Question 1

What is a good ROI for an Airbnb investment?

Accepted Answer

Cap rates for vacation rental properties typically range from 5-6% or more in strong markets, compared to 3-5% for traditional long-term rentals. Cash on Cash returns of 8-12% are considered solid for STR investments. However, "good" ROI depends on your market, financing terms, and risk tolerance. AirROI's calculator computes your specific Cap Rate, Cash on Cash Return, and total ROI based on real comparable property data and your actual purchase price and financing terms.

Question 2

How do I calculate Airbnb Cap Rate?

Accepted Answer

Cap Rate = Net Operating Income / Property Value. Net Operating Income (NOI) is your annual gross revenue minus all operating expenses (management, cleaning, insurance, taxes, maintenance, utilities). If a property generates $50,000 NOI on a $500,000 purchase price, the Cap Rate is 10%. AirROI calculates NOI automatically from comparable property revenue data and your inputted operating expenses, so you get a location-specific Cap Rate rather than a generic estimate.

Question 3

What is Cash on Cash Return for Airbnb?

Accepted Answer

Cash on Cash Return = Annual Pre-Tax Cash Flow / Total Cash Invested. It measures the annual return on the actual money you put in. For a property generating $19,248 in annual cash flow (NOI minus debt service) on a $100,000 down payment, the Cash on Cash Return is 19.2%. This metric is especially useful for leveraged investments because it captures the effect of mortgage financing on your returns.

Question 4

Is Airbnb more profitable than long-term rental?

Accepted Answer

In many markets, Airbnb generates 2-3x the gross revenue of long-term rentals. However, STR properties have 30-50% operating costs versus 10-20% for LTR, plus more management effort and regulatory risk. The net profitability depends on your specific market, expense structure, and management approach. AirROI's calculator compares STR vs LTR income for any address, factoring in the full expense profile of each strategy.

Question 5

How do I evaluate an Airbnb investment before buying?

Accepted Answer

Start with AirROI's calculator: enter the property address to get revenue projections from 50 comparable properties. Input your purchase price, down payment, mortgage terms, and estimated expenses. Review Cap Rate, Cash on Cash Return, DSCR, and 10-year projections. Compare the STR projection against long-term rental rates. Verify the comparable properties to ensure the estimate is based on truly similar listings. This data-driven approach prevents the most common mistake: overestimating revenue.

Question 6

How many comparable properties does AirROI analyze?

Accepted Answer

AirROI analyzes 50 comparable properties for each revenue estimate, selected based on proximity, property type, size, and amenities. This is the largest comp set in the industry -- BNBCalc uses 40, Airbtics uses up to 30, and most other tools do not disclose their methodology. More importantly, AirROI displays every comparable property so you can verify the quality and relevance of the comparison set yourself.