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Rental arbitrage calculator

Check whether an arbitrage deal pencils out before you sign the lease: monthly profit, the occupancy you need to break even, and how fast your startup costs pay back.

$
$
65%
Used to estimate cleanings per month
$
Charged to the guest and passed through to your cleaner
$
Utilities, supplies, software, insurance
$
Deposit, furniture, setup
Monthly profit$767.90
Monthly revenue
$3,627.43
Nightly revenue (19.8 booked nights)
$2,967.90
Cleaning pass-through (6.6 turnovers)
$659.53
Monthly expenses
-$2,859.53
Profit margin
21.2%
Breakeven occupancy
48.2%
Startup payback
19.5 months
Running the numbers on unit #2? See how operators scale with Hostaway →

How to read these numbers

The single most important output is breakeven occupancy. It tells you the occupancy rate at which short-term revenue covers rent and operating expenses. If your market realistically runs at 60-70% and your breakeven is 48%, you have a cushion; if breakeven is 75%, one slow season puts you underwater. Compare the breakeven against real market occupancy data, not best-case assumptions.

Payback period converts startup costs, such as the deposit, furniture, and setup, into months of profit. Deals that pay back in 12-18 months are often considered strong; much beyond 24 months and your capital is locked up through at least two seasonal cycles before it earns anything.

Two costs deserve special attention: rent, which is fixed whether or not guests book, and occupancy, which compounds every other number. Before signing, stress-test the deal at 10-15 points below your expected occupancy and confirm the lease explicitly allows short-term subletting.

Rental arbitrage FAQs

What is rental arbitrage?

Rental arbitrage means leasing a property long-term and re-renting it as a short-term rental, keeping the spread between short-term revenue and the monthly rent. The landlord must explicitly permit subletting, usually via a lease clause or a master lease agreement, and local short-term rental rules still apply.

How much profit can rental arbitrage make per unit?

It depends entirely on the spread between nightly revenue and rent. Many operators aim for monthly short-term revenue approaching double the rent. As a worked example, a $2,000/month apartment earning $150 a night at 65% occupancy grosses about $2,970 in nightly revenue, leaving roughly $770 a month after rent and $200 of operating expenses: a workable deal, though not an exceptional one. Below about 48% occupancy the same unit loses money.

What occupancy rate do I need to break even?

Your breakeven occupancy equals your fixed monthly costs (rent plus other expenses) divided by what a fully-booked month would earn at your nightly rate (nightly rate x 30.44). If that number is above the occupancy realistic for your market, the deal does not work at that rent and rate: raise the rate, negotiate the rent, or walk away.

What startup costs should I budget for rental arbitrage?

Typical startup costs include the security deposit, first and last month of rent, furniture and furnishings, linens, kitchenware, smart locks, photography, and any landlord fees. A commonly cited range is $10,000-$20,000 for a one- or two-bedroom unit, though it varies widely by market and finish level. The calculator divides these by monthly profit to show how many months until you are paid back.

Is rental arbitrage legal?

It is legal where the lease allows subletting and local regulations permit short-term rentals, and prohibited where either says no. Always get written landlord consent and check city registration, permit, and zoning requirements before signing; rules vary widely by jurisdiction.

Learn the terminology

Rental ArbitrageBreak-Even OccupancyOccupancy RateMaster LeaseSubleaseAverage Daily Rate (ADR)Guide: Arbitrage ProfitabilityGuide: Rental Arbitrage

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