Rental arbitrage numbers, explained.

The model in one paragraph

Guests pay a nightly rate plus any cleaning fee you add. The platform takes a percentage of both. You pay cleaning and supplies every stay, and rent, utilities, internet and insurance every month. What is left is net monthly profit before income tax. Only the guest side is uncertain, and the cost side is mostly fixed, which is what separates arbitrage from owning: the lease payment is owed in every month, empty or full.

Variable by variable

• Monthly rent: fixed by the lease. It does not move with bookings.
• Utilities, internet, insurance, permit fee: treated as fixed monthly costs (a yearly permit fee is divided by 12).
• Average nightly rate: your assumption before fees.
• Occupancy: share of the month’s nights booked. The model uses 30.4375 days per month (365.25 ÷ 12). Low, base and high are scenarios you set.
• Average stay: converts nights into stays, because cleaning is paid per stay. Longer stays mean fewer cleanings.
• Cleaning cost and cleaning fee charged: the fee you charge is revenue and also attracts the platform fee; the cost is what you pay.
• Platform fee: an input. Airbnb states that most hosts pay 15.5% under its single-fee structure and 3% under split-fee, with some paying more; check your account. The fee applies to the nightly price and to fees the host adds.
• Management fee: a percentage of guest revenue if a co-host runs the unit; 0 otherwise.
• Lodging tax: either passed through (collected from guests and remitted, not your income) or absorbed (your rate already includes it, so it comes out of your revenue).

Metrics

Rent-to-revenue multiple is guest revenue divided by monthly rent. It is a quick screen, but it ignores everything else, so use it as a starting question rather than a verdict. Break-even occupancy is where net is zero. Payback is furnishing and setup divided by net monthly profit. Stress test repeats the month at 10 and 20 points lower occupancy.

Worked example A: base case

Rent $2,000, utilities $200, internet $60, insurance $50, $150 rate, 3-night stays, $75 cleaning fee charged, $80 cleaning and $10 supplies per stay, 15.5% fee, 60% occupancy. Nights booked 18.3, stays 6.1, guest revenue $3,196, rent-to-revenue multiple 1.6x, platform fee $495, per-stay costs $548, fixed $2,310, net -$157 a month. Break-even occupancy 64.4%.

Worked example B: the fixed-rent downside

Between 50% and 70% occupancy the same unit moves by roughly $718 a month. A small change in bookings produces a large change in profit because the costs do not move with them. This operating leverage is the central fact of rental arbitrage and the reason to test the low scenario first.

What the numbers do not tell you

They do not tell you what occupancy you will get, whether your lease allows this, or whether your city permits it. Those come from your booking data and the lease and permit checklist. Run your own inputs in the rental arbitrage calculator.

Sources

Airbnb Help Center, "Airbnb service fees" (article 1857); IRS Topic no. 414, Rental income and expenses. Retrieved 2026-10.

What this does not cover

• Whether your lease allows subletting or short stays, which only your lease, your landlord and local law can settle.
• Market data: there is no address lookup, no comparable listings and no occupancy or rate forecast.
• Platform ranking, seasonality, guest reviews or demand shifts, which you would need to put into your occupancy assumptions yourself.
• Income tax: the model stops at profit before income tax. See the tax explainer for how the IRS describes reporting.