Airbnb Profitability Calculator
Work out whether a short-term rental actually makes money once platform fees, cleaning, management and vacancy are priced in.
What this calculator does
This short-term rental calculator works out whether an Airbnb property actually makes money after the costs that nightly-rate arithmetic ignores. Enter the home price, your down payment, expected monthly revenue, the management fee percentage, and annual operating expenses, and it returns annual revenue, net income, and the cash-on-cash return on the money you put in.
The gap between revenue and net income is where short-term rentals are won or lost. Gross figures look spectacular against long-term rents, but management at twenty to twenty-five percent, utilities you would otherwise not pay, consumables, and furnishing replacement consume a large share before the mortgage is touched. The year-by-year table tracks revenue, total expenses, and net income so the shape of that gap stays visible.
When to use it
Use it before buying in a market you have researched on AirDNA or a similar data source, when you have a defensible nightly rate and occupancy rather than a hope. The honest test is to run your projection twice: once at your expected occupancy and once at forty percent, which is roughly what a new listing achieves before it has reviews.
It is also the right tool for the convert-or-not decision on a property you already own. Run it as a short-term rental, then run the same property through a long-term rental calculation, and compare net income rather than gross revenue. In an ordinary suburban market that comparison frequently favors the long-term tenant once management and turnover costs are counted, which is a useful thing to learn before you spend $25,000 furnishing it.
Understanding the inputs
Home price and down payment set the loan; short-term rental financing is usually treated as investment property, meaning twenty to twenty-five percent down and a rate roughly half a point to a point above owner-occupied.
Monthly STR revenue should be nightly rate times occupied nights, plus cleaning fees you collect, minus platform fees. Build it from comparable listings' calendars rather than their advertised rates. Management fee is a percentage of revenue — twenty percent for full service, zero if you self-manage, though self-managing an Airbnb is a genuine part-time job. Annual expenses should include utilities, internet, insurance, property taxes, supplies, and an annual allowance for replacing furniture and linens.
How is this calculated?
Monthly Revenue = Nightly Rate × Occupancy Days + Cleaning Fees × Stays. Monthly Profit = Revenue − Platform Fees − Expenses.
A worked example
Take a $420,000 property with twenty-five percent down, so $105,000 of cash and a $315,000 loan at 7.25 percent over thirty years, costing about $25,786 a year in debt service. At $290 a night with sixty percent occupancy, monthly revenue is roughly $5,200, or $62,400 a year.
Management at twenty percent takes $12,480 and operating expenses run $14,000, leaving $35,920 before the mortgage and about $10,134 after — a cash-on-cash return of roughly 9.7 percent on the $105,000 invested. Now compare the long-term alternative. The same house rented at $2,600 a month grosses $31,200, and after a five percent vacancy allowance and $9,000 of expenses it produces about $20,640 of NOI, which is $5,100 short of the mortgage. Short-term is the only version that works here.
Limitations and assumptions
The model cannot price regulatory risk, which is the dominant risk in this asset class. A city ordinance or an HOA rule change can reduce a viable short-term rental to a long-term one overnight, so run the long-term numbers as your downside case before buying — if the property cannot carry itself as a conventional rental, you are betting the mortgage on local politics.
It also assumes steady revenue, whereas real short-term income is highly seasonal and depends heavily on review count and ranking. It excludes the upfront furnishing cost of $15,000 to $30,000, closing costs, lodging taxes where the platform does not remit them, and the value of your own time. Check local ordinances, HOA covenants, and lodging tax registration requirements before committing, and treat the first year's revenue as materially below the stabilized figure.
Common Questions
- What occupancy rate should I assume?
- Fifty to sixty-five percent is realistic for a well-run listing in a market with genuine demand, once you exclude the first few months while you build reviews. New listings routinely run at thirty to forty percent for a season. Any projection built on eighty percent occupancy should be treated as marketing rather than analysis.
- How much do the platform fees take?
- Airbnb's split-fee structure charges hosts about three percent of the booking subtotal, with guests paying roughly fourteen percent on top. The host-only model, mandatory for some listings, charges fifteen percent to the host instead. Vrbo runs about five percent host-side. Assume your fee load lands between three and fifteen percent depending on which model applies.
- What does short-term rental management cost?
- Full-service co-hosting typically runs twenty to twenty-five percent of revenue, against eight to ten percent for a long-term rental. That gap is one of the main reasons short-term returns look better on gross revenue and much closer on net income. Some managers also charge separate onboarding and linen fees.
- What expenses do people forget?
- Furnishing a property to a competitive standard costs $15,000 to $30,000 and needs refreshing every few years. Then utilities, high-speed internet, streaming subscriptions, consumables, a dynamic pricing tool, lock and camera hardware, and a much higher insurance premium. Short-term rentals also wear out faster — expect to repaint far more often than a long-term rental.
- Will my regular homeowners insurance cover it?
- Almost certainly not. Standard policies exclude commercial use, and a denied claim after a guest incident is the worst possible time to discover that. You need a short-term rental policy or a commercial landlord policy. Airbnb's AirCover is secondary protection, not a substitute for your own coverage.
- What is regulatory risk and how big is it?
- The largest risk in the model and the one no spreadsheet captures. Cities including New York, Dallas, and Honolulu have passed rules that eliminated or severely restricted short-term rentals, and HOAs increasingly ban them outright. Check the local ordinance and the HOA covenants before you buy, not after.
- Do I pay lodging taxes?
- Usually yes — state sales tax plus a local occupancy or transient tax, commonly totaling eight to fifteen percent. Airbnb collects and remits automatically in many jurisdictions but not all, and where it does not, the liability is yours. Registration with the city or county is often a separate requirement.
- Is short-term always better than a long-term tenant?
- Not once you net out the costs. Gross revenue is often double, but management at twenty percent, utilities, consumables, higher insurance, and furnishing replacement can consume most of the difference. Short-term wins clearly in genuine destination markets and loses in ordinary suburbs where nightly rates barely exceed a monthly rent divided by thirty.
- How does the 14-day rule work?
- Under IRS rules, if you rent your primary residence for fourteen days or fewer in a year, the income is entirely tax free and you do not report it. Rent for fifteen days and the whole amount becomes reportable. It is a genuinely useful exemption for people near a stadium or a major annual event.
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