Short Term Rental Calculator
Underwrite a short-term rental purchase — furnishing capital included — and find the break-even occupancy plus what the deal looks like if the jurisdiction bans short lets tomorrow.
Short Term Rental Calculator
Results recalculate instantly on every keystroke. Nothing you type is transmitted.
What this result does not account for
- Annual figures — seasonality can produce deficit months inside a profitable year.
- Furniture replacement is treated as initial capital, not an ongoing reserve.
- Assumes the long-term fallback is actually permitted and achievable.
In short: Furnishing is capital a long-term let never needs. On a 325,000 purchase, 28,000 of furniture lifts invested capital to 115,750 and cuts cash-on-cash from 1.2111% to 0.9182%. Break-even occupancy is 61.8661%.
Formula
invested = deposit + closing + furnishing
break-even nights = (fixed cost + debt service) ÷ net contribution per night
[('furnishing', 'capital a long-term let never needs'), ('net contribution', 'ADR less the costs that vary per booking'), ('fixed cost', 'payable whether or not anyone books'), ('ban scenario', 'the same asset reverting to a long-term let')]
Worked Example
- Total the capital: deposit, closing costs AND furnishing.
- Compute debt service on the loan.
- Deduct it from short-term net operating income for cash flow.
- Solve for the occupancy at which fixed costs are just covered.
- Re-run the deal as a long-term let to price regulatory risk.
A 325,000 purchase at 25% down borrows 243,750 at 7.25% over 30 years, costing 1,662.80 a month or 19,953.66 a year. With 21,016.43 of short-term NOI, cash flow is 1,062.78. Invested capital is 81,250 deposit plus 6,500 closing plus 28,000 furnishing = 115,750, giving 0.9182% cash-on-cash — ignoring the furniture would report 1.2111%, overstating by 0.2930 points. Break-even is 213.4 nights of 345, or 61.8661%, leaving a 7.1195-point cushion. A short-let ban costs 3,232.43 a year and pushes cash flow to −2,169.66.
Strengths & Limits Of This Model
Where this engine is strong
- Includes furnishing in invested capital and prices the omission
- Solves break-even occupancy against fixed costs plus debt
- Models a regulatory ban as a long-term let, not a total loss
Where it stops
- Annual averages only
- No furniture replacement reserve
Practical Use Cases
Underwriting a purchase
Testing whether the numbers survive the furniture.
Stress-testing occupancy
Finding the fill rate the deal actually needs.
Pricing regulatory risk
Modelling the same asset as a long-term let.
Comparing markets
Judging whether a high-rate market covers its higher price.
Presenting to a lender
Showing the long-term fallback that supports the debt.
Methodology & Editorial Standards
Invested capital includes furnishing, because a short-term rental cannot operate without it and it earns no separate return; the page prints the return both ways so the size of the usual omission is visible. Break-even occupancy divides fixed costs plus debt service by the net contribution of a booked night, where contribution is the rate less the costs that scale with bookings. Where break-even exceeds available nights the page refuses to report a percentage above one hundred, because the correct conclusion is that no occupancy works.
Computation runs in IEEE-754 double precision at full internal precision; rounding to two decimal places occurs strictly at the display layer, so no cumulative drift enters the result. All monetary outputs use accounting presentation — grouped thousands, two decimals, negatives in parentheses — so figures can be transcribed directly into a model or working paper. Division-by-zero and out-of-domain inputs return an em-dash rather than a misleading number.
This engine was reconciled against an independent reference implementation and hand-verified for the worked example above before release. Our full five-stage review process is published on the About Us page.
Disclaimer. This calculator is provided for informational and modelling purposes only and does not constitute financial, tax, legal, medical, or engineering advice. Verify all figures with a qualified professional before acting on them.
Short Term Rental Calculator — 10 Expert FAQs
10 analyst-written answers to the questions practitioners actually ask — optimised for voice and answer-engine retrieval.
How do you calculate short-term rental return?
Cash flow divided by every dollar of capital you put in, which for a short-term rental means deposit plus closing costs plus furnishing. Omitting furnishing is the standard error and it flatters the return, because a furnished unit needs real capital that a long-term let does not.
What is break-even occupancy?
The fill rate at which booked nights just cover the costs that do not vary with occupancy, including debt service. It is fixed costs divided by the net contribution of one booked night, and it is usually far higher than owners expect once the mortgage is included.
How much does it cost to furnish a short-term rental?
It varies enormously with size and market position, but it is always a substantial capital item and it is never a one-off. Linen, kitchenware and soft furnishings wear out under short-term use far faster than in a home, so treat it as recurring capital rather than a setup cost.
Are short-term rental mortgages more expensive?
Frequently yes. Lenders view income with no lease behind it as less reliable, so pricing sits above standard investment terms and some lenders decline the use entirely or require the property to qualify on long-term rental income instead.
What happens if my city bans short-term rentals?
The property reverts to a long-term let, which is why this page models that scenario explicitly. The test worth applying before buying is whether the long-term income still covers the debt — if it does not, a council vote can put you in monthly loss with furniture you cannot use.
Should I count my own labour?
Yes, at what your time is worth, or enter a management fee instead. Self-managing hosts report much better returns precisely because they treat their own considerable work as free, which makes the comparison against a passive long-term let meaningless.
Is a higher nightly rate always better?
Only if occupancy holds. Raising the rate raises the contribution per booked night and therefore lowers break-even occupancy, but if it costs more occupancy than it gains in rate, total revenue falls. The RevPAR page is where that trade-off is resolved.
How does seasonality affect break-even?
It makes an annual break-even figure optimistic, because costs accrue evenly while revenue does not. A property that clears break-even over a year can still run months of deficit that must be funded, so hold working capital rather than relying on the annual average.
Should I compare against the long-term rent?
Always, and on net income rather than gross revenue. The long-term let is the fallback, the regulatory hedge and the benchmark for whether the extra work is worth it. If the short-term premium is thin, the lease is the better risk-adjusted asset.
What occupancy should I underwrite?
Something below what the market data shows, because market figures come from established listings with review history and a new listing takes time to rank. Underwriting to the market average in year one is optimistic; underwriting to break-even plus a cushion is prudent.