Short-Term Rental Acquisition Model

In today’s real estate landscape, short-term rentals (STRs) stand out as one of the most dynamic and potentially high-yield asset classes. From compact urban units serving business travelers to luxury vacation homes attracting high-net-worth guests, STRs offer significant upside potential but require a more sophisticated approach to underwriting. That’s where a short-term rental acquisition model becomes essential, helping investors navigate the operational nuance and volatility not typically found in traditional real estate investments.

Underwriting an STR acquisition goes beyond evaluating stabilized rents and standard market comps. Investors must forecast fluctuating occupancy trends, strategically manage Average Daily Rates (ADR), factor in platform and management fees, and stress-test assumptions against shifting regulatory environments and competitive market dynamics.

That’s exactly why the Short-Term Rental Acquisition Model was built—a robust, investor-focused tool designed to bring clarity and structure to underwriting, analyzing, and managing STR investments across diverse geographies and property types. Whether you’re assessing a boutique Airbnb, a coastal vacation rental, or a multi-market portfolio, this model offers a comprehensive framework to evaluate deal feasibility, structure financing, and project long-term performance.

In the sections that follow, you’ll find an overview of the model’s core components, key financial assumptions, and tips for tailoring the tool to your unique investment scenarios. Whether you’re new to STR investing or a seasoned operator, this model will enable you to evaluate opportunities with institutional-grade precision and confidence.

Understanding The Core Components Of A Short-Term Rental Acquisition Model

To successfully underwrite a short-term rental (STR) investment, it’s essential to go beyond the basics of traditional real estate modeling. The STR space demands a deeper understanding of operational complexity, revenue variability, and risk sensitivity.

Overview of the key components

1. Property And Unit-Level Fundamentals

Every STR investment begins with a clear picture of the asset itself. A financial model should include details such as the total number of rentable units, the Net Rentable Area (NRA), and the average square footage per unit. It’s equally important to account for the property’s location and asset type—whether it’s an urban multifamily, a single-family vacation home, or a boutique brownstone—as these factors greatly influence demand, pricing, and operational strategy.

2. Revenue Generation And Seasonality

Revenue modeling for STRs differs significantly from long-term rentals. Instead of fixed monthly rents, you’ll need to forecast nightly rates, known as Average Daily Rate (ADR), and occupancy levels, both of which can fluctuate based on seasonality, tourism trends, and local events. A solid model will project ADR growth over time, apply varying occupancy rates, and calculate metrics like Revenue per Available Unit (RevPAU) to understand true earning potential. Additionally, platform and service fees—typically charged by Airbnb, VRBO, or similar platforms—must be deducted from gross income.

3. Operating Expenses And Management Approach

Operating STRs comes with a unique cost structure. You must factor in both fixed costs like property taxes, insurance, and utilities, and variable expenses such as cleaning, laundry, restocking, and maintenance—expenses that spike with higher guest turnover. Your model should also account for capital expenditure (CapEx) reserves and annual growth in operating costs. Another key decision point is whether the property will be self-managed or operated by a third-party manager. This choice affects the management fee percentage and ultimately impacts your bottom line.

4. Financing And Capital Stack

An effective model must clearly outline the capital structure of the deal. Begin with the acquisition cost and any renovation or furnishing expenditures required to make the property rent-ready. Then layer in your financing assumptions, including loan-to-value ratio (LTV), interest rate, amortization schedule, and any associated debt service requirements.

5. Returns And Exit Strategy

The heart of any acquisition model is the return analysis. This includes both unlevered and levered internal rate of return (IRR), equity multiples, and annual cash-on-cash returns. A well-built model projects cash flows over the hold period and ends with a sale scenario based on the terminal net operating income (NOI) and an assumed cap rate. Deducting selling costs, the model estimates net proceeds to the investor, which informs overall return performance and investment viability.

6. Sensitivity Analysis And Risk Testing

To make your model decision-grade, incorporate scenario and sensitivity testing. Evaluate how small changes in ADR, occupancy, or exit cap rate impact your IRR and equity multiple.

