How the Airbnb ROI calculator works
Revenue is your average nightly rate times the nights you book in a year (365 × occupancy), plus the cleaning fees guests pay. Expenses come in two kinds. Variable costs rise with bookings: platform fees, management, cleaning per turnover, supplies and a maintenance reserve. Fixed costs you pay either way: property tax, insurance, utilities, HOA and software.
Net operating income (NOI) is revenue minus operating expenses, before the mortgage. Cash flow is NOI minus your principal and interest. Cash-on-cash return divides that annual cash flow by every dollar you put in: down payment, closing costs, furnishing, renovation, startup costs and a 2% capital reserve.
What is a good ROI for an Airbnb?
Most long-term rentals return 5–10% cash-on-cash in a good year. Because a short-term rental takes more work and more risk, James recommends targeting at least 15% cash-on-cash in your expected case, and making sure your worst case still doesn’t lose money each month.
Cap rate shows how a property performs regardless of financing, which makes it useful for comparing deals. Break-even occupancy shows how much room for error you have. If you need 70% occupancy just to cover costs in a market that averages 55%, walk away.
Run a worst case and an expected case
Estimate revenue from comparable listings, or from AirDNA’s 50th percentile for your worst case and the 75th percentile for your expected case. Run the calculator twice. A deal is worth pursuing when the expected case clears your return target and the worst case still breaks even.
Frequently asked questions
How do I calculate ROI on an Airbnb?
Take your annual revenue, subtract operating expenses and mortgage payments to get annual cash flow, then divide by the total cash you invested (down payment, closing costs, furnishing, renovation and startup costs). That is your cash-on-cash return, the most common ROI measure for Airbnb investors.
What is a good cash-on-cash return for a short-term rental?
James recommends targeting 15% or more in your expected case. Traditional long-term rentals typically return 5–10%. Anything below 15% on an STR deserves serious scrutiny, because the extra work and risk of short-term renting should be rewarded.
What occupancy rate should I use?
Use the real occupancy of comparable listings in your market, not the market average for all listings. Data tools like AirDNA show percentiles. Use the 50th percentile for a conservative case and the 75th for a well-run listing.
Does this calculator include Airbnb fees?
Yes. The platform fee field defaults to Airbnb’s 15.5% host-only fee. If you are still on the split-fee model, change it to about 3%.
Is the calculator result a guarantee of income?
No. It is an educational estimate built on the numbers you enter. Verify revenue, taxes, insurance and local regulations for your property before you buy.