Most landlords do the comparison wrong. They look at their tenant's $1,500/month rent, check Airbnb and see an average nightly rate of $150 in their neighborhood, and conclude — reasonably, from the surface numbers — that switching to STR would triple their income. They multiply $150 × 30 and arrive at $4,500/month. Then they tell their spouse they've figured it out.
That's not how it works. Not even close. The real comparison involves occupancy rates, cleaning costs, platform fees, seasonality, supplies, utilities that tenants usually pay on their own, and the fact that you — the landlord — have effectively taken a part-time job running a tiny hospitality business. Most of that works out in STR's favor on the right property, but only if you model the numbers honestly. Here's the framework we use, with a real example from a 3-bedroom in San Antonio.
The Wrong Way to Compare (and Why It Misleads)
The textbook mistake: take the market's average daily rate (ADR) and multiply by 30 nights. Your head tells you "$150 × 30 = $4,500/month, and my tenant only pays $1,500, so STR wins by $3,000." That calculation is wrong in at least four ways.
Occupancy is not 100%. Even strong markets run 55–70% occupancy on average across the year. A "great" STR might book 22 nights out of 30. A typical one books 18. Multiplying by 30 inflates your top line by 40–65%.
Platform fees take a chunk. Airbnb's host service fee is typically 3% of the booking total under the split-fee model, but most hosts use simplified pricing where total platform cost (including guest-side fees that reduce what guests will pay) effectively runs 12–15% of gross. We model 14% as a reasonable mid-point. Vrbo's economics are similar.
Cleaning is real money. Guests pay a cleaning fee, but that money passes through to the cleaner — it's not income. If you absorb any of the cleaning cost (because your cleaner charges more than you can pass through in a competitive market), it hits your net.
Utilities, supplies, insurance, and permits don't disappear. Long-term tenants usually pay their own utilities. STR guests don't. You're now paying for electric, water, gas, internet, streaming, consumables, and higher-rate insurance. Budget $300–$500/month for a 3BR — more in summer in Texas.
The Right Framework — A Real Example
Let's walk through the actual numbers on a real property: a 3-bedroom, 2-bathroom single-family home in a San Antonio suburb, roughly 1,600 square feet, recently furnished for STR. Same property, two income models.
LTR Side (Current Setup)
The property is currently leased at $1,650/month — right around the local market rate for the size and neighborhood. Tenant pays all utilities. Landlord covers HOA ($35/mo), property insurance ($110/mo as landlord policy), and an allowance for repairs/maintenance averaging $150/mo (a mix of small repairs, an annual HVAC service, appliance replacement reserve).
| LTR Monthly | Amount |
|---|---|
| Gross rent | $1,650 |
| HOA | −$35 |
| Landlord insurance | −$110 |
| Repairs / maintenance reserve | −$150 |
| Net LTR income (before mortgage / taxes) | $1,355 |
Note: We're comparing operating income, not full cash flow. Mortgage and property taxes are identical in both scenarios, so they drop out of the comparison. What we want to know is: how much more does this same property make under STR?
STR Side (Conservative Assumptions)
Same property, converted to STR. Based on AirDNA comps for this ZIP code and the amenity set (fenced yard, nicely furnished, good photos, but no pool or hot tub), a reasonable model looks like this:
- Average daily rate (ADR): $195/night (blended across seasons)
- Occupancy: 62% = ~18.6 nights booked per month
- Average stay length: 3 nights → roughly 6 turnovers per month
- Cleaning: $165 host-paid cost per turnover, $175 charged to guest (small buffer absorbed by host on some bookings)
- Platform fees: 14% of gross booking revenue
- Supplies, consumables, restocking: $150/mo
- Utilities + internet + streaming (now host-paid): $380/mo
- STR insurance (higher tier): $155/mo
- HOA: $35/mo (same as before)
- Permit amortized: $12.50/mo ($450 every 3 years)
Let's run the gross booking revenue first:
18.6 nights × $195 ADR = $3,627/mo gross booking revenue (this is the amount guests pay for nights, before cleaning fees).
| STR Monthly | Amount |
|---|---|
| Gross booking revenue (18.6 nights × $195) | $3,627 |
| Platform fee (~14%) | −$508 |
| Cleaning net impact (6 turnovers, mostly passed through) | −$60 |
| Supplies / restocking | −$150 |
| Utilities + internet + streaming | −$380 |
| STR insurance | −$155 |
| HOA | −$35 |
| Permit (amortized) | −$13 |
| Repairs / maintenance reserve | −$150 |
| Net STR income (before mortgage / taxes) | $2,176 |
So on this specific property, the honest comparison is:
- LTR net: $1,355/mo
- STR net: $2,176/mo
- Difference: +$821/mo = +$9,852/year on the same property
That's nearly 60% more operating income on the same asset — but it's a long way from the $3,000/month fantasy most landlords start with. And notice what happened to the headline: gross STR revenue was $3,627, but net was $2,176. That $1,450 gap is where most landlords' mental math breaks.
