Arbitrage one of your properties -- good or bad?

Question

We have a newly renovated rental property and someone has approached us with the option for them to AirBnB arbitrage it.  What are the pitfalls of doing this?  I have heard of it, but have not researched it extensively.  They have said they would do a year lease and pay the rent quarterly.  Looking for some advice from the group please.

Mark DiPietro · Answer

Thanks so much @Bill Brandt and @Jonathan Greene.  I see your points and now it makes sense.  There does not seem to be a big (if any) upside and tons of downside.  I think we will pass.  Again, I appreciate your experience and council.

Bill B. · Answer

So you get all the downside and none of the upside? If STR suddenly becomes illegal do you think your “tenant” will make one more payment? I think we all know the answer to that.  Well at least you can skip all the tenant screening since you’ll have no idea who’s in your property or what they’re doing. Make sure you pay extra for more insurance and tell them there will be STR tenants otherwise you might not be covered. Hopefully they won’t just piss off all your neighbors and make you the bane of the neighborhood.

I have zero idea why anyone would do this. MAYBE, if you charged them 30-50% over market rent and your plan was to boot them after a year and use it yourself with Airbnb using their rental history but even then I don’t think so.

Matthew Crivelli · Answer

Why wouldn't you just ditch this guy and Air B & B it yourself? Set up a cleaning lady, list the property, come up with some common sense rules and you're good to go. Why let someone else profit on the short term rental craze?

Jonathan Greene · Answer

What @Matthew Crivelli said. If you don't want to do the work, hire a PM Airbnb company to do it, but why would anyone on Earth allow arbitrage? They make all the money and you get all the problems. Anytime someone asks about allowing arbitrage all of our answers are the same. Why would anyone ever do this>?

Mark DiPietro · Answer

@Matthew Crivelli great idea.

We do this with a few beach properties but don’t want to take the time needed to do this local, more buy and hold traditional property.

We want this to be as passive, for us, as possible due to other commitments.

Arbitrage one of your properties -- good or bad?

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