The Best Vacation Rental Income Calculator

Are you thinking of buying a vacation home to rent out? Using a vacation rental income calculator is the best way to find a profitable one.

Table of Contents

1. Is the Vacation Rental Business Profitable?
2. What Is a Vacation Rental Income Calculator?
3. What Kind of Data Can You Expect from the Vacation Rental Income Calculator?
4. Where to Find the Best Vacation Rental Income Calculator

How do you find a profitable investment? The best way to do so is to use a vacation rental income calculator. Mashvisor provides such a tool that lets you gauge how much ROI you will get from any particular investment.

It’s extremely valuable to any real estate investor, whether big or small. A tool of such type prevents the investor from going in blind into a deal. It can make or break a good investment.

What is this real estate investment tool? What does it do for real estate investors? Where can you find the best vacation rental income calculator? Keep reading to find out the answers to all these questions.

Is the Vacation Rental Business Profitable?

Short-term rentals are a profitable source of income, and vacation rentals are probably the most profitable ones. Platforms like Airbnb made it possible for regular homeowners to branch out to the business niche typically dominated by hotels. 

For an Airbnb to outperform traditional rentals, you need quite a specific location for your rental. For instance, a rental in a quiet neighborhood of a small town with nothing of interest around will probably do better as a traditional rental.

It all changes when your rental is in an area with a high volume of tourists. Whether it’s a bustling metropolis or a scenic town, if there are people coming and going, there’s money to be made.

According to Mashvisor’s August 2022 data, Pebble Beach, CA, is the most profitable town to set up an Airbnb rental. The average Airbnb rental income in this location comes up to $16,000 per month. Many other places with plenty of both tourist and business-related stays produce a similar stream of income. So, vacation rentals are immensely profitable.

The only thing that you need to do to make a good ROI on your rental is to pick the right place. You can do that either by looking up places with high tourism volumes or go with data analysis.

Mashvisor’s vacation rental income calculator gathers data from thousands of listings to calculate metrics like Airbnb vacancy rate, cap rate, and cash on cash return. The metrics derived from market data analysis help investors understand which areas provide a good ROI. It makes choosing a rental investment property a much easier job.

Related: How to Start a Vacation Rental Business—A Step by Step Guide

What Is a Good Rate of Return on a Vacation Rental?

You want your ROI on a vacation rental to be at least 5%. But how do you estimate it?

Mashvisor’s rental income calculator allows users to get an accurate estimate of several metrics on their vacation rentals. The most important are probably capitalization rate and cash on cash return (CoC).

Cash on cash return is the return on total cash investment, not the price of the house overall. Mashvisor calculates the CoC return by considering two numbers.

One is cash flow. It’s calculated by Mashvisor internally, based on the average nightly rate in the area and Airbnb occupation rate minus rental expenses. The other is cash investment, which you can calculate by including the down payment on the mortgage, renovation cost, and agency fees.

Then, the rental income calculator divides annual cash flow by cash investment to come to a cash on cash return estimate.

If the estimated net income is $12,000 annually and the total cash investment is $85,000, the CoC is 14%. The rate represents a solid income stream.

Generally, you want the return on investment to be above 5%. If it’s above 10%, you’re looking at a great property.

What Is a Vacation Rental Income Calculator?

A vacation rental income calculator is an online tool designed to help real estate investors, both beginner and professional, search for and find top-performing vacation rental properties. The tool provides users with neighborhood-level and property-level data that they can use to evaluate the profitability of potential real estate investments.

To use the tool, all you need to do is input some basic information, such as the method of property financing (cash or mortgage loan) and the amount of the down payment. 

Mashvisor’s rental calculator is particularly handy for investors who do not have access to data mining tools. With it, you can not only calculate multiple metrics based on your own input but also discover data based on market research.

Most calculators only allow you to input your own data. It’s rather easy with variables like the price of the rental or down payment on a mortgage. However, when it comes to Airbnb occupancy rate or average nightly fee at local Airbnbs, most will come short.

Mashvisor provides all that data for users. It means your estimates will be based on solid information from analyzing thousands of listings.

Let’s see what the calculator does for a real estate investor in more detail.

What Does a Vacation Rental Income Calculator Do?

Buying a vacation rental property can be overwhelming, especially if you are a first-time real estate investor. Fortunately, the vacation rental calculator will help you do all the following things.

Find the Right Location

The vacation rental income calculator helps real estate investors decide on the best location for vacation rental investment. As you may know, finding the right location for your vacation rental property is crucial in order to succeed in the vacation rental industry.

The calculator spares you from manually performing neighborhood analysis by pinpointing the most profitable neighborhoods in your city of choice through a real estate heatmap.

