Short-Term Rental Math: Break-Even Occupancy and Comparison With a Long-Term Tenant
October 29, 2026
A short-term rental earns more per night than a long-term lease but has more expenses and gaps between bookings. The break-even point is the number of booked nights per month at which revenue covers all costs. The formula: break-even nights = fixed costs ÷ contribution per night, where the contribution is the nightly rate minus the variable cost per booked night.
Assume a nightly rate of $150, fixed monthly costs of $2,500 (mortgage, property tax, and insurance of $1,900; utilities and internet $300; furnishings and supplies amortized $250; software and permits $50), and variable costs per booked night of $24.50 (consumables and laundry $20, platform fee of 3% = $4.50). The contribution per night is $150 − $24.50 = $125.50.
Skip the math and get your answer instantly:
Open the Break-Even Calculator →Break-Even Calculation
Break-even nights = $2,500 ÷ $125.50 = 19.9, or 20 nights in a 30-day month, an occupancy of 66%. At 15 nights (50%), the result is 15 × $125.50 − $2,500 = −$617.50. At 21 nights (70%), the profit is $135.50. At 25 nights (83%), the profit is $637.50. Cleaning fees are usually charged to the guest and paid to the cleaner, so they are excluded here; if you pay for cleaning and can't pass it through, include them in the variable costs. Local lodging taxes are collected from guests and remitted, not included in revenue.
| Booked nights | Occupancy | Contribution | Profit after $2,500 fixed |
|---|---|---|---|
| 15 | 50% | $1,882.50 | -$617.50 |
| 20 | 67% | $2,510.00 | $10.00 |
| 22 | 73% | $2,761.00 | $261.00 |
| 25 | 83% | $3,137.50 | $637.50 |
Compare With a Long-Term Tenant
A long-term tenant paying $2,100 against the $1,900 of mortgage, tax, and insurance, with the tenant paying utilities, leaves $200 profit a month before maintenance and vacancy. To match that profit, the short-term rental needs ($2,500 + $200) ÷ $125.50 = 21.5, or 22 nights, about 72% occupancy. Short-term rentals also take much more time: guest messaging, cleaning coordination, and restocking. If you value your time at $25 an hour and spend 15 hours a month, that is $375, raising the required nights to 24.5.
Seasonality and Pricing
Occupancy varies by season, so use an annual model: if peak months run 90% and shoulder months 45%, the average may be 65%. Dynamic pricing can raise the average rate in busy periods. Check local regulations, because many cities restrict short-term rentals or require permits, and homeowners associations or leases may ban them. Insurance usually needs a short-term rental endorsement.
Risks
Platform rule changes, regulations, reviews, damage, and demand swings can alter the economics. Keep a reserve for months with low occupancy and for furniture replacement. This article is a simplified illustration, not investment advice.
Frequently Asked Questions
How do I compute break-even occupancy?
Fixed costs divided by contribution per night, then divided by nights in the month.
What is contribution per night?
Nightly rate minus variable costs per booked night.
How does it compare with a long-term tenant?
Calculate the nights needed to match the long-term profit.
Should I count my own time?
Yes, because management takes many hours.
Do regulations matter?
Yes, many places restrict or tax short-term rentals.