Short-term rental revenue gets all the attention, but STR deals live or die on the cost side. A property grossing twice what a long-term lease would pay can still cash flow worse once you subtract fees, cleanings, management, and the furniture bill — and none of it matters if local rules do not allow short-term stays in the first place.
Here is the cost and compliance checklist to run before you trust any nightly-rate projection.
Platform Fees
Booking platforms take a cut of every reservation. Host-side fees on Airbnb and VRBO typically run about 3-5% of the booking, depending on the platform and fee structure you choose. It sounds small, but on $80,000 of annual gross revenue that is $2,400-$4,000 off the top. Model it as a percentage of revenue so it scales with your projections.
Cleaning Turnovers
Most hosts charge guests a cleaning fee, which creates a dangerous illusion that cleaning is free. It is not. Budget the actual cost of every turnover — cleaner labor, laundry, restocked consumables, and periodic deep cleans — because the fee guests pay rarely covers all of it, and a high cleaning fee suppresses bookings, which pushes hosts to lower it and absorb the difference.
Turnover cost also scales with booking pattern: a calendar full of two-night stays generates far more cleanings than the same occupancy in week-long blocks.
Management
Self-managing an STR is a real part-time job: guest messaging, pricing updates, scheduling cleaners, and handling the 11 p.m. lockout call. If you outsource it, expect a co-host or full-service manager to charge roughly 10-25% of revenue, with lighter co-hosting at the low end and full-service management at the top. Even if you plan to self-manage, underwrite with a management line anyway — it prices in your time and keeps the deal viable if you ever hand it off.
Furnishing Costs
Unlike a long-term rental, an STR must be fully furnished and outfitted before its first booking: beds, sofas, kitchenware, linens, TVs, decor, and the amenities your comps have. This is real upfront cash on top of your down payment and closing costs, commonly running into the tens of thousands depending on size and quality tier. Underfund it and you compete at a lower ADR; forget it and your cash-on-cash return is overstated from day one.
Regulations: Check Before You Underwrite
The fastest way to lose money on an STR is to buy one you are not allowed to operate. Before underwriting a single nightly rate, verify three layers:
- Licensing and permits. Many cities require STR registration, caps, or owner-occupancy rules — and some prohibit new permits entirely.
- Zoning. Confirm short-term stays are permitted at that address, not just in the city generally.
- HOA rules. Associations can ban or restrict rentals under 30 days regardless of what the city allows.
Rules change, and grandfathered permits do not always transfer with a sale. Treat regulatory risk as part of the deal, not a footnote.
The STR vs LTR Comparison
Finally, always underwrite the same property as a plain 12-month rental and put the two side by side. This comparison does two jobs. First, it reveals whether the STR premium actually survives the extra costs above — sometimes the long-term rental quietly wins on net cash flow with a fraction of the work. Second, it is your exit plan: if regulations tighten or the market softens, the LTR numbers tell you whether the property still stands on its own.
The free Shouldirefi Deal Analyzer makes this easy — run the deal under the STR strategy with your full cost stack, then run it as a Buy & Hold, and compare the estimated cash flow and returns before you commit.
All figures are estimates for informational purposes only — not financial advice. Consult a qualified professional before making financial decisions.