real-estate · 2026-05-01
Compare net annual income from short-term rental (Airbnb / VRBO) vs traditional long-term rental, accounting for occupancy, fees, cleaning, and management.
| Avg nightly rate (STR) | $175 |
| STR occupancy % | 65% |
| Monthly LTR rent | $2,400 |
| STR management % | 25% |
| Cleaning fee paid out per stay | $90 |
| Avg stay (nights) | 3 |
| Monthly fixed (mortgage/HOA/utilities) | $2,000 |
| STR net annual income | $22 |
| LTR net annual income | $4,800 |
| STR nights booked / yr | 237 |
Airbnb / VRBO operators forget two costs: cleaning subsidy (the cleaning fee you charge guests is rarely what you pay the cleaner) and the unbookable nights between stays. Net both out and short-term rental's apparent premium often shrinks to single-digit percent over LTR — for 10x the operating effort.
Default scenario: $175/night × 65% occupancy = $41,500 gross. Subtract 25% management ($10,375), $90 cleaning subsidy × ~80 stays ($7,200), and STR nets ~$24k against $28,800 LTR rev. LTR wins by $4,800/yr in this scenario before factoring in your time.
Stable cash flow → financeable. Banks underwrite LTR cash flow at 75-100% in DSCR loans. STR revenue is only counted at 50-70% (volatility discount). For investors using leverage, LTR's lower yield is offset by easier refinancing.
Pull AirDNA's market dashboard for your zip ($30/mo). Look at top-quartile hosts in your bed-count category. Model at the median, NOT the top-quartile. Most first-year hosts hit 50-65% occupancy as they build reviews. After 12 months of strong reviews, top-quartile is achievable.
Lodging tax (TOT) is collected from the guest and remitted — passes through, doesn't affect your net. State income tax applies to STR profit (Schedule E or C if classified as business). LTR depreciation is more straightforward; STR adds turn-over capex (linens, deep cleans every 6 months).
Co-hosts charge 20-30% of bookings. Full-service property managers charge 30-40% (handles guest comms, cleaning coordination, restocking). Self-management is 5-10 hours/month after setup. The 25% default in this calc reflects a low-touch co-host arrangement.