How short-term rental cash flow is calculated
- Revenue = nightly rate × nights in the month × occupancy.
- Subtract fees that scale with revenue: the booking platform’s cut and any co-host or property manager.
- Subtract operating costs: property taxes, insurance, utilities, internet, supplies, lawn and snow, software.
- Subtract the mortgage. What is left is cash flow.
Break-even occupancy is the number to watch
It is the share of nights you must book just to cover your costs. If your break-even is 56% and the market averages 60%, one slow season or one new competitor down the street erases the profit. A wide gap between expected and break-even occupancy is what makes a short-term rental resilient.
Costs that long-term landlords do not have
- Furnishing. Furniture, linens, kitchenware and photos are real cash invested, and they wear out.
- Utilities. You pay all of them, all year.
- Turnover. Cleaning between every stay. If guests pay a cleaning fee that covers it, leave it out of both revenue and costs.
- Lodging taxes and permits. Many cities tax, license, cap or ban short-term rentals. Confirm the rules before you buy, and check that the property also works as a long-term rental in case they change.