Starting my Airbnb Arbitrage Business

Starting my Airbnb Arbitrage Business

Irvine, CA · Member since 2023 · 17 posts · 9 votes

Hi, my name is Erica Lee and I am a 22 year who is eager to start her own corporate leasing arbitrage business! I recently graduated from California State University, Fullerton with a Bachelors degree in Business Administration, Marketing. However, I have always been interested in the real estate industry and even helped out a local real estate agent handing out door to door flyers when I was little. 

I have worked many different jobs and internships. This not only gave me real world experience, but it opened my eyes to a different perspective. I realized time is more valuable than money and I now have a goal of financial freedom and time freedom to be able to control my own hours, wages, and location. My goal is to be able to do something I enjoy while being able to have the life flexibility I want. 

For the past few months, I have been educating myself about short term rentals, airbnb arbitrage, and corporate leasing businesses. With hours of podcasts, youtube videos, and reading, I believe I have a solid foundation of knowledge in this industry. However, I admit I still carry a lot of fear and hesitation when it comes to taking action. 

With this, I would love to get involved in a community with like-minded individuals and potentially find a mentor who has been in my situation, learned through mistakes, and is willing to help me accomplish similar goals as they have! 

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  • Nicholas L.Pro Member
    Flipper/Rehabber · Pittsburgh · Member since 2018 · 6k+ posts · 5k+ votes
    3y

    Can you house hack instead?

  • Member since 2021 · 376 posts · 242 votes
    3y

    @Erica Lee

    Welcome to BiggerPockets. It's amazing that you are interested and willing to start at a young age. You are completely right, that time is more valuable than money and by starting at 22; you are giving yourself so much time to achieve your goals. This is a great place to have all your questions answered. I do think it's awesome that you have a strategy in mind and want to pursue; I would be very cautious if you want to try airBNB arbitrage as your business plan now. Due to a drop in travel demand and a saturation of many markets; airBNB arbitrage has become extremely competitive and many people who are entering this market are now losing money; both from being unable to recoup their upfront expenses such as furnishing the unit as well as losing out monthly since their airBNB revenue is not consistently higher than the lease. If you want to try out this business, than I would recommend having a way to differentiate yourself from your competitors so that you are drawing more bookings towards you. If your goal is too enter into real estate, there are better alternatives than arbitrage. House-hacking is a great strategy at the moment for those entering the market. It allows for a lower priced entry point since a house hack would qualify you for primary residence financing which often comes with better rates and lower down payment requirements. You could purchase multi-unit such as a duplex, live in one and attempt to turn the other side into an airBNB. You will still run into the current problems of market saturation; but you would be able to hedge your bets since you would still be gaining equity on the property even if you are not able to fully cover your mortgage payment each month. 

  • Sarah KensingerPro Member
    Real Estate Consultant · OH · Member since 2023 · 2k+ posts · 1k+ votes
    3y

    Did you come across Michael and Elizabeth Chang in all your research? They offer a course that might be beneficial for you.

  • Irvine, CA · Member since 2023 · 17 posts · 9 votes
    3y
    Quote from @Nicholas L.:

    Can you house hack instead?


     I will look into it! Why do you recommend House hacking over arbitrage?

  • Irvine, CA · Member since 2023 · 17 posts · 9 votes
    3y
    Quote from @Sarah Kensinger:

    Did you come across Michael and Elizabeth Chang in all your research? They offer a course that might be beneficial for you.


    Thank you!

  • Irvine, CA · Member since 2023 · 17 posts · 9 votes
    3y
    Quote from @Konstantin Ginzburg:

    @Erica Lee

    Welcome to BiggerPockets. It's amazing that you are interested and willing to start at a young age. You are completely right, that time is more valuable than money and by starting at 22; you are giving yourself so much time to achieve your goals. This is a great place to have all your questions answered. I do think it's awesome that you have a strategy in mind and want to pursue; I would be very cautious if you want to try airBNB arbitrage as your business plan now. Due to a drop in travel demand and a saturation of many markets; airBNB arbitrage has become extremely competitive and many people who are entering this market are now losing money; both from being unable to recoup their upfront expenses such as furnishing the unit as well as losing out monthly since their airBNB revenue is not consistently higher than the lease. If you want to try out this business, than I would recommend having a way to differentiate yourself from your competitors so that you are drawing more bookings towards you. If your goal is too enter into real estate, there are better alternatives than arbitrage. House-hacking is a great strategy at the moment for those entering the market. It allows for a lower priced entry point since a house hack would qualify you for primary residence financing which often comes with better rates and lower down payment requirements. You could purchase multi-unit such as a duplex, live in one and attempt to turn the other side into an airBNB. You will still run into the current problems of market saturation; but you would be able to hedge your bets since you would still be gaining equity on the property even if you are not able to fully cover your mortgage payment each month. 


     I appreciate your insight and kind words! I will educate myself on house hacking as well. 

  • Nicholas L.Pro Member
    Flipper/Rehabber · Pittsburgh · Member since 2018 · 6k+ posts · 5k+ votes
    3y

    @Erica Lee

    arbitrage is a business and you don't own the RE.

    house hacking - you own it.

  • Irvine, CA · Member since 2023 · 17 posts · 9 votes
    3y
    Quote from @Nicholas L.:

    @Erica Lee

    arbitrage is a business and you don't own the RE.

    house hacking - you own it.


     What is the different between house hacking and buying a property and putting it up for rent?

  • Nicholas L.Pro Member
    Flipper/Rehabber · Pittsburgh · Member since 2018 · 6k+ posts · 5k+ votes
    3y

    @Erica Lee

    there is overlap - for example, one version of house hacking is buying a duplex, living in one side, and renting out the other.  it's house hacking because you are BOTH occupying it AND renting it out.

    i have single family and small multifamily rentals that I do not live in and have never lived in - i bought them just to rent out.

    make sense?

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