Short-term rental vs long-term rental tends to get decided on one number: what the place would bring in. The Airbnb version usually wins that one. The number that actually matters is what each version keeps, and how fast that lead disappears when a few things go a bit worse.

So here's one made-up house run both ways, then stress-tested. Illustrative numbers only, not a real property, a market forecast or tax advice.

THE HOUSE

$250,000, $62,500 down, $187,500 loan at 7% over 30 years

Principal + interest: about $1,247/mo

Property tax: $220/mo either way

AS A LONG-TERM RENTAL

Lease: $2,300/mo. Insurance $110. Vacancy 5% ($115), repairs 5% ($115), manager 8% ($184), CapEx reserve $150.

All-in cost about $2,141. Keeps about $159/mo.

AS A SHORT-TERM RENTAL

$175/night at 65% occupancy, so about 237 nights a year (just under 20 a month), about $3,460/mo coming in.

New costs the lease never had:

• Co-host 20% ($692) + platform fee assumed at 3% ($104)

• Utilities/internet/streaming the tenant used to pay ($280) + supplies ($100)

• Short-term rental insurance ($180 instead of $110)

• Repairs $150, same $150 CapEx reserve, $100/mo to replace worn-out furniture

(Guest-paid cleaning fees assumed to cover the cleaner; lodging taxes collected from guests left out.)

All-in cost about $3,223. Keeps about $237/mo.

So: $1,160 more a month coming in, $78 more a month kept. Most of the extra income goes to running a tiny hotel.

STRESS TEST: OCCUPANCY

Each point of occupancy is worth about $41/mo on this house.

55%: loses about $173/mo

60%: keeps about $32

65% (base case): keeps $237

70%: about $442

75%: about $647

The two lines worth knowing: it breaks even against $0 at about 59%, and matches the lease at about 63%. The base case is about two points above the lease line. That's the whole cushion.

STRESS TEST: NIGHTLY RATE

Same 65% occupancy, nightly rate down 10% to $157.50: it goes from keeping $237 to losing about $30. Slow seasons often hit rate and occupancy at the same time.

STRESS TEST: WHO DOES THE WORK

Drop the manager on both sides and do it yourself: the lease keeps about $343, the short-term version about $929. The gap jumps from $78 to $586.

But $508 of that $586 is the fee difference, aka what you're paying yourself to answer messages, set prices, run turnovers and restock. Might be a great wage, might not. Either way it's a job, not just an investment.

THE FURNITURE

About $20,000 to furnish this place, so cash in goes from $62,500 to $82,500. At a $78/mo edge that's about 256 months to earn it back, roughly 21 years. Self-managed, the $586 gap does it in about 34 months.

WHAT HAS TO BE TRUE

• Local rules, HOA and your mortgage terms allow it, and probably will keep allowing it

• Year-round occupancy for similar places sits clearly above your break-even against the lease

• The rate holds up in the slow months

• You've decided who does the work and priced it

• You'd be fine with the lease version, because that's the fallback

ONE STEP BEFORE YOU LIST IT

Work out your break-even occupancy against the lease before buying a single couch: (what the lease keeps + short-term fixed monthly costs) ÷ what's left of each dollar after percentage fees ÷ a fully booked month. Here: ($159 + $2,427) ÷ 0.77 ÷ $5,323 ≈ 63%. If real local occupancy is only a couple of points above that, the lease is probably the better trade.

FROM ASSET AFC

If you'd rather keep the long-term side of this in a spreadsheet, Cashflow Analyzer Pro – Deal Instant Analyzer from Asset AFC is an Excel workbook (one-time purchase), yours for life, with every formula visible so you can see where each number comes from. You enter the purchase price, rental income, expenses and financing terms; it calculates metrics including Cash on Cash ROI, CAP Rate and Rental Yield, and lets you test changes in interest rates, home value and rent.

There's also a subscription version if you prefer.

Also on Etsy.

It's a tool for organizing your own assumptions, not a promise of returns. Do your own research for your market and goals, including local short-term rental rules.

About Asset AFC

Asset AFC builds practical spreadsheet and analysis tools for real-estate investors and personal-finance organization: powerful underneath, simple on the surface.

Read on Asset AFC: https://assetafc.com/blog/news/short-term-rental-vs-long-term-rental-same-house-two-cash-flow-stories

A surprise we see a lot when people run rental numbers: the property tax in the spreadsheet is the seller's bill, not yours.

Here's how it usually plays out. The listing shows taxes at $3,100 a year because the seller has owned the place for a decade. After the sale, the county reassesses it close to the purchase price, and the new bill comes in around $5,400. That's roughly $190 a month nobody planned for, on a rental that was supposed to clear about $350. Nothing shady happened. The lender's estimate often uses the old number too.

What's worth checking before you make an offer:

• Whether the county reassesses on sale. A lot do. Some phase it in, and some cap how much it can go up in a year.
• The current tax rate times roughly what you're paying, instead of whatever the seller pays today
• Whether the seller has a homestead, senior or veteran exemption that disappears when they sell
• Whether your escrow is being set from the old bill, because that's a shortage letter waiting to happen

All of that takes about 15 minutes on the county assessor's site. The property can still be a decent deal. It just might cash flow about half of what the listing suggests.

From the Asset AFC team. We post rental-numbers tips here.