Reverse Arbitrage - San Diego Townhome - Medium Term Rental

[Joshua Foxton]

I have a townhome in San Diego close to a hospital (2 bed, 3 bath, ~1600 sq ft, could almost be 3-4 bedrooms with a smaller common space, and the office thats available too, and a 2 car garage) that has been a long-term rental for well over 6 years (with a full time property management company).

We considered AirBnB, but it does not comply with the HOA regs (No STR). However a medium-term rental (MTR) would work and is compliant.

I am long-distance, and do not want to spend the time/effort/money to furnish and run a medium term rental, but am open to the idea of helping a younger entrepreneurial type investor (probably would need to be local to the SD area) to run this.  This is the offer: Looking for a MTR Manager, willing to do reverse arbitrage (you rent from me at a higher than normal LTR rate, and then rent out to traveling professionals in compliance with HOA and MTR best practices.

Depending on the situation, this could bring in ~2-3000/month/bedroom, so anywhere from 4000-12000 month in income depending on your strategy and management style.

Please reach out if interested, serious inquiries only please: I will expect you to be able to provide a business plan/strategy, key assumptions/planning factors, as well as a projected offering for your monthly payment to rent the space. Also, I will want this done legally with a formal contract.

To those perusing and not interested in the offer, this is my first time exploring this idea, so very open to tips/warnings/spears/insights/random musings/etc as i work through this idea. My first questions to the group to start the think-tank-ing: 

Q1) what Investor delta and Arbitragee delta should i expect to have in this scenario? I'm defining my deltas as: 

a) (Investor Delta) = (Monthly Arbitrage Payment) - (Monthly Expenses)

b) (Arbitrage Delta) = (Property Income) - (Monthly Arbitrage Payment)

Q2) What should I NOT budget for anymore (or budget less for), as I am more of a note holder than the rental manager, and the new manager should budget for? I'm thinking:

a) DO NOT budget for: Property Manager / Utilities / Leasing Fees

b) Budget LESS for: Vacancy / Mx 

c) STILL Budget for: PITI / Cap Ex / HOA / PMI

Thanks for everyones time!

[Chad McMahan]

Quote from @Joshua Foxton:

I have a townhome in San Diego close to a hospital (2 bed, 3 bath, ~1600 sq ft, could almost be 3-4 bedrooms with a smaller common space, and the office thats available too, and a 2 car garage) that has been a long-term rental for well over 6 years (with a full time property management company).

We considered AirBnB, but it does not comply with the HOA regs (No STR). However a medium-term rental (MTR) would work and is compliant.

I am long-distance, and do not want to spend the time/effort/money to furnish and run a medium term rental, but am open to the idea of helping a younger entrepreneurial type investor (probably would need to be local to the SD area) to run this.  This is the offer: Looking for a MTR Manager, willing to do reverse arbitrage (you rent from me at a higher than normal LTR rate, and then rent out to traveling professionals in compliance with HOA and MTR best practices.

Depending on the situation, this could bring in ~2-3000/month/bedroom, so anywhere from 4000-12000 month in income depending on your strategy and management style.

Please reach out if interested, serious inquiries only please: I will expect you to be able to provide a business plan/strategy, key assumptions/planning factors, as well as a projected offering for your monthly payment to rent the space. Also, I will want this done legally with a formal contract.

To those perusing and not interested in the offer, this is my first time exploring this idea, so very open to tips/warnings/spears/insights/random musings/etc as i work through this idea. My first questions to the group to start the think-tank-ing: 

Q1) what Investor delta and Arbitragee delta should i expect to have in this scenario? I'm defining my deltas as: 

a) (Investor Delta) = (Monthly Arbitrage Payment) - (Monthly Expenses)

b) (Arbitrage Delta) = (Property Income) - (Monthly Arbitrage Payment)

Q2) What should I NOT budget for anymore (or budget less for), as I am more of a note holder than the rental manager, and the new manager should budget for? I'm thinking:

a) DO NOT budget for: Property Manager / Utilities / Leasing Fees

b) Budget LESS for: Vacancy / Mx 

c) STILL Budget for: PITI / Cap Ex / HOA / PMI

Thanks for everyones time!

Be careful, Joshua.
When doing rental arbitrage, as the landlord, you are handing the keys to the kingdom to someone else you don't know, and you still carry ALL of the liability WHEN something goes wrong.
I recommend you instead, hire a LTR PM (that specializes in 1-3 month rentals) and keep it all on your lap. The PM will do all the work, but you retain control and greatly minimize the risk by keeping this in your circle. Just make sure you hire a strong reputable PM that will properly vet tenants, has a great check-in/check-out protocol, and has an acceptable severance policy (WHEN you decide to part ways with the PM).