A well-structured short-term rental acquisition model doesn’t just evaluate the deal—it tells a story. It helps investors understand how revenue flows, where risks lie, and what levers they can pull to improve returns. Whether you’re managing one Airbnb or a growing portfolio of STR assets, this framework gives you the clarity and precision needed to make confident, data-driven decisions.

Download the Short-Term Rental Acquisition Model and check the scenario described above

To make this model accessible to everyone, it is offered on a “Pay What You’re Able” basis with no minimum (enter $0 if you’d like) or maximum (your support helps keep the content coming – typical real estate development models sell for $100 – $300+ per license). Just enter a price together with an email address to send the download link to, and then click ‘Continue’. If you have any questions about our “Pay What You’re Able” program or why we offer our models on this basis, you can contact our support team here.

We regularly update the model. Paid contributors to the model receive lifetime updates and unlimited downloads.

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Overview: Short-Term Rental Acquisition Model

This investor-focused, fully dynamic tool is specifically designed to underwrite, evaluate, and monitor short-term rental (STR) investments. Whether analyzing a single vacation home or a diversified portfolio of urban rentals, the model offers a transparent and flexible framework for projecting cash flows, modeling returns, and testing key assumptions under varying scenarios.

Tailored for investors repositioning undervalued multifamily or single-unit properties into premium Airbnb-style accommodations, with a clearly defined exit at stabilization. It equips users with the analytical precision needed to structure deals, assess financial feasibility, and make confident, data-driven decisions in the fast-moving STR space.

The initial version of the Short-Term Rental Acquisition Model is built with simplicity and ease of use in mind. It features a primary underwriting tab for inputting assumptions and analyzing outputs alongside a version control tab for tracking updates. Future enhancements are planned to expand the model’s capabilities. We welcome your suggestions—please contact us with feedback on features you’d find helpful.

Version Tab (Default View)

The version tab serves as the model’s homepage. It includes:

• A detailed change log outlining updates in the latest release.
• Helpful links to model tutorials, guides, and additional support materials.

Underwriting Tab (Primary Inputs – Default View)

This tab is where all core assumptions are entered. Inputs and outputs are color-coded for clarity:

• Blue font: Inputs
• Black font: Key outputs

The tab is organized vertically by section and can be navigated using scroll or quick links at the top:

1. Investment Description – Assumptions & Return Metrics
2. Investment Cash Flow
3. Operating Cash Flow
4. Reversion Cash Flow
5. Property-Level Returns
6. Sensitivity Analysis

Investment Description Section

General Property Info:

• Name, Address, City, State, Zip
• Property Type
• STR Classification (e.g., Premium)
• Unit Count
• Net Rentable Area (SF)

Timing Assumptions:

• Analysis Start Date
• Hold Period
• Reversion Year

Debt Constraints:

• Minimum DSCR
• Minimum Debt Yield

KEY ASSUMPTIONS & RETURN METRICS IN THE SHORT-TERM RENTAL ACQUISITION MODEL:

Summarizes core assumptions and resulting return metrics.

Investment Cash Flow

Captures up-front capital invested to unlock future operating and reversion cash flows. Inputs include:

• Acquisition Costs (%)
• Renovation & Furnishing Costs
• Funding Fees (%)

Operating Cash Flow

Tracks annual income and expenses related to property operations.

Revenue Inputs:

• Occupancy Rate by Year
• Year 1 Average Daily Rate (ADR)
• ADR Growth Rate

Expense Inputs:

• Utilities & Maintenance
• Cleaning/Turnover Costs
• Platform & Management Fees
• Insurance
• Property Taxes
• Capital Expenditures (Reserve)

Also calculates key metrics:

• DSCR
• Debt Yield
• Cash-on-Cash Return

REVERSION CASH FLOW

Estimates asset value at the end of the hold period and calculates net proceeds. Inputs:

• Exit Cap Rate
• Selling Costs

Property Cash Flow

Aggregates all cash flows (investment, operations, reversion) to derive:

• Unlevered and Levered Cash Flows
• IRR, Equity Multiple, and Net Profit

Sensitivity Analysis

Three tables assess the sensitivity of Levered IRR and Equity Multiple based on:

1. Exit Cap Rate vs. Hold Period
2. Exit Cap Rate vs. Purchase Price
3. Loan-to-Cost vs. Cost of Debt