How do you calculate short term rental income?

Multiply 365 nights by your occupancy rate to get booked nights, then by your average daily rate. At $235 a night and 64% occupancy that is 234 booked nights and $54,896 of room revenue, plus cleaning fees collected — $9,125 across 73 turnovers here — for $64,021 of gross revenue.

What expenses does a short term rental have that a long term rental does not?

Platform fees of about 3% for an Airbnb host, cleaning between every stay, guest supplies and consumables, all utilities including internet, short-term rental insurance rather than a landlord policy, and management at 15% to 25% rather than 8% to 10%. On the example here those STR-specific lines total roughly $21,500 a year.

How much more does a short term rental need to make to be worth it?

The gross revenue premium over a 12-month lease is the number to watch. Below about 1.5x the extra work and cost rarely pay; the example here runs at 2.54x, which is why it clears $425 a month while the same property on a long lease would not. Also check the occupancy at which the premium disappears — here it is 25%.

What occupancy rate should I assume?

Be conservative and use a full-year figure rather than a peak-season one. Occupancy here means booked nights divided by 365, not by nights you chose to list. A property that books 90% of July and 30% of February is a 55% property, and the annual number is what pays the mortgage.

Is furnishing cost part of the investment?

Yes, and leaving it out overstates the return badly. Furnishing a two-bedroom to a rentable standard — beds, linens, kitchen, seating, smart lock, professional photography — commonly runs $20,000 to $30,000. Counted here as $22,000, it is 23% of the total cash invested and it depreciates over five to seven years rather than 27.5.

Nightly rate to net

Short Term Rental Calculator

Short-term rentals gross far more than a lease and cost far more to run. This takes average daily rate and occupancy through every cost — platform fee, cleaning, management, supplies, reserves — to net operating income and cash flow, and compares it to the same property on a 12-month tenancy. The example below nets $425 a month.

Year one, short-term let

Monthly cash flow

+$425

$64,021 of gross revenue from 234 booked nights, less $38,164 of costs and $20,757 of debt service.

Gross revenue

$64,021

Net operating income

$25,857

Cash-on-cash

5.36%

RevPAR

$175.40

Revenue per available night.

Premium over a lease

2.54×

$64,021 vs $25,200 on a 12-month lease.

Occupancy that just matches a lease

25%

Below this, the long-term tenant grosses more.

Room revenue

365 × occupancy × average daily rate

= 365 × 64% × $235

= $54,896 from 234 nights

Turnovers

Booked nights ÷ average length of stay

= 234 ÷ 3.2

= 73 cleans, costing $8,030

Net operating income

Gross revenue − platform fees − cleaning − management − fixed − reserves

= $64,021 − $1,921 − $8,030 − $11,524 − $11,200 − $5,490

= $25,857

Revenue and costs
Revenue and costs	Amount
Room revenue	$54,896
Cleaning fees collected	$9,125
Gross revenue	$64,021
Platform fees	($1,921)
Cleaning costs	($8,030)
Management	($11,524)
Tax, insurance, utilities, supplies	($11,200)
Maintenance and CapEx reserves	($5,490)
Net operating income	$25,857
Debt service	($20,757)
Pre-tax cash flow	+$5,100

Against a 12-month lease
Against a 12-month lease	Amount
Short-term gross revenue	$64,021
Long-term gross rent	$25,200
Revenue premium	2.54×
Cash investedincluding furnishing	$95,125
Furnishing and setup	$22,000
Cap rate	7.96%
Cash-on-cash	5.36%

Bookings

Average daily rate

Occupancy

Nights booked ÷ 365, not nights available

Average length of stay

Cleaning fee charged

Cleaning cost per turn

Long-term rent for comparison

What a 12-month tenant would pay

Operating costs

Platform fee

Airbnb host service fee is typically 3%

Management

Full-service STR management runs 15–25%

Property tax / year

Insurance / year

Short-term let cover costs more than a landlord policy

Utilities / month

Supplies / month

Consumables, restocking, small replacements

HOA / month

Maintenance reserve

CapEx reserve

Purchase and setup

Purchase price

Down payment

Closing costs

Interest rate

Loan term

Furnishing and setup

Beds, linens, kitchen, locks, photography

Gross revenue is not the comparison

The loaded example grosses $64,021 against $25,200 for a long-term lease at $2,100 a month — a 2.54x premium. But the costs are not comparable either, and the honest contrast is at the net operating income line.

