How to Calculate True Profit Per STR Property

Ask most Airbnb hosts what their profit margin is and you'll get one of two answers: a vague "pretty good" or a number based on revenue minus mortgage. Neither is real profit.

True profit means revenue minus every cost: mortgage or rent, cleaning, utilities, platform fees, insurance, maintenance, supplies, software, depreciation, and your time. When you calculate it correctly, some properties are stars and some are bleeding money. Knowing the difference changes every decision you make.

The Formula

Let's break down each component.

Gross Revenue

This is the total amount guests paid, before any platform fees. Not what hit your bank account. Include:

• Nightly rate income from all platforms (Airbnb, VRBO, Booking.com, direct)
• Cleaning fees collected from guests
• Extra guest fees
• Pet fees
• Any other ancillary income

Many hosts use their Airbnb payout as "revenue." That's wrong -- it already has platform fees deducted. Use the gross booking amount so you can see true fee percentages.

Platform Fees

What each platform takes from your bookings:

• Airbnb: 3% host fee (on host-only pricing) or split with guest
• VRBO: 5% host fee (standard) or 8% if guest doesn't pay a service fee
• Booking.com: 15% commission (significantly higher)
• Direct bookings: Payment processor fees (Stripe 2.9% + $0.30)

On $100K gross revenue, platform fees alone can be $3,000-15,000 depending on your channel mix. This is why many operators push for direct bookings.

Operating Expenses (Variable)

These scale with occupancy -- the more guests, the higher these costs:

Cleaning

Typically your largest variable cost. Calculate per-turn: if you pay $130 per clean and have 18 turnovers per month, that's $2,340/month. Some hosts charge guests a cleaning fee that covers this, some don't. Either way, track the actual cost.

Supplies and Consumables

Toiletries, coffee, paper goods, cleaning supplies for mid-stay cleans. $5-15 per guest stay adds up. At 18 stays/month, that's $90-270/month.

Laundry

If you outsource linen service: $15-35 per set per turn. If you do it in-unit: detergent, water, electricity, and wear on the machines. Either way, it's a real cost.

Fixed Costs (Monthly)

These stay roughly the same regardless of occupancy:

• Mortgage/rent -- your biggest fixed cost
• Utilities -- base cost + variable component from guest usage
• Insurance -- STR-specific liability insurance
• Internet -- required for guests
• Software -- PMS, pricing tool, expense tracker, channel manager
• Property taxes (owners) or HOA fees
• Permits and licenses -- STR permit, business license

The Costs Most Operators Forget

These are the ones that separate a "pretty good" estimate from actual profit:

1. Furniture replacement reserve. Guest wear is real. Budget 5-10% of revenue annually for furniture, mattress, and linen replacement.
2. Maintenance reserve. Something breaks every month. Budget $100-200/month per property for repairs.
3. Vacancy cost. Even at 85% occupancy, 15% of the month generates zero revenue. Your mortgage/rent doesn't stop.
4. Seasonality. Don't calculate profit on your best month. Use trailing 12-month averages.
5. Your time. If you're self-managing, your time has value. At 5 hours/week per property and $50/hour equivalent, that's $1,000/month you're "paying" yourself.
6. Opportunity cost of capital. If you put $20K into furnishing a unit, that money could be earning 5% in a HYSA. The $1,000/year you're NOT earning is a real cost of the business.

Example: True Profit Calculation

Here's a real-world example for a 2BR apartment in a mid-tier market:

$114/month in true profit. Not the $3,400/month ($5,200 - $1,800 mortgage) most operators would quote. The difference is cleaning costs, reserves, and all the "small" expenses that add up.

This property might still be worth operating -- you're building equity, getting tax benefits from depreciation, and the property is appreciating. But the cash flow is $114, not $3,400. Knowing that changes how you think about adding properties, raising prices, or cutting costs.

What to Do When a Property Isn't Profitable

• Raise your nightly rate. Many hosts underprice. A $10/night increase at 80% occupancy = $240/month more revenue.
• Optimize cleaning costs. Can you negotiate a better per-turn rate? Could a cleaner do 2 of your units back-to-back at a discount?
• Charge a realistic cleaning fee. If you're paying $130/clean, don't charge guests $50. Cover your actual cost.
• Reduce vacancy. Fill gaps with discounted last-minute bookings. 50% of your nightly rate is better than $0.
• Cut underperforming platforms. If Booking.com's 15% commission is killing your margin on that unit, focus on Airbnb and direct bookings.
• Exit the unit. Sometimes the numbers just don't work. Better to know at month 3 than month 12.

Per-Property P&L Is Not Optional

If you have multiple properties, you need per-property P&L, not aggregate numbers. An aggregate profit of $500/month across 5 properties could mean one property making $2,000 and four losing $375 each. Without per-property visibility, you're flying blind.

Track by property. Review monthly. Make decisions based on real numbers.