Deal Analysis Masterclass

Lesson 1 of 6

The 3 Numbers That Make or Break a Deal

Every deal comes down to three numbers. Get these right and you will be profitable. Get any one wrong and you will struggle.

NUMBER 1

Rent-to-Revenue Ratio

Realistic SA profit margins sit around 25%. So on a £3,000/mo rent unit, gross revenue usually lands £4,000–£4,500 — that's a 65–75% rent-to-revenue ratio. Tight, but workable. Sub-40% ratios exist mainly in tourist-heavy prime locations and premium pricing; don't model them on an average deal.

Formula: Monthly Rent ÷ Monthly Revenue × 100

80%+ (Danger)65%55% (Ideal)

Realistic target: 55-65% — anything above 70% walk away

Example: 1,100 rent / 2,592 revenue = 42.4% -- right on the edge.

NUMBER 2

Effective Nightly Rate

This is your actual revenue per night, not your listed price. You need to account for weekday dips, seasonal drops, gaps between bookings, and longer-stay discounts.

Formula: Monthly Revenue / 30

Listed rate: 120/night

Effective rate: 86/night

That is a very different deal. Always run your analysis at 85-90% of the listed comparable rate.

NUMBER 3

Cost Per Turnover

How much it costs every time a guest checks out and a new one checks in. Cleaning (£40–70), laundry (£10–20), consumables top-up (£5–10), plus your time. If turnover cost is £70 and you get 10 turnovers/month, that's £700/month gone before you've earned a penny.

Pass the cost to the guest. On Airbnb add a cleaning fee that covers your cleaner + laundry + consumables. Most listings charge a flat turnover fee so every turnover is covered — not just the long ones. Add a pet fee (£25–50 if you allow pets). Add an extra-guest fee above base occupancy. These aren't nice-to-have extras — they're how you stop losing money on every short booking.

The Fix:

Aim for average stay of 2.5+ nights. Set 2-night minimums. Offer weekly discounts. Charge cleaning + pet + extra-guest fees per booking so each turnover is funded by the guest, not you.

Quick Check: Which ratio matters most for initial screening?

Rent-to-Revenue Ratio

Effective Nightly Rate

Cost Per Turnover

Rent-to-Revenue Ratio. This is the single most important number. In the real world profit margins sit around 25%, so your rent is typically 55–65% of revenue — aim for the low end. Above 70% the deal is dead before you even look at the other levers. It is your first filter.

Lesson 2 of 6

The Property Labs Rules of Thumb

5 benchmarks used on every deal. If a property does not hit these, it does not get touched. Tap each card to flip it.

Break-Even at 50% Occupancy (optimal) / 60% (worst case)

Tap to see why

Don't think in pounds of profit — think in occupancy. A deal should cover all costs at 50% occupancy in an optimal area, and at 60% in a tougher one. If the numbers only work at 75%+ you're one bad month away from losing money.

Rule: break-even occupancy <= 60%. If not, walk away.

Profit Margin: At Least 25%

Tap to see why

Below 25%, you are working too hard for too little. A 17% margin means nearly all your revenue goes to costs. One rent increase or occupancy dip pushes you into loss.

Real example: £2,592 revenue with £2,148 costs = 17.1% margin. Technically profitable, but no room for error.

Break-Even on Setup in 6–9 Months

Tap to see why

A good SA deal returns your setup capital in 6–9 months. Under 6 months is exceptional and often unrealistic — if your model shows 3–4 months, re-check your occupancy assumptions. Over 12 months means the deal is too thin; negotiate rent down or cut setup costs.

Realistic window: 6–9 months. Aim for the low end.

Use 70% as London's Occupancy Benchmark

Tap to see why

70% is a realistic London blended average across high and low seasons. Model that on your baseline. 75–80% is strong. 85%+ is a prime-location outlier, not a forecasting assumption. Below 55% in London usually means a listing or pricing problem, not a market problem.

Rule: if your deal doesn't work at 60% occupancy (worst case), it doesn't work.

Rent-to-Revenue: Below 65%

Tap to see why

Profit margins on SA are typically 25%, so rent usually lands at 55–65% of revenue. Below 55% is excellent. Above 70%? Walk away or renegotiate rent — there's no room for costs, platform fees, or a bad month.

Red flag: if the area has 100+ listings within 1 mile with low occupancy, or setup costs above £5,000, walk.

Lesson 3 of 6

The Field Guide

Every field in the analyser, where to find the data, and a pro tip for each one. Tap to expand.

Property Details

Property Address ▶

The full address of the property you are analysing.

Source: The listing or directly from the landlord.

Pro tip: Airbnb doesn't need planning permission in most cases — but you DO need to know the area. Drop the address into Google Maps, grab the yellow street-view figure and walk around the street. Look at the shops, parking, housing quality, noise clues, and whether it looks like a council estate or a high-spec block. You'll spot dealbreakers before you ever visit.

Monthly Rent ▶

What you will pay the landlord each month.

