Did you know that you can make money with short-term real estate investing, even if you don’t own a property?
It’s called Airbnb arbitrage, and it can be quite a profitable endeavor.
Plus, it can help you grow your real estate investing knowledge.
In this article, we’ll break down everything you need to know about Airbnb arbitrage, including its advantages and disadvantages, how to get your first Airbnb to arbitrate deal, tools you’ll need to help your business, and more.
If you’re ready to learn about Airbnb arbitrage, let’s get started!
What is Airbnb Arbitrage?
Airbnb arbitrage is renting a property from a landlord and then re-renting, or sub-leasing, that same property to others at a rate that will allow you to cover your rental payment as well as earn you a profit on top.Airbnb arbitrage is renting a property from a landlord and then re-renting, or sub-leasing, that same property to others at a rate that will allow you to cover your rental payment as well as earn you a profit on top.
This is doable by renting the place out nightly as a short-term rental rather than monthly to a single tenant.
Airbnb Arbitrage Example
Let’s take a look at an Airbnb arbitrage example to help explain the concept.
Let’s say you rent an apartment for $1,000 per month.
If you sublet that same apartment on Airbnb for the month at $100 per day, you could pay off your rent in less than 2 weeks.
After that, whatever you make is a profit on the property you don’t even own.
Benefits of Airbnb Arbitrage
There are several benefits to Airbnb arbitrage. These benefits include:
Disadvantages Airbnb Arbitrage
It’s important to keep in mind there are several drawbacks to Airbnb arbitrage. These drawbacks include:
Is Airbnb Rental Arbitrage Legal?
Yes and no.
Airbnb rental arbitrage is legal, but it’s dependent on the current short-term rental regulations where you live.
For example, don’t expect to do Airbnb arbitrage in cities like:
These locations have strict short-term rental policies that make it difficult and nearly impossible to earn a profit with Airbnb arbitrage.
Laws and permissions (such as a hospitality license) vary by state as well as local governments, so it is very important to seek out this information and understand what is allowed in your desired area before committing to running Airbnb arbitrage.
Airbnb Arbitrage: How To Get Started in 3 Steps
Step 1: Ensure it’s Legal and Profitable in Your Area
The first step with Airbnb arbitrage is to ensure that it can be done legally and profitably in your area. In addition, determine if there are licenses you need, such as a hospitality license.
Step 2: Find a Property
Next, you will need to decide on a specific property to operate it from.
You can:
Step 3: Lay Out Your Intentions with the Property Owner
Ensure that you tell the property owner your Airbnb arbitrage strategy.
Next, we’ll look at how you can convince your landlord to accept Airbnb arbitrage.
How do I convince my landlord to accept Airbnb Arbitrage?
Some landlords will be hesitant to agree to Airbnb arbitrage due to some common concerns.
Property owners prefer to know who will be living in their space and like to have a say in who goes in and out. After all, a consistent and trustworthy tenant goes a long way to eliminate stress on their end.
A way to combat this concern is to make it clear that you will take responsibility for any damages and complaints that come from others you sublease to.
As long as your goals align with the landlord’s in the way that each of you want to keep the space nice and preserve the longevity of the asset, you have a good chance of getting the landlord to agree. landlord to agree.
Tools You’ll Need to Automate and Scale your Airbnb Arbitrage Business
There are several tools you’ll need in your Airbnb arbitrage journey to both automate and scale your business.
Here are a few.
Screen Tenants
Apps such as Autohost automatically screen tenants and can help you avoid tenants that may become a problem.
Handling Noise Complains
What if you’re not around to monitor the noise level?
NoiseAware offers noise sensors that will make calls if the noise reaches beyond a specific level.
Automated Responses
Customer service is paramount for achieving a solid rating as an Airbnb arbitrage host and therefore landing more bookings.
To help with nailing this aspect of things, creating automated email responses for major, repeating pieces of the rental process is key.
For example, upon booking an automated email can be sent welcoming the guests and delivering any vital information they may need during their stay.
Smart Locks
Another must-have for an Airbnb arbitrage property: smart locks.
These create an added level of security as well as convenience for both you and your guests.
The passcode can be set to automatically change upon check out and the fresh code can be sent to the cleaning crew to ensure they also are not delayed.
The Bottom Line: Airbnb Arbitrage
Airbnb arbitrage is a great way to begin investing in real estate without the massive amount of cash normally required.
After some furnishings and added technology, you can be well on your way to earning profit each month.
The travel market is expected to continue to grow in the future and the demand for short-term rentals remains hot.
Plus, more and more people prefer Airbnb to a hotel room these days because of the unique experience and flexibility it offers.
Capitalizing on this trend has the potential to generate cash flow for you now and into the future.
