Every number in this post is an example. The figures are round, made-up numbers for illustration. They aren't a real property's numbers, a forecast or a promise of income.
The question we hear more than any other from owners goes something like this: "Wouldn't I just make more renting it out long-term?"
Sometimes, yes. We'd rather say that up front than pretend every home belongs on Airbnb. We've been running short-term rentals in coastal San Diego since 2016, and the honest answer is that it comes down to one number: how many nights a month you actually book. Recently, an owner in Solana Beach came to us wanting to short-term rent his condo. Once we ran the numbers together, a long-term lease made more sense for him.
So let's do the math the way we'd do it on a napkin.
Step 1: What the lease really pays you
Say a tenant would pay $4,000 a month. That's not what lands in your account, though. Even a good lease has a turnover month now and then, a repair, maybe a leasing fee. Spread that out and call it $300 a month in this example.
Example lease net: $4,000 minus $300 = $3,700 a month.
Step 2: What one booked night pays you
A short-term rental earns by the night, and a lot of its costs come by the night too: cleaning, towels and linens, platform fees and management. (On our Standard plan, the rest of the guest consumables are included in the management fee.) In this example, say the home books at $375 a night on average, and after those per-stay costs you keep $225 of each booked night.
Then there are the bills a tenant would normally cover and now you do: utilities, internet, wear on the furniture, the extra insurance. Call that $800 a month in this example.
Step 3: Find the break-even
To match the lease, the short-term rental has to cover the $3,700 the lease would have paid plus the $800 in monthly bills. That's $4,500. Divide by what you keep per night:
$4,500 ÷ $225 = 20 booked nights a month.
That's the whole idea. In this example, at 20 booked nights the two are even. Above 20 the short-term rental wins, and below 20 the lease wins. Over a year it's about 240 booked nights, and that's how we'd look at it, because no month is average. Summer and holidays carry the year. January doesn't.
What moves your number
- Your nightly rate. A better rate lowers the break-even fast. That's why pricing that moves with the season matters so much.
- What you keep per night. Cleaning and linen costs are real, and a well-run turnover keeps them predictable.
- Your monthly bills. Utilities on a coastal house in August are not utilities in February.
- Your rules. If the city or the HOA limits stays, the math may not matter. More on that below.
- Your reviews. Better reviews tend to mean better placement and more booked nights. It's the slowest lever and the one that lasts.
What the napkin leaves out
A few things don't fit in one line of math, and you should know about them before you decide.
- Rules come first. In the City of San Diego you need a short-term rental license, and other coastal cities have their own permits and limits. Many HOAs require 30-night minimums. If you can't legally rent short-term, the lease wins by default. Check with your city, and talk to your attorney if you're not sure what applies to your home.
- Taxes. Transient occupancy tax is collected from guests and passed through, but income tax treatment differs between a lease and a short-term rental. Talk to your CPA.
- Setup. A short-term rental needs furniture, linens, a stocked kitchen and good photos before the first guest.
- Your time. If you self-manage, every message, turnover and 2am lockout is yours. Put an honest value on that.
- Your own use. With a short-term rental you can block a few weeks a year for yourself. With a lease you can't.
When we'd tell you to keep the lease
If the home can't get a permit, if the HOA requires month-long stays, if demand on your street is thin outside summer, or if you just want a steady deposit and no surprises, a good long-term tenant is a fine answer. We'd rather tell you that now than sign a home that won't work.
If the home is in a spot guests want, it can be permitted, and you'd like to use it a few weeks a year, the short-term side usually deserves a real look.
Want the real numbers for your place?
That's what our free revenue projection is for. Tell us about the home and we'll run this same math with real inputs: what similar homes nearby book at, what the costs look like, and where your break-even lands. If we think the lease is the better call, we'll say so. No pressure, just numbers.
Start at openroadstays.com, email info@openroadstays.com, or call or text (858) 299-6775.
Open Road Stays. We've been managing vacation rentals in coastal San Diego, from Oceanside to Coronado, since 2016. No setup fees, and a 3-month money-back guarantee.
