Key takeaways
- Revenue = nightly rate × nights booked (≈ 30.4 × occupancy).
- Cash flow = revenue − operating expenses − fixed costs (mortgage, taxes, insurance).
- Use a blended annual occupancy (often 50–70%), not your best month.
- STRs out-earn long-term rentals per night but cost more and carry regulatory risk.
What is short-term rental income?
Short-term rental income is your nightly rate times the nights booked, minus operating and fixed costs. Revenue rides on two levers — how much you charge and how often you're booked — and the rest is cost control.
Worked example
Using the defaults — $180/night at 65% occupancy, $1,200 operating and $1,500 fixed monthly costs:
- Nights booked: 30.4 × 65% ≈ 19.8/month
- Gross revenue: $180 × 19.8 ≈ $3,557/month
- Monthly cash flow: $3,557 − $1,200 − $1,500 ≈ $857
- Annual revenue ≈ $42,682; annual cash flow ≈ $10,282
How occupancy moves the numbers
| Occupancy | Nights / mo | Gross @ $180 |
|---|---|---|
| 50% | 15.2 | $2,736 |
| 65% | 19.8 | $3,557 |
| 80% | 24.3 | $4,378 |
Occupancy and nightly rates vary widely by market and season; pull local comps from a source like AirDNA before assuming a number.
Frequently asked questions
How is Airbnb income calculated?
Nightly rate × nights booked (≈30.4 × occupancy), minus operating and fixed costs.
What occupancy should I assume?
Many profitable STRs run 50%–70% blended annual occupancy; verify with local market data.
Does this include taxes?
Include property taxes and insurance in fixed costs. Income tax on profit is separate — consult a tax professional.
STR vs. long-term rental?
STRs can earn more per night but cost more and carry more effort and regulatory risk. Compare against the rental property ROI for the same home.
What is ADR?
Average daily rate — the average price per booked night. ADR × occupancy drives revenue.
Do local STR rules matter?
Very much — many cities cap or license short-term rentals, which can cut occupancy or close a listing. Check before buying.