STR vs LTR Calculator

The STR vs LTR Calculator compares renting one property short-term, night by night, against renting it long-term on a lease, using the same property value for both so you can see which model produces more annual net income and the better cap rate.

How It Works

1. Enter the property value. This is used only for the cap rate, so both strategies are judged on the same capital base.
2. Describe the short-term model. Enter the nightly rate, the expected occupancy percentage across the year, and your monthly operating expenses for short-term renting (cleaning, platform fees, supplies, management, utilities).
3. Describe the long-term model. Enter the achievable monthly rent, the vacancy rate you expect between and during tenancies, and the lower monthly operating expenses typical of a leased property.
4. Compare net, not gross. For each model you get monthly and annual gross revenue, annual expenses, net income, and cap rate, plus the annual difference and a verdict on which model earns more under your assumptions.

Formula

Short-term annual gross revenue assumes the nightly rate is earned on the occupied share of a 365-day year:

$\text{STR gross} = \text{Nightly rate} \times 365 \times \frac{\text{Occupancy } \%}{100}$

Long-term annual gross revenue applies the vacancy rate to a full year of rent:

$\text{LTR gross} = \text{Monthly rent} \times 12 \times \left(1 - \frac{\text{Vacancy } \%}{100}\right)$

For both models:

$\text{Annual net income} = \text{Annual gross} - (12 \times \text{Monthly operating expenses})$

$\text{Cap rate} = \frac{\text{Annual net income}}{\text{Property value}} \times 100$

Monthly figures are the annual amounts divided by 12.

Input Parameters

| Input | Unit | Realistic range | Notes | | --- | --- | --- | --- | | Property value | Currency | USD 100,000 to USD 2,000,000 | Must be greater than zero; used for cap rate | | STR nightly rate | Currency per night | USD 50 to USD 800 | Average achieved rate, not peak rate | | STR occupancy | Percent | 30% to 85% | Annual average across all seasons | | STR monthly expenses | Currency per month | USD 500 to USD 4,000 | Cleaning, fees, management, utilities | | LTR monthly rent | Currency per month | USD 800 to USD 6,000 | Achievable market rent | | LTR vacancy rate | Percent | 0% to 15% | Allowance for empty months and turnover | | LTR monthly expenses | Currency per month | USD 100 to USD 1,500 | Landlord-side costs only |

Worked Example

A property worth USD 500,000, with a nightly rate of USD 200 at 70% occupancy and USD 1,500 a month of short-term expenses, against a long-term rent of USD 2,500 a month with 5% vacancy and USD 500 a month of expenses:

Short-term model:

1. Gross: USD 200 x 365 x 0.70 = USD 51,100 per year (USD 4,258.33 a month).
2. Expenses: USD 1,500 x 12 = USD 18,000.
3. Net: USD 51,100 - USD 18,000 = USD 33,100 per year (USD 2,758.33 a month).
4. Cap rate: USD 33,100 / USD 500,000 x 100 = 6.62%.

Long-term model:

1. Gross: USD 2,500 x 12 x 0.95 = USD 28,500 per year (USD 2,375 a month).
2. Expenses: USD 500 x 12 = USD 6,000.
3. Net: USD 28,500 - USD 6,000 = USD 22,500 per year (USD 1,875 a month).
4. Cap rate: USD 22,500 / USD 500,000 x 100 = 4.50%.

The verdict: short-term renting earns more here, by USD 33,100 - USD 22,500 = USD 10,600 a year. The gross revenue gap was USD 22,600, but higher short-term expenses consumed more than half of it, which is exactly the effect this comparison exists to expose.

Interpreting Your Results

Compare cap rates when you are deciding how to use capital, and compare annual net when you are deciding how to use the property. Because both models share one property value, the cap rate ranking always matches the net income ranking here; the value of showing both is that cap rate lets you benchmark the winner against other investments and against buying a different property entirely.

Sensitivity is the real story in most comparisons. Short-term results hinge on occupancy, the input owners estimate most optimistically. Rerun the example at 50% occupancy instead of 70% and short-term gross falls to USD 36,500, net to USD 18,500, and the long-term model wins. Test pessimistic occupancy and your highest realistic expense figure before trusting an STR advantage.

The expense entries decide the honesty of the comparison. Short-term renting carries cleaning, linen, platform commissions, furnishing replacement, and far more management time. If your STR expense figure is not visibly larger than the LTR one, it is probably understated.

Choosing the Right Tool

• Use this STR vs LTR Calculator for a head-to-head of the two rental strategies on one property with your own rate, occupancy, and expense assumptions.
• Use the Cap Rate Calculator when you have one strategy and one net operating income and simply need the capitalization rate.
• Use the Rental Property Cash Flow Calculator for a deeper long-term model with financing, taxes, and month-by-month cash flow.
• Use the Sell vs Keep Rental Property Calculator when the alternative on the table is selling the property rather than switching rental models.

Limitations

The model is deliberately simple. It uses a flat annual occupancy and nightly rate, so seasonality, weekend premiums, and dynamic pricing are averaged away. It does not include mortgage payments or financing costs, income tax, depreciation, furnishing and setup capital for short-term use, or major repairs unless you bury them in the monthly expenses. It cannot account for local short-term rental regulation, licensing, occupancy taxes, or HOA restrictions, any of which can prohibit or cap the STR option outright. Insurance costs often differ between the models and must be in your expense figures to be counted. Treat the output as a first-pass screen, then validate with market data for your specific area before committing.

Questions

What occupancy should I assume for short-term rental?

Use an annual average, not your best season. Pull achieved occupancy for comparable listings in your market from a short-term rental analytics source rather than guessing, and test a lower scenario as well. The worked example shows a 20-point occupancy swing reversing the verdict, so this single input deserves the most care.

Why does the comparison use net income instead of gross revenue?

Because the two models have very different cost structures. Short-term renting almost always grosses more and almost always costs more to run. Comparing gross would systematically flatter the short-term option; net income after each model's own expenses is the only fair basis.

Does the cap rate here include my mortgage?

No. Cap rate is calculated from net operating income before financing, by definition, and divides by property value. If you want the return on your cash after a loan, use the rental property cash flow tool, which models financing explicitly.

Sources and Methodology

The method is the standard direct-capitalization comparison used in real estate investment analysis: estimate annual net operating income under each operating model and divide by property value to obtain the cap rate, the convention used in appraisal and brokerage practice. Occupancy and nightly rate assumptions should be benchmarked against market evidence for the property's location, such as the occupancy and average daily rate reporting published by hospitality research firms like STR and CoStar and by short-term rental analytics providers. Expense categories follow the operating cost structure recognized in hospitality and property management practice; the figures themselves must come from your own quotes and accounts.