Line	Short-term	12-month lease
Gross revenue	$64,021	$25,200
Platform fees	$1,921	—
Cleaning between stays	$8,030	—
Management	$11,524	$2,016
Tax, insurance, utilities, supplies	$11,200	$7,340
Maintenance and CapEx reserves	$5,490	$2,520
Vacancy allowance	In occupancy	$1,260
Net operating income	$25,857	$12,064

The revenue premium is 2.54x; the NOI premium is 2.14x. Costs scale with the operation rather than with the rent, so of the $38,821 of extra revenue, $25,028 is consumed producing it — about two-thirds. It is still a large gap. It is just not the gap the gross number implies.

The three assumptions that decide the answer

Occupancy. Every point is worth $1,000 of gross revenue on this property. Drop from 64% to 55% and revenue falls about $9,000, which is more than the whole year of cash flow.
Average daily rate. ADR and occupancy trade against each other — you can always fill the calendar by cutting the rate. The product of the two, RevPAR, is the honest metric, and it is $175.40 a night here.
Management. At 18% of gross revenue, management costs $11,524 a year. Self-managing saves that entirely and turns the property into a job with guest messages at 11pm. Both are valid; only one of them should be in the model.

The regulatory risk is not in the spreadsheet

Cities change short-term rental rules faster than they change zoning. A permit cap, a primary-residence requirement or an outright ban converts this model back into the long-term column overnight, and the furnishing cost does not come back. Underwrite the deal so the long-term numbers are survivable.

Common questions about short term rental returns

How do you calculate short term rental income?: Multiply 365 nights by your occupancy rate to get booked nights, then by your average daily rate. At $235 a night and 64% occupancy that is 234 booked nights and $54,896 of room revenue, plus cleaning fees collected — $9,125 across 73 turnovers here — for $64,021 of gross revenue.
What expenses does a short term rental have that a long term rental does not?: Platform fees of about 3% for an Airbnb host, cleaning between every stay, guest supplies and consumables, all utilities including internet, short-term rental insurance rather than a landlord policy, and management at 15% to 25% rather than 8% to 10%. On the example here those STR-specific lines total roughly $21,500 a year.
How much more does a short term rental need to make to be worth it?: The gross revenue premium over a 12-month lease is the number to watch. Below about 1.5x the extra work and cost rarely pay; the example here runs at 2.54x, which is why it clears $425 a month while the same property on a long lease would not. Also check the occupancy at which the premium disappears — here it is 25%.
What occupancy rate should I assume?: Be conservative and use a full-year figure rather than a peak-season one. Occupancy here means booked nights divided by 365, not by nights you chose to list. A property that books 90% of July and 30% of February is a 55% property, and the annual number is what pays the mortgage.
Is furnishing cost part of the investment?: Yes, and leaving it out overstates the return badly. Furnishing a two-bedroom to a rentable standard — beds, linens, kitchen, seating, smart lock, professional photography — commonly runs $20,000 to $30,000. Counted here as $22,000, it is 23% of the total cash invested and it depreciates over five to seven years rather than 27.5.

To underwrite the same property as a long-term rental, use the rental property calculator. The furnishing spend and its depreciation are covered on the depreciation calculator, and the loan test is on the DSCR calculator — worth running, because many lenders will not underwrite short-term income at all.

The rest of the deal, on the same numbers

Your inputs are shared across every calculator on this site, so changing a figure here changes it everywhere.