Vacation Rental ROI Calculator: Return on a Short-Term Rental
See whether a vacation rental property paid off — by comparing the cash invested at purchase against net rental income and appreciation over the years you owned it.
Adjust the inputs and select Calculate for a full breakdown.
Year-by-year value projection
Compare Common Scenarios
How the numbers shift across typical situations for this calculator:
| Scenario | Total ROI | Annualized ROI | Net profit |
|---|---|---|---|
| $250k all-in · $400k net · 10yr | 60.00% | 4.81% | $150,000.00 |
| $100k · $200k · 8yr | 100.00% | 9.05% | $100,000.00 |
| $500k · $1.5M · 15yr | 200.00% | 7.60% | $1,000,000.00 |
| $180k · $120k · 5yr (underperform) | -33.33% | -7.79% | -$60,000.00 |
How This Calculator Works
Enter the all-in purchase cost (down payment + closing + furnishing), the total net proceeds (cumulative net rental income plus any sale proceeds, less all expenses), and the years held. The calculator reports total ROI, net profit, and the annualized rate.
The Formula
Return on Investment
V_start = amount invested, V_end = amount returned; annualized ROI = (V_end / V_start)^(1/n) − 1
Worked Example
A vacation rental with $250,000 all-in purchase cost producing $400,000 of total net proceeds over 10 years posts a 60% total ROI — about 4.8% a year annualized. That sits below long-run stock-market returns, which is typical: vacation rentals trade liquidity and effort for the chance to capture both yield and appreciation in one asset.
Key Insight
Vacation rental ROI looks better on a spreadsheet than in practice because most owners underestimate operating costs. Cleaning, platform fees (Airbnb's 14% + host fee), maintenance, utilities during vacancy, and seasonal demand swings routinely consume 30% to 40% of gross rent. The properties that actually outperform are in supply-constrained markets where appreciation does most of the work — not in oversupplied STR markets where regulations and competition compress yield.
Vacation rental (STR) economics 2024
REVENUE.
Nightly rate × occupancy × 365.
Occupancy: 40-70% typical (market-dependent).
Revenue management (PriceLabs, Wheelhouse, AirDNA).
ADR + RevPAR metrics.
EXPENSES.
Platform fees (Airbnb host 3%, VRBO 8%).
Management: 20-30% (or self-manage).
Cleaning (often pass-through to guest).
Utilities + internet + supplies.
Maintenance + furnishing depreciation.
MARGINS.
Net 20-40% after fees.
Cap rate 5-10%.
Higher than long-term rental (but more work).
vs LONG-TERM.
STR gross higher, opex higher, more volatile.
Regulation risk.
Regulation + tax + risk
STR REGULATION (KEY RISK).
NYC effectively banned (Local Law 18, 2023).
Much of CA, Hawaii restricting.
Permit + occupancy tax + primary-residence rules.
Check before buying.
TAX.
Schedule E (passive) or Schedule C (services-heavy).
STR + material participation = non-passive (offset W-2).
Bonus depreciation + cost segregation (the 'STR loophole').
Occupancy/lodging tax collection + remittance.
14-day rule (rent <14 days tax-free).
FURNISHING.
$15K-$50K setup capex.
Section 179 + bonus depreciation.
RISKS.
Regulation (bans/permits).
Occupancy + seasonality.
Platform algorithm + review dependency.
Market saturation.
Climate/insurance.
STRATEGY.
STR-friendly markets.
Dynamic pricing.
Cost-seg + STR tax strategy.
AirDNA market data.
U.S. vacation rental ROI benchmarks (2024)
Reference STR economics.
| Item | Detail |
|---|---|
| Occupancy | 40-70% |
| Airbnb host fee | 3% |
| VRBO fee | 8% |
| Management | 20-30% |
| Net margin | 20-40% |
| Cap rate | 5-10% |
| Furnishing capex | $15K-$50K |
| NYC status | Effectively banned |
| 14-day rule | Rent <14 days tax-free |
| STR tax loophole | Cost seg + material participation |
| Lodging tax | Collect + remit |
| Data tool | AirDNA |
STR regulation is the dominant risk (NYC banned, CA/HI restricting) — check before buying. Occupancy 40-70% + seasonality. 'STR loophole' (material participation + cost seg) offsets W-2 income. AirDNA market data. SBA + IRS + FRED data.
Frequently Asked Questions
What goes into purchase cost?
Down payment + closing costs + initial furnishing (often $10,000 to $50,000 for a turnkey STR). Use cash invested, not the financed amount — the loan principal isn't your equity at risk.
What gets deducted from gross rent?
Operating expenses (insurance, property tax, utilities, internet, supplies), management fees (10% to 30% of revenue), cleaning costs, platform commission (typically 3% to 15%), and mortgage interest. What's left is what flows to ROI.
Should I include appreciation?
Yes if you sold. Total proceeds = cumulative net rental + sale price minus selling costs. For current holdings, use a current appraised value as the implied sale proceeds for an unrealized ROI figure.
What is a good vacation rental ROI?
Stabilized properties often clear 6% to 12% annualized including appreciation. Top performers in scarcity markets reach 15%+; oversupplied STR markets often return below market index levels once honest costs are counted.
Are STR regulations a risk?
Yes — and rising. Many cities have restricted or banned short-term rentals (NYC, San Francisco, large parts of Europe). Regulatory risk now factors heavily into STR underwriting; assume the regulation can tighten any time.
When is this calculator unreliable?
Less reliable when occupancy rate variance (40-70%, market + seasonal), when platform fees (Airbnb host 3%, guest 14%; VRBO 8%), when management 20-30% + cleaning, when STR regulation risk (city bans/permits — NYC, much of CA), when seasonality (beach/ski peak vs shoulder), when furnishing + setup capex, when revenue management/dynamic pricing tools, or when mortgage (DSCR/STR loan) vs cash.
References & Authoritative Sources
- U.S. Small Business Administration (SBA) — Small Business Financing + Industry Data · consulted June 1, 2026 · Federal small business agency
- Internal Revenue Service (IRS) — Business Tax + Depreciation (Pub 535, 946) · consulted June 1, 2026 · Federal tax authority
- Federal Reserve / FRED — Commercial Real Estate + Economic Data · consulted June 1, 2026 · Federal economic data
Related Calculators
Data Sources & Benchmarks
This calculator draws on 1 independent, dated source.
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Methodology & Review
Business ROI = (Annual Net Profit / Total Investment) × 100. Payback period = Total Investment / Annual Net Profit. U.S. 2024: short-term rental (Airbnb/VRBO) ROI = (annual net income / total investment) × 100; revenue nightly rate × occupancy; net margins 20-40% after management + platform fees; cap rate 5-10%; STR regulation + occupancy + seasonality dominant; cleaning + management 20-35%. RELIABILITY: Reliable for ROI ratio. Less reliable for (a) occupancy rate variance (40-70%, market + seasonal), (b) platform fees (Airbnb host 3%, guest 14%; VRBO 8%), (c) management 20-30% + cleaning, (d) STR regulation risk (city bans/permits — NYC, much of CA), (e) seasonality (beach/ski peak vs shoulder), (f) furnishing + setup capex, (g) revenue management/dynamic pricing tools (PriceLabs, Wheelhouse), (h) mortgage (DSCR/STR loan) vs cash.
Reviewed according to the CalcDomain Editorial Policy & Calculator Methodology. We document formulas, edge cases, sources, update dates, and correction paths for calculator pages.
Updated