By Erika Albert, Broker, E-Rae Realty
Short answer: As a first screen, I want a property's estimated gross annual revenue to be at least about 10% of the purchase price. If it passes, I ask for the trailing 12 months of bookings, an expense breakdown, and how it's managed. I want to understand cleaning and management costs and hotel occupancy taxes and how they are accounted for in the numbers.
Every revenue number in this business is an estimate. That isn't a reason to skip the math. It's a reason to do it carefully and to know which numbers are reported and which are assumptions.
What is the 10% screen, and why use it?
It's a quick filter, not a valuation. If a home's realistic gross revenue is well under about 10% of the price, it usually has a hard time covering a mortgage, operating costs and the occasional slow month. Passing the screen just means the property is worth a closer look. Financing terms, how much you put down, and your own goals all change what "good enough" looks like.
What financials should I ask the seller for?
For an existing short-term rental, I ask for:
Trailing 12 months of revenue, ideally platform or property management system reports rather than a summary someone typed up.
Occupancy and average nightly rate by month, so you can see seasonality.
An expense breakdown: cleaning, management, utilities, internet, supplies, pool service, landscaping, repairs, insurance and software.
How it's managed: self-managed, co-hosted or full-service, and at what fee.
Listing links and reviews, so you can see how guests experience it.
A listing with strong revenue under a manager who runs a large portfolio may not perform the same for you. Furnishings, photos, pricing and policies are part of why a property earns what it does.
How do I build a short-term rental pro forma?
Start with gross booking revenue, then take out what doesn't belong to you or what it costs to earn it.
Cleaning fees. Treat them as a cost of each stay, not as profit. Deduct what you actually pay your cleaner.
Hotel occupancy tax. Leave it out of revenue entirely. It's collected from guests and passed through. In Austin, booking platforms have collected and remitted Hotel Occupancy Tax since April 1, 2025, though owners still file quarterly reports (City of Austin).
Management. Full-service management in this market commonly runs around 20% of revenue, and fees vary by company and service level.
The license. Inside Austin city limits, a new STR license costs $736.60 and lasts two years (City of Austin).
Amenity Maintenance Costs. A pool helps revenue but adds service and repair costs. I typically budget about $200 a month for pool service.
Everything else. Utilities, internet, streaming, supplies, insurance, repairs and a reserve for replacements.
You can plug your own numbers into my STR investment calculator.
Is AirDNA accurate for Austin?
In my view it has gotten noticeably better for our market in recent years, but its accuracy depends on how you use it. I don't take the headline estimate at face value. I look for comparable listings that are actually performing: similar bedrooms and baths, similar amenities, a real review history. A listing with zero reviews tells you very little. Then I compare that against the actual revenue records I've collected from turnkey listings over the years. More on my process in how to analyze revenue potential for an Airbnb investment in Austin.
Frequently asked questions about STR revenue
How much should an Austin short-term rental earn compared with its price?
As a first screen, Erika wants a property's estimated gross annual revenue to be at least about 10% of the purchase price. It is a quick filter, not a valuation. Passing it just means the property is worth a closer look, because financing terms, your down payment and your goals all change what good enough looks like.
What financials should I ask an STR seller for?
Ask for the trailing 12 months of revenue, ideally platform or property management system reports, plus occupancy and average nightly rate by month. Also request an expense breakdown, how the property is managed and at what fee, and the listing links and reviews so you can see how guests actually experience it.
Should I include hotel occupancy tax in STR revenue?
No. Hotel occupancy tax is collected from guests and passed through, so leave it out of revenue entirely. In Austin, booking platforms have collected and remitted Hotel Occupancy Tax since April 1, 2025, though owners still file quarterly reports. Treat cleaning fees as a cost of each stay rather than as profit.
Is AirDNA accurate for Austin short-term rentals?
It has gotten noticeably better for the Austin market in recent years, but its accuracy depends on how you use it. Do not take the headline estimate at face value. Look for comparable listings that are actually performing, with similar bedrooms, amenities and a real review history, and compare against actual revenue records.
Should cleaning fees count as revenue?
Only if you also count what you pay for cleaning as an expense. Most people find it cleaner to net them out.
What if the seller won't share financials?
That's a data point. You can still estimate with market tools, but weigh the property with more caution.
Are projections guaranteed?
No. They're estimates based on past performance and comparable listings, and your results depend heavily on how the property is run.
Related reading
Talk it through
If you want a second set of eyes on a pro forma or a listing's numbers, book a call with me.
This post is general information, not financial advice.
Sources
City of Austin, Short-Term Rentals (license fee $736.60 for two years; platforms collect Hotel Occupancy Tax since April 1, 2025; quarterly reports): https://www.austintexas.gov/development-services/short-term-rentals
ATX|STRS, a division of E-Rae Realty
