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Vacation Rental Valuation: value and your max offer

Enter the asking price, the loan and the income. See what the income supports and the most you can pay and still hit your targets.

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Examples computed by this calculator on sample inputs. Not market data.

The listing in four numbers

  • No account needed
  • Airbnb fees per Help Center article 1857
  • Every formula shown, sources dated
  • Free PDF report with every chart
How it works

Three steps. About a minute.

  1. Step 1: Enter the listing

    Asking price, nightly rate, occupancy and the cap rate similar STRs sell at locally. Set your loan and return targets.

  2. Step 2: See value and offer

    A value range from income, the cap rate implied by the ask, and the highest price that meets your targets.

  3. Step 3: Keep the PDF

    Download the valuation, the maximum offer workings and the P&L at the asking price.

Your report

What you'll get

Maximum offer on your targetsFrom the sample
THE HEADLINE

The most you should pay on your own targets

The lower of two prices: the highest where NOI still covers the loan at your DSCR, and the highest where cash flow still returns your cash-on-cash target. Above it, the deal fails one of your own tests.

  • Maximum offer on your targets
  • Max price at your DSCR
  • Max price at your cash-on-cash target

Showing part 1 of 4: Maximum offer

  • A value range from the property's income
  • The cap rate implied by the asking price
  • Your maximum offer, and how it moves with the rate
  • An offer ladder across cash-on-cash and DSCR targets
  • The P&L at the asking price

Value from income, in one step

Value vs cap rateFrom the sample

An income valuation divides net operating income by the cap rate similar STRs sell at. Lower cap rates mean higher prices for the same income.

The cap rate is yours to enter. There is no reliable national figure for STRs, so ask a local broker what recent sales traded at. This method ignores condition, comparable sales and land value, so treat it as one view of price, not the only one.

Valuation mistakes this calculator catches

The asking price is the seller's number. These are the ways buyers end up adopting it.

  1. 01Anchoring on the ask

    On the sample, the ask is $425,000 and the maximum offer on an 8% cash-on-cash and 1.25 DSCR is $299,161. That $125,839 gap is the negotiation, in dollars.

  2. 02Valuing on the seller's best year

    A 10% lower NOI cuts value at a 7% cap rate from $374,759 to $337,283. Ask for 24 months of payouts.

  3. 03Checking only one test

    A price can pass the lender's DSCR and still return almost nothing on your cash. The maximum offer is the lower of the two for that reason.

The most you should pay

Asking price vs what the income supportsFrom the sample

Two tests set the ceiling. One is the highest price where NOI still covers the loan at your target DSCR. The other is the highest price where cash flow still returns your target on the cash you put in.

The lower of the two is your maximum offer. Above it, the deal works only if income grows. MagicBNB's Deal Analyzer saves each valuation and scores saved deals against your target return, so the next listing gets measured against this one.

What good looks like

Read the ask against three prices this calculator produces.

OutputWeakOkayGood
Ask against your maximum offerThese are this calculator's three readings: priced on hope, priced on today's income, works on your terms.Above the top of the value rangeInside the value range, above your maximumAt or below your maximum offer
NOI DSCR at the price you payRule of thumb. Lenders set their own minimum, often 1.0 to 1.25.Under 1.01.0 to 1.251.25 or more

The income behind the value, and the permit risk

Gross to NOIFrom the sample

Every dollar of value here comes from NOI: gross bookings minus Airbnb's fee and the running costs. Overstate the income or skip a cost line and the value rises with it.

That income also depends on permission to rent short term. If a city caps or ends STR permits, income and value fall toward what the property earns as a long-term rental. Check the local rules before you trust the number.

How operators use it

  1. Buyer preparing a first offer

    Listing is priced at the top of the local range.

    Opens near the maximum offer, with the value-from-income table as the reason, and keeps the ladder for counters.

  2. Operator selling a door

    Wants a price buyers will finance.

    Checks the price at a 1.25 DSCR on its real NOI and lists close to it instead of above it.

Valuing an STR from its income

How much below asking should I offer on an Airbnb?

As far below as it takes to meet your own return and coverage targets. On the sample, an 8% cash-on-cash and 1.25 DSCR support $299,161 against a $425,000 ask.

That is 30% under the ask, and many sellers will not accept it. The point is to know where your numbers stop working before you start negotiating, so every concession is a choice and not a drift.

The calculator's reading frames the conversation. The sample's ask is 'priced on today's income': inside the $327,914 to $437,219 value range at a 7% market cap rate, but above what your targets allow.

Sample: $425,000 ask, 25% down, 7.4%
  • Highest price at NOI DSCR 1.25$348,561
  • Highest price at 8% cash-on-cash$299,161
  • Maximum offer, both targets$299,161
  • Gap to the ask$125,839

How do interest rates change what an Airbnb is worth to me?

A lower rate raises the price that meets your targets. On the sample, a 1-point drop from 7.40% to 6.40% raises the maximum offer from $299,161 to $319,014.

Income value does not change with rates; your maximum offer does, because cheaper debt leaves more cash flow at every price. That is why two buyers can value the same property differently.

