Welcome to our Airbnb ROI Calculator, which is perfect investment calculator for anyone looking to buy an Airbnb rental property. By completing the inputs below, the calculator will show the expected return on investment (ROI) of your vacation rental property at the end of the mortgage term and, for comparison purposes, the expected ROI should you instead choose to invest in the stock market over that same period.
How it Works
Simply complete the inputs below to calculate your monthly carrying costs, cash flow and expected ROI at the end of your mortgage term.
Investment Calculator Input Guidelines and Assumptions
- Mortgage terms. Due to the increased risk profile of a vacation rental property, lenders will typically require between 20% or more as a down payment and offer interest rates that are typically 25 to 50 basis points higher. For more information on mortgage rates for vacation properties click here.
- Property management fees. If you will be hiring a property management company then you will need to factor in the relevant property management fees in your calculations. The Airbnb ROI Calculator includes the following two fee structures:
- Commission-based – a common model whereby a property management company will take a percentage of monthly bookings. A typical commission is between 20-30% of rental income
- Fixed-fee structure – with this model, you pay your property manager a flat monthly fee no matter how many bookings you receive.
- Airbnb fees. The standard host fee is currently set at 3.0% which is automatically calculated below using your expected monthly rental income.
- Cleaning fees. For the purposes of the calculations, we have assumed that you (or your property management company) will pass along the cost of cleaning to your guests. Therefore, it is not included in the calculations.
- Annual housing price growth. In order to run a proper expected vacation rental ROI, you will need to estimate the anticipated price appreciation in your rental property. Using US and Canadian housing data, we have included guidelines below and a 4.0% default annual growth rate.
- Annual stock market growth. For the purposes of comparison, the calculator will show you what a stock market investment would like like during the same period. You will similarly need to estimate annual growth in the stock market. We have included a default annual growth rate of 8.0% based on historical performance of US and Canadian stock markets.
- Scenario 1 vs Scenario 2 explained. In order to ensure an apples-to-apples comparison, we have assumed that only out-of-pocket amounts under Scenario 1 would be invested under Scenario 2. For instance, the initial down payment and monthly cash outflow (if any) under Scenario 1 would then become the contribution amount under Scenario 2. If, on the other hand, you are cashflow positive under Scenario 1 after factoring in your expected rental income (net of expenses), then we have assumed that you would not be making any monthly contributions under Scenario 2.
Airbnb ROI Calculator
We hope you’ve found this Airbnb investment calculator useful. Be sure to also explore our additional resources on owning a vacation rental property, including our house rules for guests (both standard and funny versions) and sample short term rental agreement.
