How to Generate $10,000 in Passive Income Monthly Without Quitting Your Day Job

by | BiggerPockets.com

Recently, I was at a real estate summit in Philadelphia, when a guy in a Hawaiian shirt slipped into a nearby row. He had a beer in his hand, though it was only about 10:00 a.m. (if I recall). He looked a bit out of place, honestly, and I couldn’t help but notice that he seemed to be… well, let’s say more relaxed than everyone else.

I struck up a conversation and learned that he travels the world full-time—on his real estate profits. And he said his goal was to work as few hours as possible. He seemed like he was having fun! I just had to probe.

I never would have guessed he was a former banker.

This guy—we’ll call him Martin—had shucked his suit and tie for a suitcase and a straw hat. He had learned the secret of Airbnb arbitrage.

This is Martin:

Martin explained that he is able to locate vacant apartments or other rentable units, furnish them, and make massive profits leasing them out to long-term corporate tenants, with Airbnb filling the gaps. This guy has 19 rentals and works a few hours per week while the cash rolls in. (He did a great job at outsourcing virtually everything.)

I was looking for income for one of my kids and asked how I could learn more. He told me how he had been trained by Al, a guy who was actually speaking at that conference, and he introduced me to him that morning.

Martin said, “When Al first told me years ago that I could make three times the profit on furnished rentals, I thought he was a little out there. When I did it myself over and over, I became a true believer! Probably would have made another $100K and retired a year or two earlier if I would have listened to Al a few years back!”

I attended Al’s talk, and I think it was the most popular session at the conference. As he told how he had stumbled into this opportunity, the room was buzzing. I heard someone lean over to their friend and say, “This is a game changer! It could change my whole real estate investing strategy.”

Al is not only training others to do this. He’s living proof that it works. An engineer by trade, he now refers to himself a landlord scientist, and he’s testing out different variables to see how to make this most profitable.

Al is living the dream himself, with a stable of cash-producing corporate and Airbnb and long-term corporate rentals—with a twist. He has figured out how to maximize the profits in this niche without owning any real estate. He’s learned the secret of Airbnb and corporate rental arbitrage.

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Why This Works

Did you know that 36% of travel nights are by travelers on the road for one to six months? And did you know that Airbnb, only a decade old, hosts more nightly stays and is in more countries than the world’s largest hotel chain—Marriott—which has been around since the 1950s? Check this out:

And that doesn’t even count others like VRBO, Flipkey, HomeAway, or a half-a-dozen others.

This is your chance to get in on this business travel economy!

So, Who Will This Work for?

It’s really quite simple—yet powerful. And it works great if you don’t own any real estate—and equally well if you do. A guy on my team is going through this training program right now, and we are setting up two of our units as furnished rentals this week. If it works well, we plan to do many more.

I know others who are profiting from this strategy with rented units and rented furniture. And very little out of pocket.

This is truly a strategy that I think anyone could use to increase their income and accelerate their ability to bag their J.O.B. and jump into real estate investing full-time.

Even if you don’t want to do this particular strategy forever, I think it could be a bridge for you to get from where you are now to the place where you have income and options. See if you agree.

The High-Level Strategy

The strategy is to lease (or own) a vacant rentable unit in the right location. Then furnish it beautifully, with all the nice touches. Professionally photograph it, turn on all of the utilities, then list it on Airbnb and several similar sites.

Once you’ve got some nights booked, go to the next level. Go out and start marketing to corporate clients who need long-term (say, one to 12 months) corporate stays.

As soon as possible, plug one of the long-term tenants into your unit and halt the short-term stays. If you can find more tenants through that company or individual, you may be able to expand your business into multiple units.

Related: How to Upgrade Your Landlording to Make Your Investment More Passive

Profitability (You Will Love This)

Often a typical unfurnished rental unit cash flows at $100 to $300 per month to the owner. (I realize there are wide variations to this, so don’t shout me down.)

Many units on straight Airbnb may cash flow a net $700 to $1,000 (or even more) per month. But there’s a lot of effort involved with Airbnb. You’ve got to answer prospective tenants’ requests, help them check in, check for damage, help them find the closest grocery that carries semi-boneless ham, get a timely cleaner in, and much more.