If you expect to refinance, do not pay today for a rate you do not have yet. Offer on today's rate and treat a later drop as upside.

Sample, maximum offer by interest rate
  • 6.40%$319,014
  • 6.90%$308,870
  • 7.40%$299,161
  • 7.90%$289,875
  • 8.40%$280,999

What DSCR should I use to set a maximum offer on an STR?

At least the lender's minimum, and 1.25 if you want room for a soft year. On the sample, the price allowed falls from $421,630 at 1.00 to $348,561 at 1.25.

A DSCR of 1.00 means NOI covers the loan exactly, with nothing left for a slow season. Every step above it is a cushion bought with a lower price.

Lenders often set minimums between 1.0 and 1.25, measured their own way. Your own test should use NOI, after every operating cost.

Sample, highest price at each DSCR
  • 1.00$421,630
  • 1.10$389,011
  • 1.25$348,561
  • 1.40$315,731

Can I trust a seller's Airbnb income figures?

Trust payout reports. Ask for 24 months from every channel, and value on the lower year if they differ.

A 10% lower NOI cuts the sample's value at a 7% cap rate from $374,759 to $337,283. Small differences in the income you accept become large differences in price.

Check three things: whether gross includes the cleaning fee, whether the platform fee has been taken off, and whether the seller's own blocked weeks are hiding low demand. Then rebuild NOI with your own costs, since the seller's may not include insurance or a manager.

Where it fits in a purchase

  1. On the listing

    Enter the ask, financing and a market cap rate. If the ask is above the value range, the seller is pricing on hope.

  2. At the offer

    Open near your maximum offer and plan counters from the ladder, so each concession is a known cut in return.

  3. Across several deals

    Save each one in MagicBNB's Deal Analyzer and compare them ranked on your own targets.

Terms on this page

Maximum offer
The highest price that meets both your DSCR and your cash-on-cash targets.
Market cap rate
The cap rate similar STRs actually sold at nearby, ideally from a broker.
Implied cap rate
NOI divided by the asking price: the yield the seller is offering you.
Offer ladder
The highest price at each step of return you might accept.
DSCR
NOI divided by annual loan payments.

Questions

How do you value a vacation rental from its income?

Divide its net operating income (revenue after the platform fee and every operating cost, before the mortgage) by the cap rate similar STRs sell at locally. Then check the price against your own financing: the highest price where NOI still covers the loan at your DSCR target, and where cash flow still returns your target on the cash you put in.

What cap rate should I use for a vacation rental?

The one recent STR sales in that market traded at, which a local broker can give you. There is no reliable national STR cap rate, so the field starts on the sample's 7% and you should overwrite it.

What is the most I should offer for an Airbnb property?

The lower of two prices this page solves for: where NOI equals your target DSCR times the debt service, and where cash flow equals your target cash-on-cash return on down payment, closing and furnishing. Above that, the deal only works if income grows.

What is a gross rent multiplier for a short-term rental?

Asking price divided by annual gross booking revenue. It is a quick screen between listings in the same market, but it ignores costs, so two properties with the same multiplier can have very different NOI.

Why is an STR valuation riskier than a long-term rental valuation?

Because the income depends on permission to rent short term. If a city caps or ends STR permits, the income and the value fall toward what the property earns as a long-term rental. Price that risk in before you pay for STR income.

How should I set an opening offer on an STR?

Work down an offer ladder: the highest price at several cash-on-cash and DSCR targets, solved on the same income and financing. Pick the rung you can defend and open below it. The results also show how the maximum offer moves if the interest rate rises or falls by up to a point.

Does the maximum offer include closing and furnishing costs?

Yes, through the cash-on-cash test, which divides cash flow by all the cash you put in: down payment, closing and furnishing.

Why are there two maximum prices?

One protects the loan (DSCR), the other protects your return (cash-on-cash). A price can pass one and fail the other, so the maximum offer is the lower of the two.

What does priced on hope mean?

The ask is above even the top of the value range at market cap rates. The seller is pricing in growth or a buyer who will not check the income.

Can I pay more than the maximum offer?

You can, knowingly. It means accepting a lower return or less DSCR cushion than you set. The offer ladder shows exactly what each step up costs.

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Deal Analyzer

Compare every deal you look at

One valuation tells you about one property. MagicBNB's Deal Analyzer keeps saved analyses side by side, scored and ranked on your own target ROI and risk tolerance, so the offer goes to the best deal and not the latest one.

Two more places this shows up in MagicBNB

  • Tree-of-Thoughts (multi-scenario)For a decision like renovate, reprice or hold, Milo lays out scenarios A, B and C on revenue, ROI timeline and risk, then recommends one with its reasoning.
  • Property DetailOnce you own it, a financial mini-card with net payout, NOI, expenses and margin shows whether the income you paid for arrived.
Rank your deals side by side
Go deeper

Value it again on real income, live

This valuation is the quick look, on income you expect. MagicBNB runs the same numbers in depth and in real time, property by property, in its Portfolio Overview.

Run the numbers in depthBack to the calculator