Short-Term Rental Investment Glossary

Every term serious STR investors need to know — with plain English definitions and embedded calculators.

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ADR (Average Daily Rate)

The average revenue earned per rented night, calculated as total rental revenue divided by booked nights.

Airbnb Superhost

A recognition status awarded by Airbnb to hosts who maintain a high rating, response rate, and booking completion rate.

Break-Even Occupancy Rate

The minimum occupancy rate required to cover all property costs, below which the investment operates at a loss.

Cap Rate (Capitalization Rate)

Net operating income divided by property value, expressed as a percentage — a financing-neutral measure of investment yield.

Cash Flow

Net operating income minus debt service — the actual cash remaining after all expenses and mortgage payments.

Cash-on-Cash Return

Annual pre-tax cash flow divided by total cash invested, measuring the actual return on your equity.

Cost Segregation

A tax strategy that reclassifies building components into shorter depreciation categories to accelerate tax deductions.

DSCR (Debt Service Coverage Ratio)

Net operating income divided by annual debt service — the key metric DSCR lenders use to qualify STR properties.

Dynamic Pricing

Automated nightly rate adjustments based on demand, seasonality, local events, and competitor pricing data.

Gross Rent Multiplier (GRM)

Purchase price divided by annual gross rent — a quick valuation metric for comparing properties.

Gross Yield

Annual gross revenue divided by property value, expressed as a percentage — a pre-expense return measure.

NOI (Net Operating Income)

Gross revenue minus all operating expenses, excluding mortgage debt service — the foundation of real estate valuation.

Occupancy Rate

The percentage of available nights that are booked, a primary driver of STR revenue performance.

RevPAR (Revenue Per Available Night)

Average daily rate multiplied by occupancy rate — measures revenue performance accounting for both pricing and demand.

STR Regulations

Local government rules governing short-term rentals, including permits, night caps, occupancy limits, and zoning restrictions.