How do you calculate cash-on-cash return for a rental property?

Divide annual pre-tax cash flow by total cash invested. If you invest $50,000 (down payment plus closing costs) and the property generates $5,000 per year in net cash flow, your cash-on-cash return is 10%.

What is a good cap rate for a rental property?

Cap rates vary by market and property type. In major cities, 4-6% is common. In secondary markets, 6-10% is typical. A higher cap rate implies higher risk and potentially higher returns. Compare cap rates within the same market and property class.

What expenses should I include in rental property analysis?

Include mortgage payment, property taxes, insurance, property management (8-10% of rent), maintenance (5-10% of rent), vacancy allowance (5-8%), HOA fees, utilities you cover, and capital expenditure reserves for major repairs.

What is the 1% rule in real estate investing?

The 1% rule says monthly rent should be at least 1% of the purchase price. A $200,000 property should rent for $2,000 or more per month. It is a quick screening tool. Properties that pass often cash flow well, but always run full numbers before buying.

How much more can I earn with an Airbnb vs long-term rental?

In most markets, a well-managed Airbnb generates 1.5 to 3 times the gross revenue of a comparable long-term rental. However, operating expenses are significantly higher: cleaning fees, supplies, furnishing, platform commissions (3 to 15%), higher insurance, and property management (20 to 25% for STR vs 8 to 10% for long-term). Net cash flow is typically 20 to 50% higher than a long-term rental after expenses.

What vacancy rate should I assume for an Airbnb?

Budget 25 to 35% vacancy for a year-round short-term rental. Seasonal markets (beach, ski) may see 40 to 50% vacancy in off-season months. Use AirDNA or Mashvisor to research actual occupancy rates in your specific market before purchasing.

What are the biggest risks of short-term rental investing?

The three biggest risks are regulatory changes (cities banning or restricting STRs), seasonal revenue swings (some markets drop 50%+ in off-season), and higher operating costs than projected. Always verify local STR regulations before purchasing, and stress-test your numbers at 60% occupancy to ensure the deal still works.

How much does it cost to furnish a short-term rental?

Budget $10,000 to $25,000 to fully furnish a 2-bedroom Airbnb including furniture, linens, kitchen essentials, decor, and smart home tech (keyless entry, thermostat, cameras). Premium furnishing for luxury listings can run $30,000 to $50,000+. This is a capital expenditure you should factor into your total investment.

Rental Property Analyzer for Airbnb / Short-Term Rental

Pre-filled with real airbnb / short-term rental industry benchmarks

Short-term rentals on platforms like Airbnb and VRBO can generate 2 to 3 times the revenue of a traditional long-term rental, but they come with higher operating costs, seasonal variability, and regulatory risk. Occupancy rates typically range from 55 to 75% depending on market and season, and you need to budget for furnishing, cleaning, supplies, platform fees, and higher insurance. The key metric is revenue per available night (RevPAN) compared against your total operating costs. This calculator is pre-filled with typical Airbnb/STR assumptions to help you evaluate whether a short-term rental pencils out.