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​To calculate how much money the property can bring in, you need to estimate three variables:
​Average Daily Rate (ADR): The average price charged per night. (Check tools like AirDNA, Mashvisor, or competitor listings in the immediate neighborhood for realistic data).
​Occupancy Rate: The percentage of nights booked out of the total available nights in a year (market averages typically range from 50% to 75% depending on seasonality).
​Gross Annual Revenue: Calculated as ADR \times 365 \times Occupancy Rate.
​2. Operating Expenses (OpEx)
​Running a short-term rental is closer to running a hospitality business than a traditional long-term rental. Be sure to account for:
​Platform Fees: Airbnb hosts typically pay a host-only fee of around 3% per booking.
​Cleaning Fees: Usually passed on to the guest, but you must factor in turnover costs if you use a management or cleaning service.
​Utilities & Wi-Fi: Unlike long-term rentals, the host usually pays electricity, water, gas, and high-speed internet.
​Supplies & Restocking: Toilet paper, coffee, toiletries, linens, and paper towels.
​Property Management: If you are not local or prefer a hands-off approach, professional property managers typically charge 15% to 25% of gross revenue.
​Insurance & Taxes: Specialized STR insurance (standard homeowner's insurance often won't cover short-term guests) plus local lodging/hotel taxes.
​Maintenance & Reserves: Set aside 5% to 10% of revenue for repairs and replacing worn-out furniture.
​3. Financial Performance Formulas
Line Item
Monthly Estimate
Annual Estimate
Gross Revenue (ADR: \$200, 60\% Occupancy)
$3,600
$43,200
Platform Fees (3%)
$108
$1,296
Utilities & Wi-Fi
$300
$3,600
Cleaning & Turnover
$500
$6,000
Maintenance & Supplies
$250
$3,000
Insurance & Local Taxes
$350
$4,200
Total Operating Expenses
$1,508
$18,096
Net Operating Income (NOI)
$2,092
$25,104
Less Mortgage Debt Service (Principal & Interest)
$1,200
$14,400
Net Cash Flow
$892
$10,704
​. Key Risk Factors to Check
​Before moving forward with an Airbnb property, always verify:
​Local Regulations & Zoning: Check city ordinances, HOA bylaws, and short-term rental permit caps. Many cities require licenses or heavily restrict non-owner-occupied STRs.
​Seasonality: Ensure your financial model accounts for "off-season" months where occupancy might drop drastically.
​Setup Capital: Furnishing an Airbnb from scratch typically costs anywhere from $10,000 to $25,000+ depending on the size of the property.
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