Source: Tenancy agreement, or search Rightmove/OpenRent for the listing.

Pro tip: Benchmark rent against the area. On Rightmove/Zoopla set a 0.25 mile radius around your target and look at 5–10 comparable listings (same bed count, similar condition). If your landlord's asking price is 10%+ above the local average, you have negotiation leverage. Most landlords will drop £50–£100/month for a reliable tenant on a 12+ month lease — that £100 saving is £1,200/year straight to your bottom line.

Revenue Projection

Average Nightly Rate ▶

What you will charge guests per night on average.

Source: AirDNA, Mashvisor, or comparable listings on Airbnb. Filter by same bedroom count and similar quality. Average 5-10 comparable listings.

Pro tip: Run at 85-90% of listed comps. The listed price is not what people actually earn after gaps, discounts, and quiet periods.

Expected Occupancy Rate ▶

Percentage of nights you will actually book.

Source: AirDNA and market-intel tools are a decent starting point for area averages. But the real work is running your own comps: open Airbnb, search your target area, filter to same bed count and quality, and look at 10–15 real listings. The area average hides everything — some listings run 40% because of bad photos, thin reviews, or lazy management; others run 85%+ with strong reviews and dynamic pricing. You'll quickly see what separates winners from losers in the same postcode.

Pro tip: Use 70% as your London baseline. Check seasonality — an 75% annual average might still dip to 45% in January. Model worst month alongside average. And always compare listings with identical setups — if the winner has a hot tub and you don't, the 85% occupancy isn't your ceiling.

Monthly Costs

Council Tax ▶

Monthly council tax payment.

Source: Local council website. Search "[city] council tax bands". The landlord can also confirm the band.

Pro tip: Band D or above is a red flag. It eats into margins significantly. Bands A-C are much more workable.

Utilities ▶

Gas, electric, water, and wifi combined.

Source: Call suppliers for exact quotes. Budget 120-180/month for a 2-bed. Wifi is typically 25-35/month.

Pro tip: Smart meters help you track usage. Guests leave heating on and lights running. Budget for it.

Insurance ▶

Short-let or serviced accommodation insurance.

Source: Get quotes from Guardhog, Pikl, or Proper Insurance. Budget 50-80/month.

Pro tip: Standard landlord insurance does NOT cover short-lets. You need specific SA insurance. Do not skip this.

Cleaning Costs ▶

Cost per clean multiplied by number of turnovers per month.

Source: Local cleaning companies. Typically 40-70 per clean for a 2-bed. Average stay is 2-3 nights, so roughly 8-10 turnovers/month.

Pro tip: This is almost always your second biggest cost after rent. Short stays (1-2 nights) will eat you alive on cleaning. Set minimum 2-night stays.

Platform Fees ▶

Airbnb (host-only fee): ~18.5% + VAT. Booking.com: ~18%. Vrbo: ~8%. Direct bookings: 0%. Earlier educational material quoted 3% — that's the old guest/host split fee, not the current host-only model. Use 18.5% as your default for Airbnb-led operations.

Source: % of gross monthly revenue. The analyser applies it automatically.

Pro tip: On £2,500/month revenue, 18.5% = £462/month gone. That's your second- or third-biggest cost after rent. Always model it in — never pretend it's 3%.

Maintenance Reserve ▶

Money set aside for repairs and replacements. Budget 5% of monthly revenue.

Source: 5% of Monthly Revenue.

Pro tip: Things break. Guests are not always careful. A broken bed frame, stained sofa, or faulty appliance will come up. Budget for it or it comes out of profit.

Setup Costs

Furniture and Furnishing ▶

Everything the guest sees and uses.

Source: IKEA, Facebook Marketplace, B&M, Dunelm. Budget 2,000-4,000 for a 2-bed.

Pro tip: Do not overspend. Guests do not care about designer furniture. Clean, functional, and photogenic is what matters. Facebook Marketplace can save you 50%+.

Professional Photography ▶

Professional listing photos. Budget 100-200.

Source: Local property photographers.

Pro tip: This is NOT optional. Professional photos can increase bookings by 20-40%. It is the single best ROI spend in your entire setup budget.

Lesson 4 of 6

Worked Example: Manchester 2-Bed

Follow along step by step as we analyse a real deal. Tap "Reveal" to see each calculation.

The Property

2-bedroom flat, Dale Street, Northern Quarter, Manchester. Modern build, walking distance from Piccadilly Station. Landlord is fine with short-lets.

Step 1

Property Details

Monthly Rent: 1,100 | 2 Bed Flat | Manchester

Step 2

Revenue Projection

Nightly rate: 120 (from comparable listings on AirDNA).
Occupancy: 72% (Manchester average for a well-managed 2-bed).

