What ROI to Expect on Your Short-Term Rental Property

Short-term rental properties have surged in popularity, prompting many investors to ask: What ROI should I expect on short-term rental property?

Platforms like Airbnb and VRBO have transformed real estate investing, offering potentially lucrative income streams and attractive flexibility. However, to truly succeed in this market, understanding your expected return on investment (ROI) is not just helpful; it’s crucial.

In 2024, the average occupancy rate for short-term rentals in the US was approximately 57%. But this year, Mashvisor’s April 2025 Airbnb occupancy rate report showed that the occupancy rate has dropped to 50%. This shift highlights market fluctuations and underscores the importance of accurately understanding ROI to navigate changing demand and maximize profitability.

Without clear ROI expectations, you could misjudge potential returns or even overlook key opportunities. In this guide, we’ll explore factors affecting short-term rental ROI, benchmark expectations, and actionable strategies to enhance your investment outcomes.

Understanding ROI on Short-Term Rental Properties

Before investing in real estate, especially short-term rentals, it’s essential to understand your return on investment (ROI).

What Is ROI in Real Estate?

Return on investment (ROI) measures the profitability of real estate investments over time. It indicates how efficiently an investment generates income relative to its cost.

In the context of short-term rental properties, ROI (often referred to as short-term rental ROI) helps investors evaluate an Airbnb investment’s viability and potential success. A clear grasp of your property’s ROI empowers informed decision-making and strategic financial planning, ensuring your investment aligns with your overall financial goals.

How to Calculate ROI for Short-Term Rentals

Calculating ROI for short-term rentals involves using a straightforward yet powerful ROI formula. The basic calculation for return on investment involves subtracting your property’s expenses from its income, dividing the result by the total investment cost, and multiplying by 100 to express it as a percentage.

Here’s the simplified ROI formula:

ROI = [Rental Income – Expenses) / Total Investment Cost] x 100

Let’s look at an example to clarify this calculation:

Imagine you purchase a short-term rental property for $300,000. Over one year, the property generates a rental income of $40,000. Your expenses, including property management fees, maintenance, utilities, and mortgage payments, total $20,000.

Using the formula:

• Rental income = $40,000
• Expenses = $20,000
• Total investment cost = $300,000

The ROI calculation would be:

ROI = [$40,000 – $20,000) / $300,000] x 100 = 6.67%

This means your property’s ROI is approximately 6.67%, indicating how effectively your investment converts expenses into profit.

Using tools like an Airbnb calculator can streamline this process, allowing you to quickly analyze multiple scenarios and confidently assess potential short-term rental properties.

What ROI Should You Expect on a Short-Term Rental Property?

Now that you know what ROI is in real estate and how to calculate it for your investment, it’s time to understand the expected ROI for short-term rental property. Knowing this helps you evaluate Airbnb profitability and make informed decisions.

Typical ROI Ranges for Short-Term Rentals

A good ROI for short-term rentals typically falls between 5% and 10%, depending on location, property type, and management efficiency. In some high-demand markets, investors may achieve ROIs exceeding 12%.

At Mashvisor, we measure ROI using cash-on-cash return, which reflects the annual pre-tax cash flow relative to the amount of cash invested. This method gives a more accurate picture of real-world profitability, especially for investors using financing.

Unlike gross yield or cap rate, cash-on-cash return considers operating expenses, loan payments, and other real costs, making it one of the most realistic ways to evaluate investment performance.

In our report on the best short-term rental markets in 2025, the top 25 cities showed median short-term rental cash-on-cash returns between 6.16% and 7.45%. In these markets, you can expect consistent, above-average returns based on actual cash invested.

