Rental Arbitrage Calculator

1. Start with gross revenue. Multiply your nightly rate by the nights you expect to book in a month, then add the cleaning fees you collect across every turnover in that month. Cleaning fees are revenue, not a rebate: guests pay them, they land in your payout, and leaving them out understates both your income and the fee your booking platform charges you.

2. Subtract every monthly cost. Rent comes first, because in arbitrage it is the single largest fixed cost and it is owed whether or not anyone books. Then add the rest of your fixed monthly line items: utilities, internet, short-term-rental insurance, and any pricing or channel-management software. Then the variable costs that scale with turnovers rather than nights: what you pay your cleaner and the consumables you restock each stay. Then your booking platform's fee, and finally a maintenance reserve set aside as a percentage of revenue.

3. What's left is your net monthly cash flow. This is the number that decides whether the lease is worth signing. A positive figure means the unit pays its own rent and pays you. A negative figure means you are funding someone else's mortgage out of your reserve every month, which is survivable for a short stretch and ruinous across a full lease term.

4. Divide by invested capital, not purchase price. This is where arbitrage ROI differs from a purchase analysis. You are not buying an asset, so there is no purchase price to divide by. What you actually have at risk is the cash it takes to sign the lease and furnish the unit: first and last month's rent, the security deposit, furnishing, supplies, permits, photography, and utility deposits.

netMonthly = grossRevenue - (rent + fixedCosts + turnoverCosts + platformFee + maintenanceReserve)
annualROI = (netMonthly x 12) / investedCapital

Two details in this calculator are worth knowing about, because they are the two most common places an arbitrage spreadsheet goes wrong. First, the platform fee is applied to full gross revenue, including the cleaning fee, not to nightly revenue alone. On a host-only fee model around 15.5%, applying that fee to the nightly line only will quietly overstate your profit by the fee on every cleaning fee you collect. Second, the security deposit is excluded from invested capital by default, because it is refundable at the end of the lease if the unit comes back in good condition. It is cash you need on day one, so it stays in the cash-needed-upfront figure, but treating it as invested capital understates your return on money you expect to get back. If you would rather be conservative and assume the deposit is gone, the toggle beside the ROI tile counts it as invested and the return recalculates instantly.

The STR premium ratio is your gross short-term revenue divided by your monthly rent. It answers one question in one number: how many times the rent does this unit actually clear as a short-term rental? Because it uses gross revenue rather than profit, it is deliberately a screening number, not an accounting one. It tells you quickly whether a deal has enough headroom to be worth modelling in detail, before you spend an evening on furnishing quotes.

The heuristic operators generally use, and the one this calculator labels against, is this: below 1.5 times rent, the deal is unviable, because once the platform fee, cleaning, utilities, and a maintenance reserve come out, there is nothing left for the operator. Between 1.5 and 2.0 times, the deal is tight, meaning it can work but has little tolerance for a soft season, a rate cut, or an occupancy assumption that turns out optimistic. At 2.0 times and above, the deal is healthy, with enough gross revenue to absorb the operating costs and still leave a margin.

Treat those three bands as a rule of thumb, not a standard. They are not published thresholds, and they do not adjust for a market where cleaning is unusually expensive, a unit where utilities are unusually high, or a lease where rent is unusually low for the area. At the calculator's default numbers, $4,062.50 of gross revenue against $1,800 of rent gives an STR premium of 2.26 times, which lands in the healthy band, and the net monthly cash flow of $574.69 confirms the ratio was pointing the right way. Use the ratio to decide whether to keep looking at a deal, and use the net cash flow number to decide whether to sign.

Break-even occupancy is the share of nights you must book, at your current nightly rate, for net monthly cash flow to land exactly at zero. It is solved directly from your inputs rather than found by nudging a slider, and it is the honest test of an occupancy assumption: if the calculator says you break even at 51% and you have no evidence this unit can hold above that across a full year, including its slow months, the deal is a bet rather than a plan.

Break-even nightly rate answers the same question from the other direction: holding your occupancy assumption fixed, what is the lowest nightly rate that still covers every cost? This is the more useful of the two when you are competing on price in a crowded market, because it tells you exactly how far you can discount before a booking stops being worth taking.

The two figures should always agree in direction. If your entered occupancy sits comfortably above the break-even occupancy, your entered nightly rate should also sit comfortably above the break-even rate, and net monthly cash flow should be positive. If one looks healthy and the other does not, something in the inputs is inconsistent, most often an average stay length that does not match the turnover costs you entered.

Arbitrage startup costs split cleanly into two groups, and conflating them is why so many deals look cheaper on paper than they turn out to be. The one-time group is everything due before your first guest arrives: first and often last month's rent at signing, the security deposit, furnishing the unit from empty, an initial stock of linens, consumables and kitchen basics, any local short-term rental permit or license fee, professional photography for the listing, and utility connection deposits.

Furnishing dominates that list, and it is the line most sensitive to unit size and to how much you already own. A studio you can furnish from existing stock is a different proposition from a two-bedroom bought new. Combining this calculator's own default figures, the one-time total for a modest one-bedroom lands in the region of $8,000 to $15,000. That range is this calculator's own combination of the default line items above, not a cited industry figure, so treat it as a starting point for your own quotes rather than a benchmark.

The ongoing group is everything that repeats: rent every month regardless of bookings, utilities, internet, short-term-rental insurance, software, cleaning and supplies for every turnover, the platform's fee on every booking, and a maintenance reserve for the wear a rotating stream of guests puts on a unit you do not own. None of it stops when bookings do, which is why the cash reserve field matters more in arbitrage than in almost any other short-term rental model.

In most arbitrage deals, yes. The financial model can be immaculate and the deal can still end in an eviction notice, because the binding constraint is not your spreadsheet, it is your lease. Standard residential leases very commonly prohibit subletting outright, and many that permit subletting still prohibit transient or short-term occupancy specifically. Separately from anything your lease says, your city may restrict or ban short-term rentals altogether, and an HOA can impose its own minimum stay rules that override both.

That is why landlord permission is a persistent gate in this calculator rather than a footnote under the results. If you have not secured written consent, the warning stays on screen next to every number, because a positive cash flow figure is not evidence you are allowed to operate. Verbal permission from a landlord who later sells the building, or a friendly conversation with a property manager who does not have authority to grant it, has ended plenty of arbitrage businesses that were profitable right up to the day they stopped.

The good news is that the conversation is usually winnable, because a well-run arbitrage tenant is genuinely attractive to a landlord: rent arrives on time regardless of your occupancy, the unit is professionally cleaned more often than a long-term tenant would ever clean it, it carries insurance a standard tenancy does not, and there is a reserve set aside for damage. The landlord pitch generator in the results panel above assembles exactly that case out of the numbers you have already entered, so you can copy it into an email and start the conversation before you commit to anything.

Already know the unit works and want the full operating picture? Run the full Airbnb profit calculator to model revenue, expenses, and financing together.

If you own the property rather than leasing it, compare this to a standard 12-month lease to see which strategy nets more.

Turnover costs drive most of the variable side of this model, so it's worth taking a minute to work out your true cleaning cost per turnover before you trust the numbers above. Platform fees matter too, so compare Airbnb's split-fee and host-only payouts to see what each booking really nets.

You can also browse all Airquerai tools, all free and all client-side.

New to the terminology behind these numbers? Start with the short-term rental metrics glossary, which covers RevPAR, ADR, and occupancy in plain language.

And before you commit to a market at all, read how to analyze a short-term rental market before you buy, which applies just as much to a lease as to a purchase.