RealInvestorX
Deal analysis by strategy
How to analyze a short-term rental against a long-term lease
A short-term rental earns more per month only if guests fill enough nights to pay for higher costs. The useful number is the occupancy at which it beats a plain lease.
Illustrative inputs for learning, not market data or a forecast. Replace every number with figures from your own deal.
Turn nightly rates into a monthly figure
Revenue per month = nightly rate x 365 x occupancy / 12. At $195 a night and 62% occupancy that is $3,677 a month.
The calculator has no line for fixed monthly costs such as utilities, supplies, software and internet, so subtract them from revenue and enter the result as monthly rent. Here $450 comes off, giving $3,227. Set vacancy to 0%, since occupancy already counts empty nights, and raise management to 20% if someone else runs it.
The comparison
- Short-term case, $340,000 price, 25% down at 7%: net operating income $21,307, cash flow $79 a month, DSCR 1.05.
- Long-term case at $2,300 a month, 5% vacancy and 8% management: cash flow -$409 a month, DSCR 0.76.
- Break-even: the short-term version matches the lease at about 50% occupancy, and it only covers its own costs at about 60%.
- Ask the honest question: is your realistic occupancy comfortably above the first number in the weakest season, not just the best one?
Checklist before you buy
- Whether the city, HOA and your lease or mortgage allow short stays, and what permit, license or tax applies; rules change and can end a business plan overnight.
- Occupancy and rate evidence for comparable listings in the same season you will operate, not a single peak month.
- Furnishing and startup cost added to the cash you invest; add it to the purchase price field or to closing costs.
- Your insurance policy, since a standard landlord policy may not cover paying guests.
- The fallback: if the rules change, does the property still work as a long-term rental?
Common mistakes
- Using peak-season nightly rates for the whole year.
- Ignoring platform fees, cleaning that is not recovered from guests, and your own time.
- Skipping the long-term comparison and never learning that a lease would earn nearly the same with far less work.
Try it with your numbers
Frequently asked questions
What occupancy do short-term rentals need?
It depends on price, financing and costs. Compute the break-even occupancy for your own deal and compare it with comparable listings.
Should vacancy be zero?
In this calculator yes, if your occupancy assumption already reflects empty nights. Entering both would count the gaps twice.
Are short-term rentals allowed everywhere?
No. Local rules, HOAs and loan terms can restrict or ban them, so check before you buy.