That’s why I think a lot of people (especially those with busy lives, jobs, or a desire to travel the world and drink beer at 10:00 a.m.) may like this corporate landlord arbitrage strategy better.

From what Al tells me (and what we’ve learned in his training), the long-term corporate travel clients will typically provide cash flow of just a little lower than an Airbnb strategy. For the sake of argument, let’s say $600 to $800 per month.

But this strategy takes a fraction of the effort. At least once a tenant is secured (which takes more effort than Airbnb, but has no commission attached). And it may therefore be more sustainable and easier to grow. Hang with me, and I’ll tell you how one guy’s business skyrocketed as a result of one sales call.

Here’s some math. This is an example straight from Al.

Guest pays:                         $1,860

Rent due to owner:           – $950

Utilities:                              – $130

Monthly Profit:             $780

how-to-value-multifamily-property

What Are the Detailed Steps?

It’s quite simple. (So simple, it just might work!)

First, locate a vacant rental unit. This could be in an apartment complex, or it could be in a duplex or a single-family rental. Ideally, this unit would be in an area where there are business travelers. Look for locations where there are long-term stay hotels like Extended Stay America, Homewood Suites, and Residence Inn by Marriott.

Negotiate your best possible deal on the rental unit. See if you can get a month-to-month lease, and see if they’ll let you delay your first payment ‘til you have a tenant. (Yes, you’ll have to tell them what you’re up to, but that should be fine.)

I have a theory that this may work very well in a new apartment complex that is still far from being leased up. But you’d have to get the owner to give you a discount if it’s a Class A+ building.

Next, furnish the unit as beautifully (but economically) as possible. Think of Joanna Gaines or other home stagers. That’s your goal. (Hey, if Chip and Joanna can renovate a whole house for $40,000, you can furnish it for cheap.) I would expect you to spend about $3,000 furnishing a unit if you buy smart. Or you may even want to rent furniture to lower your risk even more.

Then get professional photos. Don’t skimp on this step. No, you cannot do first-class photos from your phone, not even in portrait mode on the iPhone X. Professional photos will help you stand above the crowd.

Similarly, spend a lot of time reviewing the best Airbnb descriptions, and if needed, consider getting a copywriter to help write yours. Great writers can be worth their weight in gold.

Turn on the utilities. Get great wifi, cable, and more. Get your listing on Airbnb and start renting it out short-term.

Last step (or you could do it first actually): Once you’re up and running, start tracking down corporate tenants. You can do this on Facebook groups, Craigslist, at local companies, hospitals, or even by hanging around other extended stay hotels.

Engineers, nurses, therapists, visiting professors, and construction people may be great tenants. And once you locate one, you may be able to follow the bread crumbs back to their company.

My new friend, Al, has dozens of strategies to market your unit to longer-term tenants, and it’s beyond the scope of this article. (Al has developed a whole lot of strategies, policies, and shortcuts for this business. He even provides labels for the silverware drawers in your units. That’s why we’re working with him rather than going it alone.)

Once you have your units rented by long-term tenants, you will probably only need to plug Airbnb tenants in the gaps between one tenant and the next to maintain your revenue.

More Real-Life Examples

Since meeting Martin, I’ve heard about others who are killing it with this strategy.

Like an Oklahoma pastor who was tired of his family being limited to his less-than-amazing salary. He started following these steps and ended up as a preferred housing provider for the Oklahoma City Dodgers Minor League Baseball team.

Related: 5 Ways to Earn Rave Reviews on Airbnb (& Maximize Your Income!)

Or the guy in the sticks who loved this strategy but was sure he’d have to move to a bigger city to make this work. He finally got the courage to go to the local airport to offer his furnished unit as housing for people coming there for training.

He was surprised when the airport manager followed him back to his unit, signed a six-month agreement—then asked for 60 more units.

That was a pretty good day for this guy, but of course he now had a new problem. I’d take that new problem. Do the math.

I don’t know that this will happen to any of you, but how could you boost your income by doing this with five or 10 units? How would that impact your life and future, even if you don’t want to do this forever?

