The basic formula
Net operating income is gross booking revenue minus platform fees, management, cleaning, utilities, supplies, repairs, insurance, property tax and licensing. Subtract your mortgage payment from that to get cash flow.
Cash-on-cash return is annual cash flow divided by the cash you put in, including down payment, closing costs and furnishing.
Revenue
Revenue is nights booked times the average nightly rate. Get both from real comparable listings near the property, using a data tool and the listings' own calendars, and split the estimate by season.
Hot Springs demand rises and falls with the Oaklawn racing season, summer on the lakes and event weekends, so a single annual average hides a lot. Model a slow month as carefully as a busy one.
Costs to include
| Line item | Where to get the number |
|---|---|
| Airbnb host fee | Most Airbnb hosts now pay a single 15.5% fee, with guests paying no separate service fee. Check your own account's fee setting. |
| Lodging and sales taxes | Airbnb collects and remits the state, local and 3% Hot Springs A&P taxes on stays of 29 nights or fewer. These are paid by guests, but they affect the total price guests compare. |
| City STR license | Annual, renewed each January. The city's policy page lists the fee as $50 per bed. |
| HSV registration | $50 a year for rentals in Hot Springs Village (2026 fee schedule). |
| Management | Get written quotes from local managers. Fee structures vary. |
| Cleaning and laundry | Quote per turnover from local cleaners, times expected turnovers. |
| Utilities and internet | Twelve months of actual bills from the seller or utility. |
| Insurance | A written quote for a policy that covers short-term rental use. |
| Property tax | Garland County or Saline County assessor records for the parcel. |
| Repairs, replacements, supplies | Set aside a monthly reserve and track it against actual spending. |
Stress-test the result
- Rerun the numbers with lower occupancy and a lower nightly rate than your base case. If the deal only works in the best case, it does not work.
- Price in the time before the first booking, including the city inspection and, in residential zones, the Special Use Permit.
- Confirm the property can be licensed. As of July 1, 2025, the city said no new residential-zone STR licenses were available.
- Check the occupancy limit of two guests per bedroom plus two before you assume a listing can sleep more.
Levers that improve the numbers
On the revenue side, better photos, a clear listing and seasonal pricing tied to the Oaklawn calendar and summer lake weeks usually matter most. Pricing tools such as PriceLabs, Wheelhouse and Beyond adjust rates automatically within limits you set.
On the cost side, self-managing removes the management fee but adds your time. Some owners hire a local cleaning crew and handle guest messages themselves.
Questions about short-term rentals in Hot Springs?
Call or text 501.365.1001, or send a note and we will get back to you.