Airbnb Arbitrage as an experiment?

Question

Morning everyone,

So I have been slowly starting to get my plan together for my real estate ventures, but I was talking to a family member the other day and they mentioned the concept of sub-letting a rented space for Airbnb. I inititally wasn't interested, but after thinking about it, it sounds like a great way to experiment with managing a property without investing a lot of initial capital to find if I like it, and then transition to buy-and-hold. Additionally, if I played my cards right, I would be able to gain enough capital to buy my first property. Has anybody pursued this as a lead in into buy and hold? or is this a too simplistic way of looking at it?

Paul Barbeau · Answer

I have a friend that does this here in Nashville, TN and he has very good cash flow from it. He rents it for $2,000 a month and Airbnb's it for around $400/night.  He says after all expenses he usually cash flows $2,000 a month. But don't forget your up front cost of furnishing the place. I know several short term rental hosts here and some of them love being a host, some of them hate it.

Paul Barbeau · Answer

Yes, the apartment complex actually promotes it. It’s one of the only places in Nashville that allows it. They take a percentage of your gross income though. I guess if it were any other case you should probably tell them to protect yourself and them from liability.

Marcellus P McKinley · Answer

@Paul Barbeau

That’s perfect man. Thanks for that! I may start sketching up some ways to do this myself in the VA Beach area!

Branford Shaw · Answer

I've been wondering about doing this in Nashville, seems like a great way to get started! It's good to know that someone is having success with it.

Paul Barbeau · Answer

@Marcellus P McKinley

So my friend did it by accident. He was going to move into the property but found another place he liked better and decided to do Airbnb for the property. It would be a good low risk way to experiment though. People tend to not like it if they self manage and get bad reviews, have to deal with maintenance issues in the middle of the night, stuff like that. Also if they buy a house in a not so great area and they don’t get as many bookings as they hoped at the price they hoped for.

Tracy D. Garrett-Numa · Answer

@Marcellus P McKinley, I have not done this but I saw training on line for it.  It seems to be very profitable depending on the location.  I have considered it but right now I have a couple flips keeping me busy.  Search in line for the training.

Caleb Heimsoth · Answer

@Paul Barbeau. Did your friend tell the landlord of this plans ?

Marcellus P McKinley · Answer

@Steve Frye I’m def interested! Thanks a lot.

Steve Frye · Answer

@Marcellus P McKinley It's definitely doable and I've got clients that ask me to find these type of properties all the time.  There are some really unique setups that you could make an owner-occupied setup work for you.  Let me know if you want to see some of the properties I've done this with this year.

Airbnb Arbitrage as an experiment?

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