STR Operating Expenses

Gross revenue is not profit. A property generating $35,000 annually in bookings might net $10,000–15,000 after opex, depending on your cost structure. The gap—often 50–65% of revenue—is consumed by cleaning, utilities, supplies, co-host services, maintenance, platform fees, taxes, insurance, and miscellaneous labor. Most new STR operators underestimate opex by 20–30%, building financial models that collapse when reality arrives. This article dissects the opex layer, line by line.

Key takeaways

• Cleaning and turnover account for 20–40% of STR gross revenue; this is the largest single expense category and the hardest to optimize without sacrificing guest satisfaction.
• Utilities (electricity, water, gas, internet) typically cost 3–6% of revenue, but high-volume, high-occupancy properties might hit 10%.
• Platform fees (Airbnb 3% + guest fees 14–16%, VRBO 10–16%, Furnished Finder 25–40%) are partially baked into ADR but often underestimated.
• Property manager or co-host services run 15–25% of revenue if outsourced, or $0 with significant personal labor if self-managed.
• Maintenance and repairs (3–8% of revenue) accelerate with guest volume; older properties and high-traffic areas (kitchens, bathrooms) are cost centers.
• Tax, insurance, and HOA/condo fees add 5–15% of revenue and are often overlooked in initial modeling.

Cleaning and turnover: the biggest expense

A property at 65% occupancy with 4-night average stays incurs approximately 59 turnovers per year. Each turnover requires a 2–4 hour deep clean: bathrooms scrubbed, sheets changed, kitchen cleaned, surfaces wiped, vacuum, trash removed, and a quality check.

Cleaning cost scenarios:

Scenario	Cost per Turnover	Turnovers/Year	Annual Cost	% of Revenue
Self-clean (labor only)	$0	59	$0	0%
Hire local cleaner, $120/turnover	$120	59	$7,080	20%
Third-party service, $150/turnover	$150	59	$8,850	25%
Turnkey cleaning service, $180+/turnover	$180	59	$10,620	30%

Professional services with turnkey guarantees (they handle linen laundering, restock supplies, deep clean to hospitality standard) cost more but reduce coordination overhead.

Hidden cleaning costs:

• Linens and towels: Industry standard is 3–4 sets per bedroom to handle constant rotation. Laundering (if outsourced) costs $50–100/week for a 2-bedroom property, or $2,600–5,200/year. If you self-launder, labor is the cost.
• Supplies and restocking: Shampoo, conditioner, toilet paper, paper towels, dish soap, laundry detergent, trash bags, light bulbs, batteries. Budget $150–250/month, or $1,800–3,000/year.
• Damage allowance: Guests break things. A water glass breaks, a chair leg chips, a remote control disappears. Budget 2–5% of revenue for replacements and repairs attributable to guest wear.

Total cleaning-adjacent opex: $7,080 (cleaning) + $3,000 (supplies) + $2,500 (linens) + $2,000 (damage buffer) = $14,580 on a $35,000 revenue property. That's 41% of gross revenue.

Utilities: electricity, water, gas, internet

Furnished properties consume more utilities than vacant homes. More guests = more showers (hot water), more laundry (water + electricity), longer air conditioning, and 24/7 Wi-Fi streaming.

Typical utility costs:

Utility	Urban Apt	Beach Condo	Suburban House	Annual Budget
Electricity	$120/month	$180/month	$150/month	$1,440–2,160
Water & sewer	$40/month	$60/month	$50/month	$480–720
Gas (heating)	$30/month (summer)–$80 (winter)	$20–50	$40–100	$480–900
Internet	$60/month	$60/month	$60/month	$720
Annual total	~$2,640	~$3,600	~$3,240

As % of $35,000 revenue: 7.5–10%. This is higher than homeowner utility costs because the property is occupied and occupied consistently.

Optimization:

• Install smart thermostats (Nest, Ecobee) to reduce HVAC costs for vacant periods.
• LED lighting throughout (cheaper long-term than incandescent or halogen).
• Water-efficient showerheads and faucets.
• Solar for hot water or electricity (high upfront cost; consider only if the property has strong sun exposure).

Most operators accept utilities as a fixed cost and build it into ADR.

Platform and service fees

These fees are paid by guests or deducted from your booking; they reduce the cash you net from each reservation.

Airbnb:

• Host service fee: 3% of nightly rate
• Guest service fee: 14–16% (paid by guest, not you, but built into total price)
• Total impact: You net 84–97% of the nightly rate you set, depending on tier and payment method
• Example: You set $140 nightly. Guest pays $140 + $20 (14% service fee) = $160. You receive $140 − $4.20 (3% host fee) = $135.80.

VRBO:

• Commission: 10–16% (varies by tier, location, promotion level)
• Additional fees: 2–5% for enhanced visibility (optional)
• Total impact: You net 84–90% of nightly rate
• Example: You set $135 nightly. VRBO takes 14% commission = $18.90. You receive $116.10. (Different from Airbnb's structure; commission is opaque.)

Furnished Finder:

• Commission: 25–40% (higher than vacation platforms)
• Impact: You net 60–75% of nightly rate
• But: Longer stays (30–90 days) and lower churn mean fewer total bookings to achieve same occupancy
• Example: 60-day booking at $150/night = $9,000 gross. Commission 30% = $2,700. You net $6,300. One booking = no turnovers. Cleaning and turnover costs drop dramatically.

Total platform fees as % of revenue: 15–25% when weighted across all platforms. This is usually already factored into your ADR assumptions, but it's worth double-checking.

Co-host or property manager: delegating operations

If you delegate property management to a co-host or third-party manager, they typically take 20–25% of gross revenue.

