Short-Term Rental Calculator: Nightly Rate to Real Cash Flow

Introduction

A short-term rental grosses two or three times what the same house would rent for long-term. It also costs vastly more to run, requires capital a landlord never spends, and is a business rather than an investment. The gap between those two facts is where most STR projections go wrong.

TL;DR: On the defaults here, the property grosses $77,289 a year — equivalent to $6,441 a month of long-term rent on a $400,000 house. After cleaning, platform fees, management, utilities and reserves, $35,509 of that survives as net operating income, and cash flow is $861 a month. Break-even occupancy is 57%. The single most common modelling error is charging cleaning per night instead of per booking, which on this deal would overstate costs by $15,877.

The formula

STR revenue is rate times occupancy times nights, split by season:

Peak nights = 365 × (peak months ÷ 12)

Nights booked = (peak nights
                 × peak occupancy)
              + (off nights
                 × off occupancy)

Gross revenue = (peak booked
                 × peak rate)
              + (off booked
                 × off rate)

Bookings      = nights booked
                ÷ average stay

Cleaning cost = bookings
                × cleaning fee

Platform + mgmt = gross revenue
                  × their percentages

NOI       = gross revenue
            − cleaning − platform fees
            − management − utilities
            − taxes − insurance
            − reserve

Cash flow = NOI − annual debt service

Worked example

The defaults: a $400,000 property, 25% down at 7.5% over 30 years, $8,000 closing and $25,000 to furnish. Six peak months at $350 a night and 85% occupancy; six off months at $210 and 60%. Average stay three nights, cleaning $90 a turnover, 3% platform fee, 20% management, $5,200 taxes, $2,800 insurance, $4,200 utilities, 5% maintenance reserve.

Revenue:

• Peak nights available: 365 × 6/12 = 182.5, of which 85% booked = 155 nights
• Off nights available: 182.5, of which 60% booked = 110 nights
• 265 nights booked, 72.5% blended occupancy
• Gross revenue: (155 × $350) + (110 × $210) = $77,289
• Revenue per available night: $77,289 ÷ 365 = $212

Costs:

• Bookings: 265 ÷ 3 = 88 stays. Cleaning: 88 × $90 = $7,939
• Platform at 3%: $2,319
• Management at 20%: $15,458
• Maintenance reserve at 5%: $3,864
• Taxes, insurance, utilities: $12,200
• Total operating costs: $41,780
• NOI: $35,509

Financing: $300,000 at 7.5% over 30 years = $2,098 a month, or $25,172 a year.

Cash flow: $35,509 − $25,172 = $10,337 a year, or $861 a month. On $133,000 of cash in, that is a 7.8% cash-on-cash return.

The cleaning error

This is worth its own section because it is so common and so consequential.

Cleaning is paid once per booking, not once per night. A guest who stays three nights generates one clean. On the example above:

• Correct: 88 bookings × $90 = $7,939
• Wrong: 265 nights × $90 = $23,816

A $15,877 error on a deal with $10,337 of annual cash flow — enough to turn a working investment into an apparent loss, or the reverse if the error runs the other way in a spreadsheet you inherited.

The corollary matters strategically: shorter average stays cost more to operate. A property averaging two-night stays generates 50% more cleans than one averaging three, on identical occupancy and revenue. This is why many hosts impose minimum-stay rules that reduce bookings — they are trading revenue for margin, deliberately.

What makes an STR different from a rental

Furnishing is real capital. Beds, sofas, kitchenware, linens, a full inventory, photography. $25,000 on a whole house is normal and $15,000 is a floor. It is not financed by the mortgage, it depreciates faster than the building, and it belongs in cash invested. Most projections omit it entirely, which overstates cash-on-cash by a third or more.

Management costs roughly double. Long-term management runs 8–10% of rent. STR management runs 15–25% of revenue, because the work is continuous — messaging, pricing, turnovers, restocking, reviews. On the defaults, management at 20% is $15,458 a year, more than half the mortgage.

You pay the utilities. Electricity, water, gas, internet, streaming, sometimes lawn and pool service. A long-term tenant pays most of these.

Insurance costs more. A standard landlord policy generally will not cover short-term commercial occupancy. Expect a specialist policy at a premium.

