How to Calculate Break-Even Occupancy for Your Airbnb

Most investors obsess over cash flow projections. But projections assume you hit your target occupancy. What happens if you don't? Break-even occupancy answers that question. It tells you the minimum occupancy rate you need just to cover your costs, and it's the best indicator of how much risk you're taking on.

What Is Break-Even Occupancy?

Break-even occupancy is the percentage of nights your property needs to be booked to cover all your expenses with zero profit and zero loss. If your break-even is 45%, you need the property booked at least 45% of the year (about 164 nights) before you start making money.

A lower break-even percentage means more margin for error. If the market softens, a new competitor opens nearby, or you have a slow season, you still stay afloat. A high break-even means you're operating on a razor-thin margin where one bad month can put you underwater.

The Break-Even Formula

Let's break this down:

• Monthly Fixed Costs: Expenses you pay regardless of bookings (mortgage, insurance, property tax, utilities, HOA)
• Net Revenue Per Occupied Night: What you actually keep after variable costs (nightly rate minus platform fees, cleaning costs allocated per night, and maintenance reserve)

A Real Example With Numbers

Let's walk through a typical STR investment:

The Property

• Purchase price: $350,000
• Down payment: 25% ($87,500)
• Loan: $262,500 at 7% interest, 30-year term
• Average nightly rate: $185
• Cleaning fee: $125 per turnover
• Average stay length: 3 nights

Step 1: Calculate Monthly Fixed Costs

Step 2: Calculate Net Revenue Per Night

This is where most people mess up. You can't use your gross nightly rate. You need to subtract variable costs that scale with bookings: platform fees (3%) and maintenance reserve (5%).

Note: The cleaning fee you charge guests ($125) offsets your cleaning cost, so cleaning is revenue-neutral. We only account for the variable expenses (platform fee, maintenance) charged on that cleaning revenue.

Step 3: Calculate Break-Even Occupancy

What's a Good Break-Even Occupancy?

Our example property at 48% break-even falls into the solid deal category. With a break-even under 50%, you have good margin for error and can weather slower months without dipping into savings.

Common Mistakes to Avoid

1. Forgetting That Variable Costs Scale

Cleaning costs, platform fees, and supplies all increase with more bookings. If you calculate break-even using only fixed costs, you'll underestimate the true number. Every booked night has a cost attached to it.

2. Using Gross Revenue Instead of Net

Your $185/night rate isn't what you keep. After Airbnb takes their cut and you set aside for repairs, you're looking at closer to $167/night in our example. Always use net revenue in your calculations.

3. Ignoring Seasonality

Even a 48% annual break-even doesn't mean every month is profitable. What about January? If your slow season drops to 30% occupancy, you'll need strong summer months to compensate. Consider how seasonality affects your specific market before committing.