Short-term rentals have exploded in popularity, and many vacation home owners use platforms like Airbnb and VRBO to offset costs. But the revenue potential varies dramatically by location, and the management burden is real. Here's an honest look at what to expect.
Revenue Potential: What the Numbers Show
Short-term rental income depends on location, seasonality, property size, and your listing quality. Use tools like AirDNA, Rabbu, or Mashvisor to estimate your specific property's earning potential before you buy.
| Market Type | Annual Occupancy | Avg. Nightly Rate | Est. Annual Revenue |
|---|---|---|---|
| Top beach/ski destination | 60–70% | $250–$400 | $55,000–$100,000 |
| Popular drive-to destination | 40–55% | $150–$250 | $22,000–$50,000 |
| Secondary market | 30–40% | $100–$175 | $11,000–$25,000 |
| Remote/off-the-beaten-path | 20–30% | $80–$130 | $6,000–$14,000 |
Platform Fees and Costs
- Airbnb host fee: 3% of reservation subtotal (standard split).
- Property management: 20–30% of revenue if using a local manager.
- Cleaning fees: $75–$250 per turnover, adding up quickly with frequent bookings.
- Linen, supplies, and restocking: $500–$1,500/year.
- Listing photography (worth every penny): $300–$600 one-time.
Legal and Regulatory Considerations
- Many cities and HOAs ban or restrict short-term rentals. Research this before buying.
- Most municipalities require a short-term rental permit ($50–$500/year).
- Some states require collecting and remitting local occupancy taxes.
- Your homeowners insurance must cover short-term rentals (standard policies often don't).
Mortgage Clause Risk
Some mortgage agreements require you to notify the lender if you rent the property. Renting a property classified as a 'second home' more than the IRS threshold may trigger lender action. Review your mortgage terms carefully.