About the Rental Arbitrage Calculator
Rental arbitrage means leasing a home or apartment on a normal long-term lease and, with the landlord’s written permission, renting it out by the night on Airbnb, Vrbo or similar platforms. You never own the property, so your profit is simply short-term rental revenue minus the rent you pay the landlord and every cost of running the listing.
Enter the monthly lease rent, your expected nightly rate, occupancy and average length of stay, then the cleaning fee you charge guests and what each turnover costs you, platform and management fees, and fixed monthly costs such as utilities, internet, supplies and insurance. The calculator returns monthly and annual profit, the break-even occupancy at which the unit stops losing money, cash-on-cash return on your furnishing and deposit, and the months it takes to earn that cash back.
It is meant for would-be arbitrage hosts screening units and for existing hosts checking a new lease before signing. Results are only as good as your nightly-rate and occupancy assumptions — check comparable listings for the same neighbourhood and season, and confirm local short-term rental rules and your lease before committing.
With the default inputs, the monthly profit is $494.78. Change any value above to recalculate instantly.
How to use the rental arbitrage calculator
- 1Enter the monthly rent on the long-term lease.
- 2Enter a realistic nightly rate, occupancy and average stay from comparable listings.
- 3Add the cleaning fee you charge and what each turnover costs you.
- 4Set platform and co-host fees, then monthly utilities, supplies and insurance.
- 5Enter furnishing and deposit costs to see ROI and payback, and check the break-even occupancy.
Formula and method
The calculator uses an average month of 365 ÷ 12 = 30.42 nights. Booked nights are that figure times occupancy, and the number of stays (turnovers) is booked nights divided by the average stay length. Revenue is nightly revenue plus the cleaning fees guests pay; platform and management fees are taken as a percentage of that gross revenue, and each turnover costs you the cleaning cost you enter.
Rent, utilities, supplies and insurance are fixed costs paid whether or not the unit is booked. Break-even occupancy divides those fixed costs by the net contribution of one booked night (nightly rate plus the per-night share of the cleaning fee, after percentage fees, minus the per-night share of cleaning cost). Cash-on-cash return and payback treat your furnishing and deposit as the cash invested and ignore taxes and seasonality.
- Occupancy
- Share of nights booked (65% = 0.65)
- Net per night
- Contribution of one booked night after fees and cleaning
- Fixed costs
- Rent + utilities + supplies + insurance and other monthly costs
Worked examples
$2,000/month apartment at $150 a night
At 65% occupancy the unit books 19.77 nights a month, about 6.6 stays, for $3,460 of revenue including cleaning fees. After the $104 platform fee, $461 of cleaning and $2,400 of rent and fixed costs, profit is about $495 a month. Break-even occupancy is 53.9%, and the $10,000 of furnishing and deposit pays back in about 20 months.
Higher-end unit with host-only fees and a co-host
A $210 nightly rate at 70% earns about $5,004 a month, but 15% platform fees plus a 20% co-host fee take $1,751, cleaning costs $479 and fixed costs total $3,375. The unit loses about $602 a month and needs roughly 85% occupancy just to break even — percentage fees can sink an otherwise attractive unit.
Same apartment in a slow season (40% occupancy)
At 40% occupancy the default unit books only 12.2 nights and earns $2,129 a month, which does not cover $2,400 of rent and fixed costs plus fees and cleaning. It loses about $619 a month, showing why break-even occupancy matters more than the best-month revenue.
Frequently asked questions
What is Airbnb rental arbitrage?+
Rental arbitrage is leasing a property long term and renting it out short term on platforms such as Airbnb or Vrbo, keeping the difference between booking income and your rent and operating costs. It requires the landlord’s written consent and compliance with local short-term rental rules.
Is rental arbitrage legal?+
It is legal only when your lease allows subletting or short-term rental and the city permits it. Many cities require registration, permits, occupancy taxes or a primary-residence rule, and some ban non-owner short-term rentals outright, so check both your lease and local ordinances.
What occupancy do I need for rental arbitrage to work?+
You need occupancy above your break-even point, which this calculator shows. A safe deal typically breaks even well below the occupancy comparable listings achieve, leaving a cushion for slow seasons, price drops and unexpected vacancies.
How much does it cost to start rental arbitrage?+
Startup cash usually includes the security deposit and first month’s rent, furniture, linens, kitchenware, photography and smart locks. Furnishing a one- or two-bedroom unit commonly costs several thousand dollars, which is why payback period is a key metric.
What fees does Airbnb charge hosts?+
Under split-fee pricing most hosts pay about 3% of the booking subtotal and guests pay a separate service fee. Under host-only fee pricing, common for professional hosts and required in some regions, the host pays roughly 14%–16%. Check your account settings for your actual rate.
Do I pay tax on rental arbitrage income?+
Yes. Net short-term rental income is generally taxable, and lodging or occupancy taxes may apply to each booking. This calculator shows profit before income tax, so set aside part of the profit and get local tax advice.
Results are estimates for educational purposes and are not financial advice. Rates, fees and terms vary — confirm with your lender or a licensed advisor before making decisions.