You may even find yourself in a position to acquire more units—small apartments, duplexes, or single family rentals. Or you may be a large apartment owner (like my company) who uses this strategy to fill a handful of vacant units. There are many wonderful possibilities.

One guy in California has 11 units (combo of leased and owned) that he’s leasing out under an arrangement like this. His current positive cash flow is $7,160 per month.

So far, he’s been reinvesting his cash to buy more furnishings and rent more units. But he told me that when he hits $10,000 per month, he’s going to stop there and enjoy the fruits of his labor. He hopes to get there by the end of this year.

And for those of you who know my story, you may recall that my business partner and I built a whole complex to provide furnished corporate housing to oil workers in the Bakken region of North Dakota. We decked out the rooms, gave them great cable and internet, and charged them $3,995 per month. (This was based on a hotel daily rate of $129, a steal in those oil rush days.)

We made bank, I can promise. We took an inordinate amount of risk to pull this off, and I honestly wouldn’t do it again. But it is a strategy to consider if you are in an area with higher demand than supply and you don’t mind some risk.

The great news is you don’t have to take much risk at all to pull this off. This is very doable. And you don’t have to travel the world or drink beer for breakfast (necessarily) to pull it off. You can do it in your pajamas from the comfort of your own home.

Which sounds like a great business to me.

What about you? Would you rather go for the easiest path of unfurnished rentals? The highest effort/profit path of Airbnb? Or the Goldilocks scenario with long-term corporate with Airbnb in your gaps?

We’d love to hear your thoughts. 

About Author

Paul Moore

After graduating with an engineering degree and then an MBA from Ohio State, Paul started on the management development track at Ford Motor Company in Detroit. After five years, he departed to start a staffing company with a partner. They sold it to a publicly traded firm for $2.9 million five years later. Along the way, Paul was Finalist for Ernst & Young's Michigan Entrepreneur of the Year two years straight. Paul later entered the real estate sector, where he completed 85 real estate investments and exits, appeared on an HGTV Special, rehabbed and managed dozens of rental properties, developed a waterfront subdivision, and started two successful online real estate marketing firms. Three successful developments, including assisting with development of a Hyatt hotel and a multifamily housing project, led him into the multifamily investment arena. Paul co-hosts a wealth-building podcast called How to Lose Money and is a frequent contributor to BiggerPockets, producing live video and blog content on a weekly basis. Paul is the author of The Perfect Investment—Create Enduring Wealth from the Historic Shift to Multifamily Housing (2016) and is the Managing Director of two commercial real estate funds at Wellings Capital.

311 Comments

  1. Paul,
    Great post! This was like a four hour seminar condensed to a 5-minute mini-seminar loaded with powerful, yet usable step-by-step pointings and no fluff. You hit a home run Airbnb style.
    Continued success!

    • Paul Moore

      James, it is true that this is not completely passive, at least in the beginning. Such is the case with most “passive income” opportunities. However, I believe once processes and systems are established this can be mostly passive. There will always be some fires to put out, but anyone who is careful enough can avoid most time consuming issues.

  2. Lauren Pardue

    Hi Paul,
    This strategy also works great for students looking for a semester or 9 month long stay. With an upside being that students often have lower standards concerning furnishings. You can even rent it out short-term during the summer break. You might even get students who come back to you for four years because they like the flexibility of month-to-month options so they can go home during the summer without being stuck in a 12-month lease.

  3. Larry Delarosa

    Excellent article! This may be my way of breaking into the AirBnB market. I am going to investigate this and see if I can get landlords to buy in. My main concern is getting them to
    a) accept a month-to-month and
    b) accept rental used as an AirBnB

    Thanks for sharing!

  4. Rashed Singaby

    Inspiring article, Paul! Thanks for sharing what seems to be an unreal strategy to investing successfully. Many questions come to mind – would love to learn more about Al’s training and other resources that could give further in-depth knowledge.

    Best Regards, -R

  5. Sachin P.

    Hi Paul,

    Nice timely article! I recently started moving some of my rentals in this space. And corporate clients is what I was thinking as well moving forward as a source of constant guaranteed income. So, I am interested in learning the strategies that you learnt to attract corporate clients. Thanks in advance!

