Rental Arbitrage Profit Calculator
Calculate rental arbitrage net profit — leasing a long-term rental and re-letting it on Airbnb/Vrbo/Booking.com. Inputs: monthly rent, average daily rate (ADR), occupancy, cleaning fees, utilities, platform fees, furniture amortization. Outputs: monthly net profit, breakeven occupancy, annualized ROI.
How Rental Arbitrage Works
You lease a property long-term (12-month lease) with the landlord's written permission to short-term-rent (STR). You re-let on Airbnb/Vrbo at 3-5x the long-term rate. Profit = STR revenue − long-term rent − operating costs. Margin: 25-50% of gross STR revenue if executed well. Risk: lower occupancy than projected, regulatory changes (NYC, LA, NOLA banned single-unit arbitrage), landlord ends the lease.
Average Daily Rate and Occupancy
ADR varies widely: $80-$200 in mid-tier US cities, $150-$400 in tourist hubs, $400+ in Manhattan/SF. Occupancy: 50-65% nationally (AirDNA 2024); top-quartile markets hit 75-85%. Use AirDNA's RevPAN metric (Revenue Per Available Night) = ADR × occupancy. A property with $150 ADR × 60% occupancy = $90 RevPAN × 30 days = $2,700 monthly STR revenue. Subtract long-term rent + operating costs to get profit.
Operating Costs
Cleaning fees ($60-$200 per turnover, passed to guest but cuts into ADR perception). Utilities (gas + electric + water + internet) — STRs use 20-40% more than long-term. Platform fees (Airbnb 14-16% total host + guest take rate; Vrbo 8% + bookings). Linens, consumables, toiletries ($30-80/month). Management software (Hostfully, Hospitable: $50-150/month per listing). Insurance — STR insurance (Proper, Slice) is required; standard homeowners doesn't cover. Property tax pass-through (rare). Permit + sales tax in many cities.
Regulatory Risk — The Biggest Killer
STR regulations have tightened sharply 2022-2026. NYC Local Law 18 (effective Sept 2023) bans STR <30 days unless host is present. Los Angeles requires Home Sharing Permit + 120-day cap. New Orleans bans non-owner-occupied STRs in residential zones. Many HOA covenants ban STR entirely. Before signing the master lease, verify: (1) city STR ordinance; (2) zoning code; (3) HOA covenants; (4) landlord's written consent in the lease (not just verbal). One regulatory change can zero out the business.
Sources: AirDNA 2024 Market Reports, NYC Local Law 18, Los Angeles Home Sharing Ordinance, AirDNA RevPAN methodology. Last updated: May 2026. Not legal/investment advice.
Frequently Asked Questions
What is rental arbitrage?
Renting a property long-term with the landlord's permission, then sub-letting it short-term on Airbnb/Vrbo for a higher daily rate. Profit = STR revenue − long-term rent − operating costs. Margin: 25-50% if executed well.
Do I need the landlord's permission?
Yes — every time. Standard residential leases ban subletting and STR. Operating without written consent is grounds for eviction + back-rent recovery + lease-violation damages. Negotiate STR rights INTO the master lease with explicit language. Offer the landlord a rent premium (5-15%) or revenue share (10-20%).
Which cities are still rental-arbitrage friendly?
As of 2026: most Sun Belt secondary cities (Birmingham, San Antonio, Tampa suburbs), Texas non-HOT areas, parts of Florida outside Miami/Orlando STR-restricted zones, smaller mountain/lake-resort markets. AVOID: NYC, LA, San Francisco, New Orleans, Seattle, Portland, Denver, San Diego, Honolulu — heavy STR restrictions or outright bans on non-owner-occupied STRs.
What is a realistic occupancy rate?
Nationally 50-65% (AirDNA 2024). Top-quartile mid-tier markets: 75-85%. First-year listings typically achieve 60-70% of mature-listing occupancy because of low review count. Plan for 50% occupancy in year 1, 65% in year 2 if pricing and listing quality are strong.
What insurance do I need?
Standard homeowners and renter's insurance do NOT cover STR activity. You need commercial STR insurance — Proper Insurance, Slice, CBIZ. Cost: $50-$200/month per listing. Required by most platforms beyond their host guarantees (Airbnb AirCover is supplementary, not primary). Without it, one liability claim can wipe out years of profit.