The Variables That Swing the Numbers
The example above is a middle-of-the-road suburban 3BR in a solid Texas market. Several factors can push the delta much higher — or eliminate it entirely.
Market type. Beach and mountain markets with strong tourism can run 25–40% higher ADRs for the same square footage. Suburban business-travel markets tend to be more stable but lower-ADR. Rural markets with no tourism hook can struggle to cover the additional overhead.
Amenities. A pool typically adds 15–20% to ADR in warm climates. A hot tub, 10–18%. A unique structure or outdoor feature ("wow factor") can add another 10–15%. These compound. A well-amenitized property in a strong market can easily double the delta in the example above.
Seasonality. In vacation markets, peak months can book at 2x the ADR of off-peak months. Smart pricing and minimum-stay rules during peak season are where experienced hosts separate from beginners. The blended 62% occupancy masks a lot of variance.
Management model. Self-managed, you keep everything above. Full-service property management runs 20–30% of gross revenue. Even after management, STR typically still outperforms LTR on a well-chosen property — but the gap narrows materially. Run the numbers for both models.
Property condition and photography. Professional photos, strong staging, a clean aesthetic, and thoughtful touches (coffee station, welcome basket) drive both ADR and review scores. Review score drives search ranking, which drives occupancy. Every one of those variables is under your control.
What LTR Still Has Going For It
We're STR-first, but we're not dogmatic about it. LTR has real advantages that matter on the right property.
Stability. One lease, one payment, twelve months. No review anxiety, no guest messages at 11pm, no seasonal swings. If you value predictability and low involvement, that's worth real money — possibly more than the $800–$1,500/month upside STR offers on a mid-market suburban property.
Lower working capital. LTR doesn't require furniture, linens, photography, smart locks, or a startup reserve. If you don't have $8,000–$15,000 available to furnish and launch, LTR is the obvious path until you do.
Tax treatment. STR activity can trigger different tax classification depending on average stay length and your material participation. This can be an advantage or a complication. Talk to your CPA before you switch — the "STR loophole" (non-passive treatment under 7-day average stays with material participation) is powerful but requires discipline.
Market fit. If your property is in a market with no tourism, no business demand, no seasonal draw — or if regulations are truly hostile — LTR isn't just the safer choice, it's the only rational choice.
The Hybrid Model
One option many landlords overlook: run the property as a mid-term rental (30+ day stays) during shoulder seasons and as a nightly STR during peak months. In a Hill Country market, this might mean LTR or corporate housing October through March, and 2–3 night STR bookings April through September when lake season drives premium rates.
This works best when: (1) your market has clear seasonality, (2) your property appeals to traveling professionals, travel nurses, or insurance-displaced occupants as mid-term tenants, and (3) you're comfortable with the operational complexity of switching modes. For the right property it captures much of STR's upside with substantially less turnover work.
Important caveat: The example numbers in this article are illustrative for a specific property type and market. Your numbers will differ. That's not a weakness of the framework — it's the reason the framework exists. Run it on your actual property.
The Bottom Line
The comparison isn't "rent × 12 vs. ADR × 365." It's "net LTR income vs. net STR income on your specific property, in your specific market, with realistic assumptions for everything in between." Done properly, STR wins on most well-located, well-amenitized properties. Done improperly, landlords overestimate by 40–70% and get discouraged when reality shows up.
The best way to know which is right for your specific property is to run the actual numbers against your address, bedroom count, and amenity set — not against a national average or a friend's anecdote.
Use our free STR Income Potential Calculator to get a realistic income projection in 60 seconds — based on your market, bedroom count, and amenities.
Calculate My STR Income →If STR wins by $500/month on your property, that's probably not worth the work. If it wins by $1,500/month, the math gets hard to ignore. And if it wins by $2,500/month — which it does more often than most landlords expect — you're looking at a genuine shift in what your asset is doing for you. Start with honest numbers, and let the spread tell you what to do.