Airbnb with no money
Hello ! I am a brand new member of BP I want to get started with Real Estate investing, I have been studying and doing research and I found that Airbnb is a good option to get started with little to no money and without owning property.
My question is if I have to set up an entity to get started and what type of contracts are used for that ? Any tips on how to get started ?
How do you Airbnb a house you don't own? I would love to see how this works? Are you going to Airbnb out your primary residence I'm thinking?
Originally posted by @Tim Johnson:How do you Airbnb a house you don't own? I would love to see how this works? Are you going to Airbnb out your primary residence I'm thinking?
He's referring to a new strategy called rental arbitrage. Essentially you are just leasing a property from someone and then subleasing it out via Airbnb and making the delta. A simple example would be I rent your apartment for $1k/month then I put it on Airbnb where it generates $2k/month. Using this example I'm netting $1k/month without owning the property. The problem with this strategy (aside from all of the obvious benefits you lose by not owning the real estate) is that many cities are starting to regulate STR's and also most leases restrict subleasing.
I heard about this strategy on a Bigger Pockets podcast, it was a reference to another episode and I didn't hear the original episode. I think they call it AirBnB arbitrage or something. In theory it works like this, you rent a property from a landlord, letting them know that you are going to AirBnB it of course, you pay the normal monthly rent and then the rent you get from AirBnB pays you back for the rent you fronted plus your profit. I believe that there are some startups out there that are using this model on a large scale.
Here are the downsides: 1. Typically you will need to have 3 times the monthly rent amount in income to qualify for the rental. 2. You need to ensure that the local codes allow for AirBnB, 3. You will probably have signed a 1 year lease for the rental space that you are on the hook for whether your business succeeds or not.
Maybe you could do a modified house hack on a rental space, rent a place with good AirBnB potential, live in it unless it is rented out then couch surf until you get your place back.
You've got to stop listening to the get-rich-quick gurus. People don't build wealth without some discipline. You need to work hard, save money, educate yourself, and make smart choices.
If you want to make money without any sacrifice, try Lotto. Your chances are probably about the same and Lotto takes a lot less effort.