The heatmap highlights the highest-ranking areas within the city in the darkest shade and the lowest-ranking areas in the lightest shade based on a few different metrics, including listing price and cash on cash return. It allows you to compare the different neighborhoods simultaneously and decide which one offers a good ROI for vacation rentals.

Related: How to Conduct Vacation Rental Market Analysis

Find the Right Property

After identifying a good neighborhood for vacation rental investments, the vacation rental income calculator helps you find the most profitable rental property in that neighborhood. It does a full vacation rental investment analysis on all the properties listed for sale in the neighborhood and provides you with a comprehensive report.

The report contains all the important numbers you need to assess the profitability of each property. The numbers include the property price, rental income, occupancy rate, and various ROI metrics (we’ll talk more about them later). 

All the above figures are based on reliable vacation rental data from the local housing market to ensure the highest degree of accuracy. The best thing about the calculator is that it allows you to modify any value which you believe will be different based on your own analysis and knowledge. It will then will immediately redo all the calculations.

You can easily compare the different investment properties based on the numbers you obtained and decide which one is the most profitable.

Find the Right Price

After finding a profitable vacation rental property, the vacation rental income calculator helps you to check if the property is priced reasonably and according to fair market values. It enables you to carry out a complete comparative market analysis.

The calculator finds properties that are similar to the one you are considering buying and that were sold recently (known as Airbnb comps). It then shows you their sales prices so you can be sure that you don’t pay more than the fair market value.

The fact that the calculator allows you to access Airbnb comps saves you so much time. Otherwise, you would need to spend it on finding comparable properties in your market, analyzing each one individually, and comparing it with the others. 

What Kind of Data Can You Expect From the Vacation Rental Income Calculator?

Now that you have an idea of what the vacation rental income calculator does for a real estate investor, let’s take a look at the important numbers that it will generate:

Rental Income

As you might’ve guessed, the vacation rental income calculator will show you projections of the rental income from renting out your vacation rental property.

The calculator looks at the average nightly rate of vacation home rentals in the area where your investment property is situated in order to give you the most accurate estimate of the rental income that you will be able to make each month.

Cash Flow

The cash flow is the amount of money your vacation rental will make (or lose) per month. The calculator takes into account all the expenses associated with buying, financing, and operating your vacation rental. It subtracts them from the rental income to estimate the potential profit from your property.

The resulting cash flow can either be positive or negative, indicating whether you will make or lose money.

Short-term vacation rentals depend on occupancy rate—how many nights per month the rental is booked. While many short stays are good for rental income, they also drive up expenses. This is because you need to pay a maintenance company to clean up before the next guest.

Occupancy Rate

The occupancy rate indicates the number of days your rental property is expected to be occupied by tenants in a year. The vacation rental income calculator estimates the vacation rental occupancy rate based on actual Airbnb analytics and data gathered from your rental property’s neighborhood.

Cash on Cash Return

The cash on cash (CoC) return is an important return on investment metric. It estimates how much profit your vacation rental will generate based on the amount of cash you’ve invested. 

The vacation rental income calculator calculates the property’s cash on cash return by taking into account your cash down payment and any other costs paid in cash, such as closing costs.

Therefore, the COC return is particularly useful if you’re considering investing in vacation rental property using a mortgage loan. 

Cap Rate

The cap rate is another ROI metric. It estimates how much profit your investment property will make without taking into account the loan payments. Instead, it assumes that the cost of the property was bought 100% with cash. It allows you to get an idea of how profitable it is compared to its market value.  

Where to Find the Best Vacation Rental Income Calculator

Right here, at Mashvisor! Mashvisor’s vacation rental income calculator comes with all the features mentioned above. This tool was developed to help you find the best vacation rental house to buy. The unique thing about our calculator is that it not only serves short-term rental investors but also long-term rental investors.

What if you decide to turn to long-term real estate investing? You can still use the vacation rental income calculator to carry out all the necessary analyses. Moreover, our calculator provides data for both rental strategies, which can help you to figure out which strategy is optimal for your investment property. 

Related: What Is Mashvisor? What Can It Do for Real Estate Investors?

Get Started Now

The vacation rental income calculator is a must-have tool for every real estate investor. Whether you’re a beginner investor looking to buy your first vacation rental property or a seasoned one thinking of starting a vacation rental business, the calculator will help you make the smartest investment decisions.

Mashvisor’s rental income calculator works with the most accurate formulas to deliver the most accurate results. In addition, you can get recent market analytics data to go with your input.

Mashvisor provides data points like Airbnb vacancy rate, Airbnb daily rate, average rental income, etc. You can obtain the said data points for individual neighborhoods or cities. This way, you can end up with a pretty realistic estimate for any vacation rental.

Sign up for a 7-day free trial to start using our vacation rental income calculator right away.