  6. Clancy C

    Please send me the info about Al’s training too! I have a single unit in Los Angeles that I’m already doing this through AirBnB, but I know I could do better. I signed up with a long term exec placement management company over a year ago and have had not had a single call, despite them telling me that my property was ideal. I often get 3 month AirBnB tenants, but would like to find longer term tenants and some outside of the platform.

  7. Christiaan Watson

    Thanks for your article. I have done this a handful of times but found it difficult to get property owners to lease to me knowing I would be subleasing the property.

    I would love to learn more from you and Al if you could email me the information. Thanks!

  8. Matthew Miller

    Hello Paul,
    Thanks for the very informative read. I really enjoyed the article and all the useful information it provided. For me I guess the million dollar question is how to find these corporate tenants, I would love any information you would be willing to send my way. I too would love to one day have beer for breakfast.
    Cheers,
    Matthew

  9. Chris Strokes

    Hi Paul,
    I would love to get more details on how to find corporate tenants. I have been feeling this out in my area checking Craigslist to see if others are doing it and I’m not having much luck. I’m scared to go through the expense of furnishing and risk not finding a corporate tenant. Maybe you have a strategy to lock in the tenant first?

  10. Juliano Pereira

    Paul, this is an amazing strategy and would LOVE TO LEARN MORE! How can I go about learning Al’s strategy? Also, any in-depth insight on how to acquire these apartments would be very beneficial. This strategy seems very doable for me, but would love to know the ins-and-outs of Al’s strategy.
    Thank you….

  11. Alex VanOeveren

    Paul,

    Great article! Been looking for a way in to the real estate market and this sounds like a great entry point! Would you be willing to send me more info on Al’s training that you are using? I look forward to your response and Thank you again for the post!

  12. Tom Ehlers

    Hi Paul – great article that has me thinking about how to better utilize some of our rentals. Could you send me the info on Al’s training and how to gain corporate clients that you’ve sent to the other respondents? Thanks much, Tom

  13. Sam Cherry

    Paul,

    If you could send me the info on training that would be great. I will also be sending you a Linkedin request. I have supported Bible League in the past and your work with them is appreciated. I would like to take this opportunity to put a little twist on this idea.

    I did this during the US Open in 2005. I had just bought a townehome right next door to another I had purchased previously. I had just returned from Iraq and had built up two months of leave. I took it all to renovate both units top to bottom. I finished them both a few weeks prior to the open. Needless to say, they weren’t in the most exclusive neighborhood but they were nice , efficient, and close to the Open. Furnished homes at the US Open can go for $10k to $100K for the open. I had posted the availability on Craigslist and in the local paper (Craigslist was for a city 20 miles away) .

    I was getting occasional calls while the rehab was in progress but no one would commit because my timeline for rehab was too close to the US Open date and they didn’t want to take a risk. I finished the rehab 13 days prior to the Open. I furnished them with borrowed furniture from a relative and my house. My wife asked me to purchase a few items for our house that I got her permission to use for the open.

    Needless to say I rented both 5 days prior to the open and charged the equivalent of 4 month rent for each. All it cost me was 1 month of cable for each unit because I already had the utilites on from the rehab.

    So it worked out like this, I covered 25% of the cost of the rehab for renting both units for 5 days. The company that rented them thought it was a “steal” compared to the hotel rates that being charged in the area.

    Now for the twist that I plan to do during the next open. I am going to offer my tenants one month free rent during the open if they will vacate and allow me to use their townehouse to rent for the open. The utilities will already be in place and will offer a storage unit to secure their valuables and excess furniture/items during the Open. The proposition will be for the tenant that sees the value in this and will be backed up by writing. The offer will be for them to take vacation or stay with a friend in the area during the open. So bottom line is they will get one months free rent for vacating for 5 days during the open.

    I was going to try it for the US Open in 2014 but a work conflict that week precluded it. I had a hypothetical conversation with one of my tenants to see what they thought. They were open to it. Like I said it will be well documented to ensure all parties are informed, but in “theory” it sounds like it can work with the right tenant.