72%x30 nights=21.6 nights/month

21.6x120=2,592/month

Step 3

Monthly Costs Breakdown

Rent	1,100
Council Tax (Band B)	110
Utilities	150
Insurance	60
Cleaning (60 x 8)	480
Consumables	40
Platform Fees (3%)	78
Maintenance (5%)	130
Total Costs	2,148

Step 4

Setup Costs

Furniture	3,000
Photography	150
Initial Supplies	300
Listing Setup	50
Total Setup	3,500

Step 5

Profitability Analysis

2,592-2,148=444/month profit

444/2,592=17.1% margin

3,500/444=7.9 months to break even

The Verdict

Verdict

MARGINAL

444/month sounds alright, but 17.1% margin and 8-month break-even is outside the comfort zone.

What if we push nightly rate to 130? Revenue = 2,808. Profit = 624. Margin = 22.2%. Getting closer.

What if we negotiate rent to 1,000? Profit = 544. Margin = 21%.

This is exactly why you run the numbers BEFORE you sign anything.

Lesson 5 of 6

7 Mistakes That Kill Deals

Every one of these has cost someone real money. Swipe through to learn from their pain.

Mistake 1 of 7

Using Best-Case Occupancy

The Mistake

"Just assume 85% occupancy." Not in your first 3 months. Not in January. Not without reviews.

The Cost

Overestimating revenue by 20-30%, turning a losing deal into a fake winner on paper.

The Fix

Start at 65% and work up. If the deal does not work at 65%, it is not a deal.

Mistake 2 of 7

Forgetting About Seasonality

The Mistake

Analysing based on summer numbers and assuming that is the annual average.

The Cost

A property making 2,500/month in summer might make 1,200 in winter. That gap can drain your reserves.

The Fix

Model a "worst month" scenario alongside the average. Your deal must survive January and February.

Mistake 3 of 7

Ignoring Platform Fees

The Mistake

"3% is nothing." But on 2,500/month revenue, it is 75/month or 900/year.

The Cost

900/year straight off your bottom line. Over 3 properties, that is 2,700 you did not account for.

The Fix

Always include 3% platform fees in your cost calculations. The analyser does this automatically.

Mistake 4 of 7

Underestimating Cleaning Costs

The Mistake

Not factoring in how cleaning scales with turnover frequency. Short stays mean more cleans.

The Cost

10 turnovers at 60 each = 600/month. That can be your second largest cost after rent.

The Fix

Set 2-night minimums. Offer weekly discounts. Calculate cleaning based on realistic turnover rates, not best case.

Mistake 5 of 7

Not Accounting for Void Periods

The Mistake

Assuming the property will be booked every available night with zero gaps between bookings.

The Cost

Gaps, maintenance days, and cancellations can add up to 5-10% lost revenue on top of your occupancy estimate.

The Fix

Build in a 5-10% void buffer on top of your occupancy estimate. Better to be pleasantly surprised than caught out.

Mistake 6 of 7

Skipping Setup Cost Recovery

The Mistake

"It will come back eventually." When? Month 3? Month 12? Month 24? You need to know.

The Cost

Capital tied up for months with no clear return timeline. Multiple properties compound this problem.

The Fix

Calculate your break-even point. If more than 4 months, negotiate harder on rent or furnish for less.

Mistake 7 of 7

Analysing Only One Deal

The Mistake

Falling in love with the first property you find and trying to force the numbers to work.

The Cost

Committing to a mediocre deal when a great one was two postcodes away. Opportunity cost is real.

The Fix

Analyse at least 5-10 properties before committing. The more deals you run, the better your instinct gets.

Lesson 6 of 6

Practice: Analyse This Deal

Here is a property with raw data. Fill in your analysis below. We will check your answers and score you out of 100.

The Property

1-bedroom flat, Broad Street, Birmingham City Centre. Modern apartment, 5-minute walk from the Bullring and New Street Station.

Monthly Rent	850
Average Nightly Rate (comps)	95
Expected Occupancy	70%
Council Tax	90/month
Utilities	120/month
Insurance	55/month
Cleaning Cost	45 per clean
Expected Turnovers	9/month
Consumables	30/month
Setup Costs	2,800 total

Your Analysis

Nights Per Month

Occupancy x 30

Monthly Revenue

Nights x Nightly Rate

Total Monthly Cleaning Cost

Cost per clean x turnovers

Platform Fees (monthly)

3% of monthly revenue

Maintenance Reserve (monthly)

5% of monthly revenue

Total Monthly Costs

All costs added together (rent + council tax + utilities + insurance + cleaning + consumables + platform fees + maintenance)

Monthly Profit

Revenue minus total costs

Profit Margin (%)

Profit / Revenue x 100

Rent-to-Revenue Ratio (%)

Rent / Revenue x 100

Months to Break Even

Setup costs / monthly profit (round up)

Master Airbnb Deal Analysis in 10 Minutes

The 3 Numbers That Make or Break a Deal

The Property Labs Rules of Thumb

The Field Guide

Property Details

Revenue Projection

Monthly Costs

Setup Costs

Worked Example: Manchester 2-Bed

7 Mistakes That Kill Deals

Practice: Analyse This Deal

Your Analysis