What they do:

• Respond to guest messages 24/7
• Manage check-in/check-out (key exchange, access instructions, welcome orientation)
• Coordinate cleaners, maintenance, and repairs
• Handle guest complaints and damage disputes
• Manage pricing (optionally)
• Track expenses and provide monthly reports

Cost impact: On $35,000 annual revenue, a 22% co-host fee = $7,700/year for someone to run the operational heavy lifting.

Self-management alternative: You absorb 300–400 annual hours (scheduling cleaners, messaging guests, handling emergencies) at your implicit labor cost. If you value your time at $25/hour, that's $7,500–10,000 in opportunity cost—similar to hiring a co-host, but with the added risk of burnout or missed details.

Hybrid approach: You handle core operations, hire a co-host for 10–15% commission to manage evenings/weekends and backup. Sweet spot for many operators managing 1–2 properties.

Maintenance and repairs

Guest volume accelerates wear. A property hosting 70+ guests annually sustains more damage than a vacant home or a long-term rental with a single tenant.

Annual maintenance budget (as % of revenue):

Property Age	Condition	Maintenance Cost
New (<2 years)	Excellent	2–3%
2–10 years	Good	4–6%
10–20 years	Fair	6–10%
20+ years	Poor	8–15%

On $35,000 revenue:

• New property at 3% = $1,050/year
• 5-year-old at 5% = $1,750/year
• 15-year-old at 8% = $2,800/year

Common maintenance items:

• HVAC filter replacements (quarterly): $200/year
• Carpet cleaning (quarterly): $400/year
• Appliance repairs (oven, fridge, washer/dryer): $500–2,000/year depending on age and failure rate
• Plumbing (toilet clogs, leaky faucets): $300–800/year
• Painting touch-ups: $200–500/year
• Furniture repairs (chair wobble, mattress replacement): $500–1,500/year
• General handyman (doorknobs, caulking, drywall repair): $300–1,000/year

Budget $1,500–3,000/year for a mid-range property. If actual repairs exceed this, push the overage to the damage allowance and raise it next year.

Tax, insurance, and HOA/condo fees

Property tax: Unchanged by STR status (already built into mortgage/ownership). Example: $300K property at 1.2% annual rate = $3,600/year, or 10% of $35K revenue. (This is the LTR cost; STR changes nothing.)

STR insurance: STR liability insurance is costlier than standard homeowner. Coverage includes guest injuries, property damage during rental periods, and host protection. Annual cost: $500–2,000/year depending on location and coverage limits. As % of $35K revenue: 1.4–5.7%.

Condo/HOA fees: Many properties are in condos or communities with HOA fees. STRs sometimes incur premium fees (condo boards restrict STRs and charge 1–5% additional fee). Example: $200/month base HOA = $2,400/year. STR premium = +$500–2,000/year. As % of $35K revenue: 7–14%.

Self-employment / business tax: If you operate as a sole proprietor, plan for 15.3% self-employment tax on net income. If you form an LLC, consult a tax advisor—the structure affects tax liability.

Total tax and insurance exposure: 10–25% of revenue depending on property type and location.

A complete opex model

Assembling all categories for a $35,000 gross revenue property:

Gross revenue:                           $35,000
Cleaning & turnover (25%):              −$8,750
Supplies & restocking (8%):             −$2,800
Utilities (6%):                         −$2,100
Platform fees (3% Airbnb host):         −$1,050
Maintenance & repairs (6%):             −$2,100
STR insurance (2%):                     −$700
Property tax / HOA (10%):               −$3,500
Co-host or manager (0%, self-managed):  $0
Miscellaneous (2%):                     −$700
Total opex:                             −$21,600 (61.7%)
Net operating income:                   $13,400 (38.3%)

If you hire a co-host (22%):

Gross revenue:                           $35,000
Cleaning:                               −$8,750
Supplies:                               −$2,800
Utilities:                              −$2,100
Platform fees:                          −$1,050
Maintenance:                            −$2,100
STR insurance:                          −$700
Property tax/HOA:                       −$3,500
Co-host (22%):                          −$7,700
Miscellaneous:                          −$700
Total opex:                             −$29,300 (83.7%)
Net operating income:                   $5,700 (16.3%)

Outsourcing cuts net income by 60% unless you can push revenue higher or reduce other costs.

Controlling opex: practical levers

1. Bulk cleaning contracts: Hire a cleaner for 10+ monthly turnovers at a discounted rate ($100 vs. $140 per turnover).
2. Linens and laundry outsourcing: Rather than owning 12 sets of sheets, use a linen service ($80–150/month) that delivers clean linens and picks up dirty ones.
3. Condo / HOA arbitrage: Buy in buildings where STR is permitted without premium fees.
4. Energy efficiency: Invest $500–2,000 in smart thermostats, LED lighting, and water-efficient fixtures upfront to save $500–1,000/year.
5. Preventive maintenance: $300 HVAC inspection and tune-up annually prevents $1,500 emergency repair.
6. Self-management during ramp-up: Accept the labor burden in year 1–2 while building occupancy, hire a co-host once you hit 75%+ occupancy and the revenue justifies it.

Operating expense flowchart

Related concepts

• ./03-str-financial-modeling.md
• ./07-the-str-team-cleaner-handyman-co-host.md

Next

Operating expenses are not fixed—they depend on the quality of your team and systems. A reliable cleaner who shows up on time and maintains standards is a revenue multiplier; a careless cleaner who generates guest complaints costs you occupancy and ADR. Building the STR operations team—cleaners, handymen, co-hosts—is the difference between a hobby property and a scaled business. We'll cover team structure and delegation in the next article.