8+ financial metrics
10-year projections
STR vs LTR comparison
Three core metrics separate profitable STR investments from underperforming ones. Understanding each is essential before committing capital to any property.
Capitalization Rate measures a property's return independent of financing. Vacation rental cap rates typically range from 5-6%+ in strong markets, compared to 3-5% for traditional long-term rentals. A higher cap rate means the property generates more income relative to its price.
Net Operating Income / Property Value
Cash on Cash Return measures the annual return on the actual cash you invested. For leveraged STR investments, 8-12% Cash on Cash is considered solid. This metric matters most for investors using mortgage financing, because it captures the effect of leverage.
Annual Pre-Tax Cash Flow / Total Cash Invested
Total Return on Investment captures all sources of value: rental income, property appreciation, equity buildup through mortgage paydown, and tax benefits. AirROI's 10-year projection models all four components, giving you a complete picture of your investment trajectory.
Total Gains / Total Investment
Airbnb gross revenue is often higher than long-term rent for the same property, but so are the costs and the effort: STR properties carry higher operating costs, more active management, and greater regulatory risk.
The right strategy depends on your market, capital, and management capacity. AirROI's calculator compares STR vs LTR income for any address, factoring in the full expense profile of each strategy.
| Metric | Short-Term Rental (STR) | Long-Term Rental (LTR) |
|---|---|---|
| Gross Revenue | Often higher | Baseline |
| Operating Costs | Higher | Lower |
| Management Intensity | High, daily operations | Low, monthly check-ins |
| Vacancy Risk | Seasonal fluctuation | Lease-protected |
| Cap Rate Range | 5-6%+ | 3-5% |
| Regulatory Risk | Increasing restrictions | Established protections |
| Revenue Flexibility | Dynamic pricing | Fixed lease terms |
| Tenant Risk | Per-booking screening | Single tenant risk |
For a comprehensive breakdown, read the detailed STR vs LTR analysis.
A single year's revenue estimate is useful but insufficient for a sound investment decision. AirROI's 10-year projection module models your property's financial trajectory over a full decade, incorporating four key components.
1
Based on historical market trends; for context, the global short-term vacation rental market is projected to grow at an 11.4% CAGR (Grand View Research, 2025–2030). AirROI applies market-specific growth rates rather than generic national averages, so your projection reflects your local demand trajectory.
2
Location-specific appreciation rates applied to your purchase price, building equity beyond rental income. Property appreciation has historically averaged 3-5% annually in most US markets, though this varies significantly by region and market cycle.
3
Principal paydown schedule showing how much equity you build through each mortgage payment over 10 years. In the early years of a 30-year mortgage, most of your payment goes to interest -- the 10-year view reveals how quickly equity accumulates as amortization shifts toward principal.
4
Expenses do not stay static. The projection factors in cost inflation for management, insurance, maintenance, and utilities. Insurance costs alone have increased 20-40% for STR properties in recent years, making realistic cost modeling essential for long-term planning.
AirROI's free calculator builds these 10-year projections alongside Cap Rate, Cash on Cash Return and DSCR, so you can test a deal beyond its first year.
Here is a complete worked example showing how Cap Rate, Cash on Cash Return, and DSCR are calculated for a real investment scenario.
Purchase Price
Down Payment (25%)
Mortgage
$300,000 at 7.0% (30-year) = $1,996/mo
Annual STR Revenue (from AirROI comps)
Operating Expenses (40%)
Net Operating Income
Cap Rate
Cash on Cash
DSCR
Every number in this example -- revenue, ADR, occupancy -- can be sourced from AirROI's calculator using 50 real comparable properties. No guesswork, no inflated estimates.
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.
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.
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.
Airbnb gross revenue is often higher than long-term rent for the same property, but so are the costs and the effort: the host pays platform fees, cleaning, supplies, utilities and furnishing, runs the operation day to day and carries more 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. Read our STR vs LTR analysis.
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. Read the STR investment analysis guide.
AirROI analyzes 50 comparable properties for each revenue estimate, selected based on proximity, property type, size, and amenities. AirROI displays every comparable property so you can verify the quality and relevance of the comparison set yourself.
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