Short-term rentals: higher turnover does not mean higher free earnings
Short-term rentals can increase revenue, but free earnings, financing capacity and local rules decide. A sober pre-purchase check is essential.
The essentials
- The nightly rate is only gross revenue; free earnings depend on costs, reserves and labour.
- Banks assess affordability for investment property through sustainable cash flow; short-term rentals can therefore be harder to finance.
- Permits and use restrictions must be checked locally; there is no Switzerland-wide 90-day rule.
1. Revenue is not earnings
In short-term rentals, the nightly rate often looks attractive. But the decisive point is not turnover; it is what remains after platform fees, cleaning, furnishing, maintenance, vacancy and your own labour. If these items are not calculated separately, free earnings are quickly overstated.
That is why a proper annual budget belongs on the table before the purchase. It should not be based on wishful thinking, but on occupancy that reflects seasonal swings and gaps. Only then can you see whether the property stands on its own or whether the high turnover exists only on paper.
Illustrative monthly calculation
Gross revenue
CHF 2'700Platform fees
CHF 405Cleaning
CHF 240Furnishing and maintenance
CHF 150Vacancy and other costs
CHF 200Assumptions: CHF 150 per night, 18 occupied nights per month, 15% platform fee, 4 cleanings at CHF 60, CHF 150 reserve for furnishing/maintenance, CHF 200 for vacancy and other costs. Annual figures are based on 12 months.
Annual view on the same basis
Annual gross revenue
CHF 32'400Annual free earnings
CHF 20'460Same assumptions as the monthly calculation. Annual figures are monthly figures multiplied by 12.
2. Costs that are often forgotten
In practice, the small items are often underestimated, even though they change free earnings significantly. They include cleaning cycles, linen, replacement of crockery and furniture, minor repairs, insurance, guest coordination, communication in the evening or at weekends and the time needed for check-in and organisation.
If cleaning is outsourced or the property is furnished to a high standard, reserves should also be set aside. Short-term rentals often shift costs forward: more revenue does not automatically mean more free cash if running expenses move with it. That is exactly why a separate, conservative calculation matters more than a glance at the gross nightly rate.
3. What banks look at in financing
FINMA describes affordability for investment property as derived from the property’s cash flow; put simply, net income, ancillary costs, financing and repayment all matter together. FINMA also notes that banks do not all use the same threshold and that different criteria and many exceptions exist in practice.
For short-term rentals, this means a bank will usually want to see that the income is not only possible, but sustainable. If the business depends heavily on seasonality, platforms or your own presence, the assessment becomes more demanding than with a classic long-term rental. That is not a rejection of the model, but a sign that the evidence and assumptions need to be solid.
4. Rules are local, not uniform across Switzerland
The BWO states that short-term rentals can generate additional income locally, but can also worsen housing shortages, traffic and noise. It explicitly says that there is no one-size-fits-all solution. Cantons, cities and municipalities should choose their own mix of measures.
It is also important to note that there is no Switzerland-wide 90-day rule. The BWO cites different local rules, for example in Bern, Lucerne, Geneva and Vaud. Anyone planning short-term rentals must therefore check the specific municipal and cantonal situation before buying, rather than relying on a general Swiss rule.
5. The practical sequence before buying
First check the permitted use, then do the numbers, then arrange financing. The sequence matters, because a nice revenue projection is worthless if the use is restricted at the location or the bank does not regard the income as sustainable. A proper review starts with permitted use, continues with your own annual budget and ends with financing.
My advice is simple: never confuse the nightly rate with yield. Calculate with actual occupancy, real costs and a buffer for downtime and replacement investment. If you do that, you will quickly see whether short-term rental is a robust form of income or just an optimistic calculation with too many open assumptions.
Common questions
Where does the calculation most often fail in short-term rentals?
It fails by confusing gross turnover with free earnings. The nightly rate is not enough if fees, cleaning, replacement investment, vacancy and your own work are not included.
What should be checked first before buying?
The permitted use at the location, plausible affordability and a conservative annual budget. Without those three, the calculation remains incomplete.
Sources & further reading
General information. Examples and assumptions do not replace a review of your business or individual legal, tax and investment advice.
Prepared with AI assistance and editorially approved before publication.