    Needless to say, I will price this 5 day stay at somewhere between 6-9 months of rent this time and I now own 3 units that this can be utilized for.

    Just another way to “think outside the box.”

    Sam Cherry

  14. hunter Stratford

    Hey Paul. Great and unique share, thanks! I have 32 units and this may work for some of them, I have a few accidental corporate clients and they are great. I’m very interested in ideas on how to approach landlords to allow you to sublease. And also any information on Al’s training would be very appreciated. Thanks

  15. Mark Lininger

    Paul,

    I just got around to reading your article and there are some great ideas there! Thank you for sharing. I’m just getting started in RE and I would love more info from you if you have it and info in Al’s training. Thanks in advance!!!

  16. Matt D.

    You can do a smaller scale version of this if your part of the country has residential RV parks. You can buy fairly decent RVs and campers from people off facebook or craigslist for under $10k. Clean them up, make any repairs, and then find a RV park that’s near the big factories, chemical plants, hospitals or wherever corporate living people may be. You can park your RV in the park for a few hundred bucks a month and then turn around and rent it to someone for less than they’d pay for a hotel. It’s actually a lot easier than trying to find houses to rent out especially for people who don’t already own a ton of properties like the guy in the article. in fact, you can probably buy a whole fleet of RVs for the price you’d pay for one house to rent. You could also just try to find a parcel of land to covert into your own RV park, but that comes with a whole lot more things to do. Using a RV park that already exists might cost you more in a year than the price of the land itself, but they already have everything established including bath facilities, laundry rooms, site manager, landscaping, utilities, etc. You might not make $10k/month.. probably closer to $3-4K if you have about 10 units, but it’s a good smaller-scale model to run for those of us still working our way up.

  17. Mitchell Sawin

    Hi Paul! I am curious, what is the average time it takes from signing a rental agreement to getting it on the market to rent? Also how long (on average) does it take to get your first corporate or VRBO customer? What do you suggest for carting coast?

    I would love to get Al’s training material so I can start this process right away!

    Thank you for your time on writing this awesome article

  18. Gary Clark

    I absolutely LOVE this article! I feel like it’s a great way for me to get into real estate investing with minimal risk but potentially high profits. I’m curious though, in telling the landlord what you are doing, why wouldn’t the landlord just turn around and use the property for the same purpose instead of allowing you to do it? What’s your pitch to the landlord?

  19. Mark Muniz

    Hi Paul,

    I was very intrigued by your article. I have been trying to think of ways to generate income by using the structure of VRBO, AirBnB and the other rental programs for a few months. I would love to get details on Al’s courses and any further tips and tricks you have come across in your journey.

    Thanks!

  20. Chris Nelson

    Thanks for the information, Paul, especially since this is a real estate activity that has a low barrier of entry, which a number of new investors struggle with.

    Could you please send me the details and Al’s training, etc., thanks!

  21. Bob Sankey

    I like the concept. Doing something similar myself.

    The only issue I see is you suggest one should secure a month to month lease and then turn around and get involved in a longer term sub-lease. How can you fulfill your promise to the person you are renting to if you lose possession of the property before the sub lease is over? That could hurt.

    But then I’m not a lawyer, so maybe there’s a way….?

  22. Celine Liu

    Hey Paul,

    This is such an amazing strategy! I am so inspired! Could you e-mail me some details on Al’s strategy and his training course as well? I am about to start my first rental property and would like to learn how to maximize the rental capacity.

    Appreciated!

    Celine

  23. Ryan McIntyre

    Hi Paul,

    Thanks for taking the time to share this great strategy. I’m very interested and would love to get more specifics like how to find the right rentals, negotiating strategies for the owner, and how to present yourself/this strategy to corporate entities. Please PM me some strategies that have worked for you or help me connect with someone, probably Al, who might be able to help me start implementing this strategy. Thanks for all your help and good luck with your investing!

  24. Kristin Perl

    Hi Paul, great article!

    Would you mind forwarding the same information on finding corporate tenants to me, as well?
    (Looks like a LOT of others have already requested it.)

