Short-term rental income looks simple: the nightly rate times the nights booked. Here’s what comes out of it before any of it is yours.
What costs come out of Airbnb income?
More than come out of a long-term rental, because you’re running a small hotel:
- The platform’s fee. Airbnb’s help center says most hosts on its single fee pay 15.5% of each booking. Hosts still on the older split fee pay about 3%, and their guests pay a separate service fee on top. Airbnb is phasing the split fee out.
- A co-host or manager, if you use one. This example uses 20% of income.
- Cleaning and supplies between stays.
- Utilities and internet, which you pay instead of a tenant.
- Repairs and money for big repairs, with wear adding up from a new guest every few nights.
- Furniture, bought before the first booking.
- Taxes, insurance and the mortgage, the same as any rental.
A $350,000 Airbnb at $300 a night
Take a house that costs $350,000, with 20% down on a 30-year loan at 7%, plus $25,000 of furniture. It books at an average of $300 a night, and Airbnb takes its 15.5% single fee. Each month you also pay $600 for cleaning, $150 for supplies, $350 for utilities, and $550 for property taxes and insurance.
| 65% booked | 75% booked | |
|---|---|---|
| Booking income | $5,931 | $6,844 |
| Airbnb’s host fee (15.5%) | −$919 | −$1,061 |
| Co-host (20%) | −$1,186 | −$1,369 |
| Repairs and big repairs (10%) | −$593 | −$684 |
| Cleaning and supplies | −$750 | −$750 |
| Utilities | −$350 | −$350 |
| Property taxes and insurance | −$550 | −$550 |
| Mortgage | −$1,863 | −$1,863 |
| Cash flow each month | −$280 | +$217 |
Booked 65% of the year, about 237 nights, the house loses $280 a month. Booked 75%, about 274 nights, it makes $217. It breaks even at about 71%, or 258 nights a year.
How do you find break-even occupancy?
Work out one month at an occupancy that looks reasonable, then move the occupancy up or down until the cash flow reaches zero. The short-term rental calculator runs that search for you and shows the occupancy you need to break even. Set its platform fee to the one you’ll actually pay.
Is 71% occupancy realistic?
That depends on the market, the season and the listing, and it’s the number to check hardest. Look at how often similar listings nearby are booked across a whole year, not only the busy months, and be wary of estimates built from asking prices rather than actual bookings.
A house that only works when nearly every good week is booked has little room for a slow season, a new listing down the street or a change in the rules.
Check the local rules before the numbers
Many cities and homeowners associations limit short-term rentals or require a permit. Find out whether this house can be rented by the night before you spend time on its numbers.