The Honest STR Underwriting Calculator
A short-term rental doesn’t earn one number — it earns a range. Enter a deal and this returns a conservative, expected, and optimistic case side by side, so you see cash flow, cash-on-cash, and DSCR across the year you might actually have — not a single flattering figure.
Matt NunnFounder, Builders Finance
The most dangerous number in underwriting is a single one. Enter the deal below. Rather than one projection, the calculator flexes occupancy and the nightly rate to show a conservative, expected, and optimistic year — because a deal that only works in the optimistic column hasn’t penciled.
Pairs withDoes This Deal Actually Pencil?
What this assumes
- Revenue. Nightly rate × occupancy × 365, lodging only. Enter figures you have already cleaned and discounted — this screen rounds nothing down for you, and it models a stabilised year rather than a first one.
- Management. The example assumes you run the property yourself. If you will pay a manager, their fee goes into operating expenses — and because that fee is a share of revenue, the Break-Even Occupancy Calculator prices it more honestly than a flat figure here can.
- Cleaning. Cleaning fees guests pay are not counted as revenue and the cleaning cost you bear is inside operating expenses. That is an underwriting convention, not a bookkeeping one — in your books the two are recorded separately.
- Reserves. There is no separate reserve line. If you have not put a maintenance and capital reserve inside operating expenses, this screen is flattering the deal by exactly that amount.
- Operating costs do not move with revenue. The same annual figure is used in all three cases. Most of an STR’s cost stack is genuinely fixed, so this is close to right — but a soft year saves a little on cleaning and supplies that the conservative column does not credit you with.
- Financing. A 30-year fixed, fully amortising loan, identical in all three cases. No interest-only period, no adjustable rate, no points.
- What is not here. Tax, appreciation, principal paydown, year two. This is a 15-minute screen for whether a deal deserves a full underwrite, not the underwrite.
What the results mean
- Occupancy
- The share of nights booked in the case shown. The conservative case takes ten points off what you entered; the optimistic case adds five.
- Net ADR
- The nightly lodging rate in the case shown. Conservative prices at 90% of what you entered, optimistic at 105%.
- Revenue
- Nightly rate × occupancy × 365. Lodging only — no cleaning fees, no taxes collected from guests.
- NOI
- Net operating income: revenue less operating expenses, before any debt. It is what the property earns; what you earn comes two rows down.
- Debt service
- Twelve months of principal and interest on the financed amount. Identical in all three cases — the loan does not care how the year goes.
- Pre-tax cash flow
- NOI less debt service. What the property puts in your pocket in the year, before tax.
- Cash-on-cash
- Pre-tax cash flow as a share of the cash you actually put in. It answers whether your capital is being paid for its trouble, and ignores whether the loan is comfortable.
- DSCR
- NOI divided by debt service. Below 1.00 the property does not cover its own loan. It answers whether the debt is safe, and ignores whether the return is good.
- Cash invested
- Down payment plus closing and furnishing — the capital at risk, which is always more than the down payment.
How the cases are built. The expected column uses your inputs as entered. The conservative column drops occupancy by 10 points and the nightly rate by 10% — a plausible soft year. The optimistic column adds 5 points of occupancy and 5% on the nightly rate. Operating expenses and financing — including the interest rate — hold constant across all three. Read the conservative column first: if the deal goes cash-flow-negative or falls below a 1.0 DSCR there, it’s riding on the forecast.
The Builders Finance Underwriting Method
- Source it — trace every number to real evidence, not a headline.
- Haircut it — discount for the year you’ll actually have; round revenue down, costs up.
- Record it — value, source, and haircut, in The Assumptions Ledger.
- Stress it — move the numbers that matter to their downside before you trust them.
This is a 15-minute quick-screen, not a full model — a fast read on whether a deal is worth deeper work. This screen returns two of the four dimensions weighed in Does This Deal Actually Pencil? — cash-on-cash and DSCR. The Break-Even Occupancy Calculator returns the third. Cap rate is the fourth, and it is a question about the asset rather than about your financing, so it is worked through in Cap Rate for STRs. The full method is The STR Deal Underwriting Manual.
Your numbers
Your figures stay in this browser. Nothing you type or calculate here is sent anywhere or saved, and reloading the page returns it to the example. The page itself makes the ordinary requests any page on this site makes — analytics and fonts — and none of them carries your numbers.
The weekly letter for people who run property as a business. One idea a week on the financial side of ownership — what changed, what it means, and what an operator should do about it. Written for short-term and long-term rental owners alike.