safest and most diverse islands in the Caribbean. Gross returns in short-term rentals easily exceed those of long-term rentals, especially in premium areas like San Juan, Carolina, Dorado, satellite islands, or certain segments of the west coast.
The market is very competitive and polarized: a minority of well-located, well-presented, and well-managed properties generates the majority of revenue. To succeed, one must analyze local data, position their property precisely (type, amenities, price), invest in its renovation and furnishing, professionalize its management, and rigorously comply with evolving regulations.
Opportunities for short-term rentals in Puerto Rico are therefore real, and sometimes exceptional. But they are increasingly geared towards informed, structured owners aware of the responsibilities – fiscal, legal, communal – that accompany the prospect of high income on an island seeking to reconcile tourism growth, social justice, and the preservation of its identity.
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Cyril Jarnias is an independent expert in international wealth management with over 20 years of experience. As an expatriate himself, he is dedicated to helping individuals and business leaders build, protect, and pass on their wealth with complete peace of mind.
On his website, cyriljarnias.com, he shares his expertise on international real estate, offshore company formation, and expatriation.
Thanks to his expertise, he offers sound advice to optimize his clients' wealth management. Cyril Jarnias is also recognized for his appearances in many prestigious media outlets such as BFM Business, les Français de l’étranger, Le Figaro, Les Echos, and Mieux vivre votre argent, where he shares his knowledge and know-how in wealth management.
