Rental Arbitrage Calculator
Rental arbitrage — leasing a place and subletting it short-term — lives or dies on the numbers. Model rent, nightly rate, real occupancy, fees, and furnishing to see the actual monthly profit before you sign a year-long lease.
Net profit / month
$200
$2,401/year at 20 booked nights a month
Estimates only. Rental arbitrage requires your landlord's written permission to sublet and compliance with local short-term-rental laws and permits — skipping either can end the business overnight. Not financial or legal advice. How we work.
Worked examples
Straight from the calculator. Notice how quickly a high management fee or a soft occupancy number flips the whole thing negative.
| Scenario | Net / mo | Annual | Payback |
|---|---|---|---|
| $1,800 rent · $120/nt · 65% · 3% fee | +$200 | +$2,401 | 30 mo |
| $1,500 rent · $95/nt · 70% · 3% fee | +$211 | +$2,531 | 24 mo |
| $2,400 rent · $180/nt · 60% · 20% mgmt | -$173 | -$2,081 | never |
| $1,600 rent · $90/nt · 50% (slow) · 3% | -$573 | -$6,876 | never |
The two winning rows still take two to three years just to earn back the furnishing. That's the honest shape of rental arbitrage: workable, but thin and fragile — not the effortless cash-machine it's sold as.
How to read your result
Rent is the number that traps people. It's fixed and it's due whether or not the unit is booked, so the entire model rests on the one input you control least: occupancy. Run it once at the occupancy a host promises you (70%+) and again at a realistic slow-season figure (45–50%). If the business only survives the optimistic number, it isn't a business — it's a bet on a busy calendar.
Watch the fee field too. Self-managing keeps it near the ~3% Airbnb host fee, but the moment you hand it to a co-host or property manager (15–25%), the margin can vanish — as the third example shows. And the payback line matters: a unit netting $200 a month with a $6,000 furnishing bill doesn't truly make money until month 30. Any early vacancy, repair, or rule change resets that clock.
None of this makes rental arbitrage a scam — it can work for hands-on operators in the right market with the landlord's blessing. But it is a job, not passive income. If you want real-estate exposure without the lease, the furnishing outlay, and the permit maze, fractional investing is the genuinely hands-off route — we cover the honest trade-offs in our Fundrise review and our Fundrise vs Ark7 vs Roots comparison.
FAQ
Is rental arbitrage legal?
It can be, but two things must both be true: your lease must explicitly allow subletting and short-term rentals (most standard leases don't — doing it anyway is a lease violation that can get you evicted), and your city must permit short-term rentals, which increasingly means a permit, a cap on nights, or an outright ban. Get written landlord permission and check local STR law before you sign anything. This is the step people skip and regret.
How much can you realistically make per unit?
After rent, running costs, fees, and a realistic (not peak) occupancy, a single unit often nets somewhere around $150–$500 a month — a thin margin sitting on top of a fixed rent obligation. The model only looks lucrative at high occupancy; drop to a slow-season 40–50% and many units go negative, as the calculator will show you.
What's the biggest risk?
Occupancy. Your rent, furnishing loan, and fixed costs don't care whether the unit is booked — but your revenue is entirely dependent on it. Always model a bad month (say 45–50% occupancy), not the summer peak. If it only works at 70%+, it's a fragile business, and a single rule change or new competitor down the street can end it.
Why does furnishing cost matter so much?
Because it's real money out the door before you earn a cent — typically $4,000–$10,000 per unit for furniture, linens, kitchen, and setup. The calculator's payback figure tells you how many months of profit it takes just to break even on that outlay, which is why a 30-month payback on a $200/month unit is a genuine risk, not a rounding error.
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Estimates assume a fixed rent and average nightly rate; real bookings, seasonality, and costs vary. Rental arbitrage requires your landlord's written permission to sublet and compliance with local short-term-rental laws and permits. This is not financial or legal advice.