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In this video, Matthew demonstrates how to create a short-term rental agreement using a legal template from legaltemplates.net. He navigates to the website, selects the real estate forms section, and locates the short-term rental agreement template. Matthew specifies the importance of selecting the appropriate state, opting for Texas in this case. He outlines key components needed in the agreement, including details about the owner and guests, additional guests' information, maximum occupancy limits (e.g., seven overnight, five during the day), and charges for exceeding maximum occupancy (e.g., five dollars per extra person). The link to the legal templates is provided in the video description.