    I really appreciate your articles. Great insight & experience packed into each one. THANK YOU!! -Kristin Perl

  25. Brandon Mix

    Thanks for the great article Paul. I can only imagine seeing your reaction as Martin comes strolling in drinking a beer at 10am. I would have done the same thing. You seized the opportunity to chat with him and you ended up learning a fantastic strategy that could net you thousands.

    I would love to get more information about Al’s course when you have the chance. Thanks again for the great content.

  26. Ajay Kumar

    Hi Paul,

    I own a few single family rentals but coming up with the 20-25% down payment is starting to become a bottleneck in rapidly appreciating markets. Your article should help break through the barriers of heavy capital requirements – thanks!

    Is there a way to post the additional information everyone’s asking for so we don’t all keep bugging you for the same thing?

    Cheers,
    Ajay

  27. Josh Collins

    @Paul Moore – I had a railroad construction company and may have stayed in your two bedroom containers, er, apartments in ND during the oil boom. It was an amazing experience to see all of these boomtowns. I’ve never seen so many businesses run out of polesheds before.

    I have to say I’m surprised the more conservative folks (no, not the political affiliation) aren’t all over this article blasting it. I personally love it for it’s creativity but I’m surprised nonetheless.

    Regarding the more rural types of rentals, are there certain types of crowds that I should market toward? Is it a certain type of person or a certain type of industry? I see these types of housing to be more affordable to own which makes it a bit more interesting from my perspective.

    Thanks for a fun and “outside the box” article.

  28. Edgar Mendez Chacon

    A lot of the article sounds great in theory but there are still many hurdles to get over if you don’t own the property and are just renting it. Many leases don’t allow sublets or short term rentals so you’d have to negotiate that portion to be allowed. Also, many municipalities have restrictions on Airbnb rentals, such as in New Orleans, where you would need to get a license from the city for it and usually it’s for the property owner only.

  29. Heather Runge

    SUCH good stuff here!!! I want to do this in my market, but I’d like to know what market conditions should be present to lower your risk of vacancy?

    Paul can you tell me how to access Al’s bank of advice?

    Thanks very much for this informative take on subleasing – game changer is right!! -Heather

  30. Paul Moore

    As a note to everyone, I or someone on my team is responding via email to everyone who comments. It is easier than responding to all the individual comments. Please send me a message via BP inbox or leave a comment and someone will help you! Sending a BP message to me directly may be the fastest way to get an answer. Thanks!

  31. Kris Tully

    Paul–Like most others above I was wowed by this awesomely-creative business model, and the low risk, low capital aspect of it!! For using this model on a leased property, I too would expect resistance from landlords for sub-leasing….at least with frequency like Airbnb.

    Thanks for taking the time to share this info with us all! I would love receiving the info from Al about: 1) his training, 2) his approach to finding corporate clients, and 3) his suggestions on convincing a landlord to allow sub-leasing and MTM (presumably this would only work in a high-vacancy market/scenario or distress situation).

  32. Micah Miller

    What an inspiring article! Thanks Paul! My wife and I are starting to move into this type of business model next month. Would you mind sending the information on Al’s course?

    Really enjoying your posts! Always informative and inspirational!

  33. Deb Dossinger

    Hi Paul…I would like more information on this strategy, please email to me. My main question is how to find apartment complexes willing to let me sublease the unit or do airbnb, I believe many have restrictions. So what are the tricks to get this strategy to work? Thank you!

  34. Tony Guard

    Hi Paul. I am totally new to BP (just a couple days) but I have previously met a guy who was doing this method with a hospital in TN who had long term patient needs (we were one of them). It was cheaper than a hotel but still ended up being 3000/mth!. We were able to create a home away from home and we were grateful for that and for him. I would be very interested in getting Al’s information.
    Thanks!

    Tony Guard

  35. NA Excell

    Hi Mr. Moore,
    I enjoyed your article. I, too, like Tina above haven’t found any apartment rental that would allow subleasing. How does Al do it? Would love to know how to do this. How do I get more information about pursuing this? Is there any training available? I appreciate your taking the time to let me know.

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