Victoria's nine-bedroom Sevierville cabin produced roughly $38,000 in bookings in June against about $18,000 in expenses, leaving approximately $20,000 in cash flow. Working through where that $18,000 went is more instructive than the headline number.
The gross number is the least useful one
Gross bookings is the figure that circulates in short-term rental conversation and it tells you almost nothing. A property producing $38,000 in a month with $36,000 of costs is a worse business than one producing $12,000 with $4,000 of costs.
Large properties in particular produce impressive gross figures and carry proportionally large expense stacks: bigger cleans, more consumables, higher utilities, larger insurance and property tax, and a larger mortgage.
When someone quotes a monthly revenue number without an expense stack, the number is marketing.
Where the money goes
| Line | Typical share of gross | Notes |
|---|---|---|
| Debt service | 25 to 40% | Largest single line on a financed property |
| Management | 0 to 30% | Depends entirely on the model chosen |
| Cleaning net of guest fees | 5 to 12% | Higher with short stays |
| Utilities | 3 to 8% | Higher in extreme climates and with pools |
| Insurance | 3 to 10% | Much higher on the coast |
| Property tax | 5 to 12% | Reassessed at purchase price |
| Platform commission | 3 to 5% | Sometimes shown net of gross |
| Supplies and consumables | 2 to 4% | Ongoing, not just initial stock |
| Maintenance and capex reserve | 5 to 10% | The line most often omitted |
Those ranges overlap and vary enormously by property and market. The point is the shape: on a financed, professionally managed property, a large majority of gross revenue is committed before anything reaches the owner.
Why a peak month is not a typical month
June in the Smokies is peak. January is not. Victoria's property in a January produces a fraction of the June figure while the fixed costs, debt service, insurance, property tax and much of the utilities, continue unchanged.
That is the central discipline in reading any single-month figure. A $20,000 June is not one twelfth of an annual number; it is the best month of a seasonal calendar.
The same applies in reverse. Antonio's Fort Myers property produced roughly $17,000 in February, which is Southwest Florida's peak. August in that market is the trough.
The number that actually matters
Annual net cash flow after every expense including reserves, divided by total cash invested. That is cash-on-cash return, and it is the figure that permits comparison across properties and markets.
Total cash invested means down payment plus closing costs plus furnishing plus setup plus the reserve, not just the down payment. Our deal sheets publish total entry cost separately from purchase price for exactly this reason.
A property with a $185,619 total entry and $22,000 of annual net cash flow is producing roughly 12%. A property with a $320,457 total entry and the same $22,000 is producing under 7%. The gross booking figures might be identical.
What cash-on-cash misses
For a high earner using the short-term rental tax strategy, cash-on-cash return is an incomplete measure. A property producing modest cash flow while amortizing debt, appreciating and generating a large first-year depreciation deduction against W-2 income can be an excellent investment at an unremarkable cash-on-cash number.
That is why we start with the tax position rather than with a yield target. Two buyers looking at the same property can correctly reach different conclusions about whether it is a good purchase.
It is also why judging short-term rentals purely on cash flow, which is how most online comparison is conducted, misses most of what makes the strategy work for the people it is designed for.
Building the model that produces this
Twelve individual monthly revenue figures derived from a comparable set you assembled yourself. A complete expense stack including reserves. A stress-tested downside at 75% of projected revenue that still covers debt service.
It should be a spreadsheet you can defend line by line, not a summary. If any line is a percentage of revenue rather than a real cost, it is probably wrong: cleaning is per turnover, insurance is a quote for the address, property tax is a reassessment at your purchase price.
That model is what separates a purchase decision from a hope, and building it is the majority of the work in evaluating a property properly.
Reading someone else's numbers
When you are shown a short-term rental's performance, whether by a seller, an agent or an online post, the questions that separate a real number from a marketed one are consistent.
Is this gross bookings or net? Which months does it cover? What is the annual figure and how is it distributed across twelve months? What is the full expense stack, including insurance quoted for this address and property tax at the purchase price rather than the seller's assessment? What is in the maintenance and capital reserve? How many bookings does the revenue represent, and what is the turnover cost?
A seller who can answer all of those is a professional operator and the numbers are probably real. One who cannot is quoting gross bookings from a good quarter.
This is exactly why we treat seller proformas as marketing documents and underwrite against actual booked-night data for genuinely comparable inventory instead. It is also why roughly 98% of what we screen does not survive the process.
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Frequently asked questions
What does a good month look like on a short-term rental?
It depends entirely on the expense stack. Victoria's nine-bedroom Sevierville cabin produced roughly $38,000 in June bookings against about $18,000 in expenses, leaving approximately $20,000. Gross bookings alone tells you nothing without the costs beneath it.
Is a peak month representative of annual performance?
No. A $20,000 June on a seasonal Smokies cabin is not one twelfth of an annual figure. Fixed costs continue through the trough while revenue does not, which is why twelve individual monthly figures matter more than an average.
What return metric should I use for a short-term rental?
Annual net cash flow after all expenses including reserves, divided by total cash invested, which means down payment plus closing, furnishing, setup and reserve. For high earners, that still understates the return because it excludes the tax benefit.