How do I tell if a house would make a good Airbnb?

What makes a house a good Airbnb?

A house makes a good Airbnb when the revenue it can earn as a short-term rental covers the running costs and the mortgage, and still leaves a return on the cash you put in. The BNBCalc Calculator works through that whole chain for any address and sums it up in one grade, the Investor Score, so the quickest way to judge a house is to run it and read the grade.

Two things sit outside the grade, though. The house has to be legal to rent short term, which BNBCalc doesn't check, so make sure to look up the city or county rules and any HOA restrictions. It also has to hold its own against the rentals around it, and that's what the comps in the analysis show you.

How do I check a house with BNBCalc?

1. Type the address into the search box that says "Analyze any city or address" and pick it from the Addresses list, or paste the house's Zillow listing link into the same box.
2. Check the details. For US addresses, BNBCalc fills in the bedrooms, bathrooms and purchase price from the property record and the home's estimated value. Set the price to what you'd pay, since every return is worked out from it.
3. Click "Select analysis type ›", choose Buy (or Own if the house is already yours) and click Run analysis.
4. Read the Short Term Rental card at the top of the analysis. It shows the letter grade with the Cash on Cash and Cap Rate figures behind it, and on a phone the grade sits under the heading Investor Score.
5. Hover over the grade, or tap it, for a one-line read of the two returns and how the grade compares with other BNBCalc analyses. When both returns are weak, that line reads "Both metrics are weak. This property doesn't pencil as an investment at these numbers."

What does the Investor Score measure?

The Investor Score turns the house's two headline returns into one number, and then into a letter:

Score = 15% × (cap rate × 7.692) + 85% × (cash-on-cash return × 5), rounded down

Because cash on cash carries 85% of the weight, the grade mostly tells you how hard your own cash works once the mortgage is paid. The cap rate leaves financing out and carries the other 15%, so it only moves the grade a little either way.

Both returns come straight from the analysis. Cash on cash is the first year's cash flow plus one year of revenue growth, divided by the cash you put in, and the cap rate is operating income divided by the purchase price. BNBCalc counts property tax with the mortgage rather than as an operating expense, so it affects the cash-on-cash return but not the cap rate.

How do I make the grade fit my deal?

BNBCalc fills every input with a starting value so the grade shows up straight away, and the grade moves the moment you change one. Unless you've saved your own defaults, a new Buy analysis in the US assumes 20% down and a 30-year loan at 6%, so if your financing is different, click the pencil next to Mortgage & Taxes and set your own Percent Down and Interest Rate %, or 100% down if you're paying cash.

Running costs work the same way: the pencil next to Operating Expenses opens every cost line, from utilities to the management fee, and Estimate with AI, next to the Profit title, suggests expenses for this particular house if you're on a paid plan or have a free analysis left.

Since every return starts from the revenue estimate, you'll want to check the comps under it as well. If a comp isn't a fair match for the house, untick it, and the estimate and the grade update together.

What else shows whether a house would make a good Airbnb?

The grade sums up a year of returns, while a few other parts of the same BNBCalc analysis show how the house gets there:

• Seasonality shows the monthly Break-even and which months fall below it, so you can see whether you'd carry the slow season out of pocket.
• DSCR Ratio, on US Buy analyses, divides operating income by the yearly mortgage and property tax. BNBCalc rates it Strong at 1.25 or more, Acceptable from 1.0 to 1.25 and Weak below 1.0.
• The amenity card, under the revenue section, names the amenities that earn more for homes with the same bedroom count in that market, which tells you what an upgrade like a hot tub could add.
• The Long Term Rental card, next to the Short Term Rental one, shows the same house as an ordinary 12-month rental with its own grade on its own scale. Click it and compare the profit, which tells you whether furnishing for short stays pays more than a regular lease.

What if I'd rent the house or co-host it instead?

The Investor Score only appears on Buy and Own analyses. If you'd lease the house from a landlord and sublet it, run a Rent analysis instead, and look at the Cash on Cash return and Payback Period Days under Cashflow Over Time. The payback figure tells you how many days of cash flow it takes to earn back the setup costs and furnishing you paid up front. For a house you'd manage for its owner, a Cohost analysis shows your commission and the owner's payout.

What if I haven't picked a house yet?

If you don't know where to invest yet, use BNBCalc Markets to rank markets by revenue and, in the US, by gross yield, which compares what rentals earn with what homes cost. Markets maps the rentals already operating rather than homes for sale, though, so the Investor Score only comes once you run a specific house's address through the Calculator.

How many houses can I check?

A free BNBCalc account includes 2 free property analyses. After that, the Calculator plan ($30 a month) and the Markets plan ($79 a month, Calculator included) both come with unlimited analyses, so you can grade every house on your shortlist before you make an offer.