What is a good cash-on-cash return for an Airbnb property?▼
Most experienced STR investors target 12%+ cash-on-cash return. 8-12% is considered acceptable in competitive markets. Below 5% means your money would likely perform better in index funds or REITs. Remember: STR properties require active management, so your returns should compensate for that effort.
What is break-even occupancy and why does it matter?▼
Break-even occupancy is the minimum percentage of nights your property must be booked to cover all expenses (mortgage, taxes, insurance, utilities, platform fees, etc.). If your break-even is 55% and your market averages 65% occupancy, you have a 10% cushion. If break-even exceeds your realistic occupancy, you will lose money every month. This is the single most important metric for STR risk assessment.
What is DSCR and why do lenders care about it?▼
DSCR (Debt Service Coverage Ratio) = Net Operating Income ÷ Annual Debt Payments. Lenders typically require DSCR ≥ 1.25x for STR loans, meaning your property must generate 25% more income than your mortgage payments. DSCR loans are popular for Airbnb investors because they qualify based on property income, not personal W-2 income.
Should I use rental arbitrage or buy a property for Airbnb?▼
Rental arbitrage (renting a property and subletting on Airbnb) has lower upfront costs and risk. You skip the down payment and can exit quickly if the market turns. But you build no equity and need landlord permission. Buying gives you appreciation, equity buildup, tax benefits (depreciation), and long-term wealth. Most successful operators start with arbitrage to learn, then transition to ownership.
How accurate is this calculator for real investment decisions?▼
This calculator uses the same formulas that professional STR investors, lenders, and underwriters use. However, your inputs determine accuracy. For best results, get real market data from AirDNA or PriceLabs for ADR and occupancy, actual insurance quotes from Steadily, and local property tax rates. The 10-year projection assumes constant growth rates, so reality will vary year to year.