Occupancy is not a constant. It is seasonal, it responds to your pricing and your reviews, and it takes months to establish. A new listing does not achieve a mature listing's occupancy in year one.

Break-even occupancy is the number to stress

Revenue and most costs scale with occupancy; the mortgage, taxes, insurance and utilities do not. So there is an occupancy level below which the property loses money regardless of your nightly rate.

On the defaults that level is 57%, against a modelled 72.5%. That is a 15-point cushion, which is reasonable but not enormous — a bad season, a new competitor, or a regulatory change that shortens your permitted season can consume it.

Compare your break-even against actual market data for your submarket, not against your own hopes. If your break-even is above roughly 65%, the deal depends on things going well rather than merely going normally.

Regulation is the risk this calculator cannot model

Short-term rental rules change, frequently and retroactively. Permit caps, primary-residence requirements, minimum-stay floors, outright bans in specific zones, HOA restrictions, and occupancy taxes are all live issues in most desirable markets.

A regulatory change does not reduce your return — it can eliminate the use case entirely, leaving you holding a furnished house whose long-term rent is far below what you underwrote. The "equivalent long-term rent" figure in the results exists for exactly this reason: it shows what a long-term tenant would need to pay to match your STR top line ($6,441 a month here, on a house that would realistically rent for perhaps $2,600). That gap is the size of your regulatory exposure.

Before buying, check the current ordinance, whether permits are capped and transferable, and whether existing operators were grandfathered the last time rules changed. Then run this calculator once more at long-term rent, and decide whether you could live with that outcome.

Where this calculator is deliberately simple

Two seasons, not twelve months. Twelve monthly inputs is a data-entry chore producing false precision on a number nobody knows to the month. If your market has a genuine third season, run it twice.

No ramp-up year. A new listing typically underperforms for six to twelve months while it accumulates reviews. Model year two, then discount year one.

Occupancy taxes are not modelled. Many jurisdictions levy a transient occupancy or lodging tax. It is usually collected from the guest and remitted, so it does not reduce your revenue — but confirm which side of the ledger yours falls on.

No cost segregation. STRs are a common cost-segregation candidate, and the depreciation treatment can materially change after-tax returns. See the cost segregation calculator.

FAQ

Is a short-term rental more profitable than a long-term rental?

On gross revenue, almost always. On net, often but not reliably, and never by the multiple the gross suggests. The defaults here gross the equivalent of $6,441 a month, and deliver $861 of cash flow — a long-term tenant at $2,600 with 40% expenses would deliver about $460 on the same financing. Better, but on far more work and considerably more risk.

What occupancy rate should I assume?

Use market data for your specific submarket and property size rather than a rule of thumb — 50–70% annual is a common range in established markets, but it varies enormously. Whatever figure you choose, check it against the break-even the calculator reports, and assume year one is worse.

Should I include property management if I self-manage?

Yes, for the same reason as a long-term rental. Self-managing an STR is genuinely a part-time job — expect several hours a week of messaging, pricing and coordination. If the deal only works because your labour is free, it is not an investment, it is employment. It also has to survive the day you want to stop, or sell to someone who will not self-manage.

How much does furnishing an STR cost?

$15,000 to $40,000 for a typical single-family house, depending on size and finish. Budget for the full inventory — not just furniture but linens in triplicate, kitchen equipment, a stocked pantry, safety equipment and professional photography. It is a real capital outlay and it belongs in your cash-invested figure.

What is RevPAN?

Revenue per available night: gross revenue divided by all nights in the year, booked or not. It is the STR equivalent of a hotel's RevPAR, and it is more useful than either rate or occupancy alone because it captures both at once. $212 here.

What happens if my city bans short-term rentals?

You hold a furnished property whose income drops to long-term rent. Run this calculator with a long-term rent figure before you buy and see whether you would still be solvent — that is the real downside case, and it is far more likely than a market crash. Check whether your jurisdiction has grandfathered existing operators previously, but do not rely on it.

Conclusion

Model the deal twice. Once at your realistic occupancy and rate, and once at long-term rent as though the permit went away. An STR that only works in the first case is a bet on both the market and the regulator; one that survives the second is an investment with an upside.