City/State	Number of Short-Term Rental Listings	Monthly Short-Term Rental Income	Short-Term Rental Cash-on-Cash Return	Short-Term Rental Cap Rate	Short-Term Rental Daily Rate	Short-Term Rental Occupancy Rate
Hazel Park, MI	269	$2,557	7.45%	7.66%	$170	53%
Sweetwater, FL	466	$5,385	7.43%	7.52%	$194	70%
Zephyrhills, FL	118	$3,863	7.17%	7.29%	$132	68%
Silver Springs, NV	104	$3,115	7.12%	7.25%	$187	60%
Highland Park, PA	218	$4,533	6.97%	7.06%	$197	51%
Winter Haven, FL	164	$4,011	6.95%	7.06%	$162	77%
Visalia, CA	175	$4,442	6.91%	7.00%	$164	86%
Madison Heights, VA	129	$2,768	6.89%	7.04%	$141	53%
Hialeah Gardens, FL	313	$5,258	6.85%	6.93%	$166	67%
Cayce, SC	105	$3,060	6.83%	6.96%	$144	52%
River Oaks, TX	176	$3,411	6.78%	6.90%	$204	58%
Tabor City, NC	315	$3,216	6.75%	6.87%	$243	54%
Richfield, MN	216	$3,798	6.67%	6.79%	$200	53%
Hampton, VA	236	$3,257	6.59%	6.71%	$221	52%
West Columbia, SC	217	$3,303	6.59%	6.70%	$163	53%
Winnetka, CA	330	$8,661	6.57%	6.62%	$322	81%
Homosassa, FL	175	$4,014	6.53%	6.62%	$201	57%
Kenneth City, FL	1,827	$3,790	6.50%	6.64%	$179	61%
Deerfield Beach, FL	431	$3,620	6.46%	6.59%	$242	60%
Madison Heights, MI	301	$2,574	6.37%	6.53%	$168	54%
Waianae, HI	283	$5,334	6.28%	6.37%	$544	66%
Big Coppitt, FL	190	$8,083	6.27%	6.31%	$399	72%
Lauderdale Lakes, FL	1,188	$2,476	6.26%	6.45%	$194	60%
Sun City Center, FL	107	$3,283	6.11%	6.23%	$246	56%
El Mirage, AZ	146	$3,283	6.07%	6.16%	$185	51%

Factors Influencing ROI in Short-Term Rentals

Several important factors can greatly influence the ROI of a short-term rental property:

Location

Properties in high-demand areas—such as tourist destinations, downtown cores, or near major attractions—typically earn higher returns. Local laws, zoning regulations, and neighborhood desirability also play a role in shaping ROI potential.

For instance, Hazel Park, MI, Sweetwater, FL, and Zephyrhills, FL, made it to our top list thanks to their investor-friendly regulations, strong travel demand, and favorable pricing dynamics.

Occupancy Rates

The higher your occupancy rate, the more revenue your property generates. Cities like Silver Springs, NV, and Winter Haven, FL, benefit from relatively stable year-round demand, helping investors maintain strong cash flow.

Average occupancy rates vary widely, so knowing your market’s trends is crucial.

Seasonal Demand

Short-term rentals often experience fluctuations in demand based on the time of year. Beach destinations like Deerfield Beach, FL, and Waianae, HI, tend to see higher ROI in the summer, while cities such as Hampton, VA, and Cayce, SC, can benefit from seasonal events or local attractions.

Planning for slower periods ensures you’re not caught off guard by dips in revenue.

Property Management

How well your property is managed affects everything from guest experience to repeat bookings. Well-managed properties often see higher occupancy, better reviews, and lower turnover costs, contributing to a stronger ROI.

When you consider these factors and analyze data from Mashvisor’s platform, you can make more informed decisions and set realistic expectations for success in the short-term rental market.

Comparing Short-Term Rentals to Long-Term Rentals

When evaluating real estate opportunities, one of the most important decisions you will face is whether to pursue short-term or long-term rental strategies. While both approaches can generate income and build equity, each has unique advantages and challenges.

Understanding the differences through a clear investment comparison is essential to determining which strategy best aligns with your financial goals and risk tolerance. So, let’s break down the key pros and cons to help you better assess short-term vs. long-term rental ROI.

