Free ROI Calculator: Calculate Rental Yield from your Airbnb

Are you thinking of investing in an Airbnb to get some passive income? How do you know if a property will bring you the most cash flow or ROI? Use our free ROI Calculator!

Based on our research, online information typically includes market updates, property prices, gross annual rental income, and service charges.

And, crucial details like occupancy rates and short-term rental expenses are often missing. This leaves us in the dark to make educated guesses when assessing potential investments.

That is why we have put together a real estate return on investment calculator (for Short-Term leases or Airbnb rental) that can help control your estimates better, and assess if a particular property will generate the desired ROI.

Beware, it’s quite detailed.

In short, assuming all other factors are equal, a property with a greater cash flow is the better investment.

Download Calculator

How to Use ROI Calculator for Short-Term Rental

Similar to the ROI Calculator Dubai for Long-Term Lease, once downloaded, the template is yours to use and customize.

The green cells require input, and some may need customization (i.e. conveyance fees ranges between AED 5k – AED 10K).

Orange cells have embedded calculations, so should not need much editing.

If you accidentally remove the formulas inside the cell, just download the template again to start over.

Here’s a guide to help you make the most of this powerful tool:

1. Property Price

You can search property prices on Bayut and Property Finder and also see what the rental prices listed for the same building are going for.

Then, plug the values into Cell B9 (Property Price).

2. Cash Buy

If the property is a cash purchase, simply put ‘0’ for Cell B27, B28, and B29 (Mortgage Portion) to view projected cash flow and cash-on-cash return with no mortgage.

3. Mortgage

If you plan to get a mortgage, you will need to find out an estimate of your mortgage monthly payments.

We particularly like this Dubai Mortgage Calculator as it calculates all the up-front costs, shows you the recurring monthly cost, and customizes your service charge based on the size of the property.

Once you have the numbers from Dubai Mortgage Calculator, plug them into Cell B27, B28, and B29 (Mortgage Portion) of the template.

4. Revenue Projections

There are 2 ways of getting the property’s projections.

You can get the forecast from property management companies in Dubai (more on Airbnb property management companies review here), or at Airdna.co to find out how much you can make instantly if you turned the property into an Airbnb.

Which one should you use?

We recommend using both to get your projections if you are serious about understanding your potential cash flow. Having 2 forecasts is better than 1, and it will also give you get a better idea of potential revenue if the results are close in numbers. If one is just too incredibly optimistic.

Let’s go back to airdna.co.

The “Rentaizer” under Airdna.co is free to use after login. Enter the property name, and adjust the number of guest rooms, bathrooms, and guests to match your potential property. Enter “Average Daily Rate” in Cell B32 and “Occupancy Rate %” in Cell B33.

5. Expenses

Enter your potential expenses to generate profits and cash flow estimates.

If you plan to hire a property management company, put in 15%-20% for management fees in Cell 46 (ST Management / Booking Fee %).

If you plan to self-manage with Airbnb, put in 3% for Airbnb hosting fee.

Make sure to put “0” in Cell B49 (Cleans/Month) as the property management company will take care of the cleaning after each stay for you.

6. Fine-Tune Assumptions

Experiment with the assumptions. Adjust numbers such as the daily rate, property management fees, and cleaning fees to see how they impact on the overall scenario.

Analyzing Your Results

Comparatively, rental revenue from short-term rental is never as straightforward as long-term lease because of its daily rates and occupancy variables.

As much as we want it to be black and white, there will always be subjectivity and uncertainties.

The ROI Calculator is to help get your mind working on property analysis, understand your price limits, and be clear on all the expenses that may come up.

The cash flow results are meant to give you an idea of how good an investment this property may be from a cash flow perspective.

More importantly, this real estate return on investment calculator will help compare similar properties to each other, and compare long-term leases vs short-term leases, so you can make a better investment decision.

Next: Free ROI Calculator for Long Term Rental

Disclaimer: Home It Better is not your financial advisor or real estate agent. The articles here are for informational purposes only, and should not be used as a substitute for advice from a licensed professional.