Pros and Cons of Short-Term Rentals

• High income potential: Short-term rentals often command higher nightly rates, allowing you to generate more income in a shorter period. In high-demand tourist areas or business hubs, this can lead to significantly stronger cash flow compared to traditional leases.
• Higher operational costs: However, with higher revenue potential comes higher expenses. Regular cleaning, utilities, furnishing, repairs, and guest management can quickly add up. You must factor these costs into your ROI calculations to get an accurate picture of profitability.
• Market volatility: Short-term rental income can fluctuate due to seasonality, local regulations, and economic shifts. This unpredictability may impact occupancy rates and returns, requiring a more hands-on and flexible management style.

Pros and Cons of Long-Term Rentals

• Steady income: Long-term leases typically provide consistent, predictable monthly income. If you want a reliable investment that offers stable cash flow and fewer fluctuations in occupancy, this rental strategy is for you.
• Lower management effort: Long-term rentals often involve less hands-on management. Once you have tenants, you usually deal with fewer turnover-related tasks and operational costs, making it a more passive investment.
• Lower overall returns: Despite their convenience, long-term rentals may generate lower ROI than their short-term counterparts. Monthly rental rates are typically lower, and opportunities to adjust pricing dynamically are limited. However, according to our data, the top 25 cities for long-term rental markets still offer respectable cash-on-cash returns ranging from 5.77% to 7.12%, making them a viable option if you seek stability over maximum yield.

Tips to Maximize Your Short-Term Rental ROI

Whether you’re new to the short-term rental space or looking to boost your profits, implementing the right strategies can significantly improve your returns. There are several key ways to maximize rental ROI and ensure your property is as profitable as possible.

Here are three essential areas to focus on for increasing short-term rental returns:

Pricing Strategies

• Implement dynamic pricing: One of the most effective ways to maximize ROI is through dynamic pricing. By adjusting nightly rates based on rental demand, seasonality, local events, and booking trends, you can ensure your property is competitively priced at all times.
• Analyze your competitors: Regularly analyzing how similar properties in your area are priced can reveal gaps and opportunities. Tools like Mashvisor can help you stay ahead by offering insights into local rental comps and historical pricing trends. This allows you to make data-driven pricing decisions that directly impact profitability.

Improving Occupancy Rates

• Market Your Listing Effectively: Listing your property across multiple platforms (Airbnb, Vrbo, Booking.com) and optimizing each listing with compelling photos, detailed descriptions, and interesting amenities can significantly increase your visibility and booking rates.
• Have high-quality amenities: Providing in-demand features like fast Wi-Fi, smart TVs, workspaces, and updated interiors adds value for guests and sets your property apart from the competition.
• Aim for positive reviews: Exceptional guest experiences lead to 5-star reviews, which drive more bookings. Prompt communication, cleanliness, and thoughtful touches go a long way in encouraging repeat stays and strong word-of-mouth referrals.

Cost Management Techniques

• Manage your property efficiently: Whether self-managing or using a service, having a system for guest communication, check-ins, cleanings, and maintenance keeps operations smooth and minimizes errors or delays.
• Practice routine maintenance: Proactive upkeep of appliances, plumbing, and HVAC systems prevents costly repairs and ensures a seamless guest experience.
• Budget and track your expenses: Keeping detailed records of your income and expenses, like property management fees, is essential to identifying where to cut costs and increase efficiency.

Conclusion

If you’ve ever asked yourself, “What ROI should I expect on short-term rental property?”—you’re not alone. It’s one of the most critical questions investors can ask when evaluating whether a property is worth the risk.

Based on Mashvisor’s latest data, a good ROI for short-term rentals typically falls between 5% and 10%, with top-performing markets offering cash-on-cash returns of 6.16% to 7.45%. However, actual returns can vary depending on your market, property type, management strategy, and ability to optimize your listing.

By understanding how to calculate ROI, comparing your options with long-term rentals, and implementing pricing, marketing, and cost control strategies, you put yourself in a much stronger position to make informed investment decisions.

Ready to put these insights into action? Mashvisor’s tools help you analyze potential ROI, compare markets side by side, and fine-tune your short-term rental strategy for success. Whether you’re a beginner or seasoned investor, Mashvisor equips you with the data and insights needed to maximize your profits.

Start your next investment with confidence. Use Mashvisor to uncover opportunities, crunch the numbers, and achieve your short-term rental goals.