Airbnb Arbitrage Landlord-Tenant Lease agreement
Member since 2022 · 1 post · 1 vote
Airbnb Arbitrage Landlord-Tenant Lease agreement
Most Popular Reply
NH · Member since 2021 · 17 posts · 11 votes
3yQuote from @John Underwood:
UGGGHHH not another person wanting to do arbitrage.
UGGGHH here comes John the self appointed arbitrage police! My GOD, John …enough already! 🙄 WHY on earth, if you are so opposed to arbitrage, do you even bother to read these threads?!? Honestly, it’s embarrassing to see how much you answer EVERY thread about arbitrage with your condescending attitude and drama! We GET IT you don’t like arbitrage!
This person owns 7 short term rentals and has made the decision to mix things up and possibly try arbitrage. She asked a very simple question. Who on EARTH do you think you are to answer someone the way you just answered ?!? You have a condescending comment on every.single.arbitrage.thread. Move on … for the love of God … please MOVE ON!
17 Replies
- 3yJohn UnderwoodPro MemberInvestor · Greer, SC · Member since 2014 · 13k+ posts · 17k+ votes
UGGGHHH not another person wanting to do arbitrage.
- Investor · Member since 2022 · 107 posts · 67 votes3y
Congrats on your portfolio so far and for wanting to expand. I hope you find what you're looking for.
- 3ySarah KensingerPro MemberReal Estate Consultant · OH · Member since 2023 · 2k+ posts · 1k+ votes
Unfortunately, it would be best if you would get your own contract from an attorney. Yes, it can be expensive but some of us have paid quite a bit for our different contracts, so it's rather hard to just give them out. Also, if something happens where the contract is broken it wouldn't go back on anyone before you....plus you can tailor the contract to just your needs!
- Investor · Philadelphia, PA · Member since 2019 · 618 posts · 430 votes3y
Quote from @Rachel Nkwenti:
Hello Everyone,
My husband and I own 7 STR units in philadelphia and we are looking to scale. We are in the process of leasing a unit from a landlord but we need some help with the agreement. Does any one have a lease template or contract they don't mind sharing with me? Any advise on what terms we should add to the lease to ensure both parties are fair?
Are you up to speed with all thats been going on in the STR world in Philadelphia? Im not in the space but know there was a meeting yesterday 4/5/23 w L&I that seems to have hosts with alot of questions still with how the space will look in the next few months/years.
- 3yMichael BaumPro MemberOlympia, WA · Member since 2016 · 8k+ posts · 7k+ votes
Hey @Rachel Nkwenti, you know that arbitrage doesn't expand your portfolio right? All it does is create a new job for yourself.
Now having said that, maybe you are one of the rare people who can do arbitrage without risking all you have. If you have 7 performing STRs, then you should have a ton of cash built up to provide the buffer if things go south. Arbitrage is good way to lose money.
Most folks trying to do it have nearly zero cash to back them up but maybe this could work for you.
I second getting an attorney involved to cover your bases. No way I would trust something I found online for something this important.
- NH · Member since 2021 · 17 posts · 11 votes3y
Quote from @John Underwood:
UGGGHHH not another person wanting to do arbitrage.
UGGGHH here comes John the self appointed arbitrage police! My GOD, John …enough already! 🙄 WHY on earth, if you are so opposed to arbitrage, do you even bother to read these threads?!? Honestly, it’s embarrassing to see how much you answer EVERY thread about arbitrage with your condescending attitude and drama! We GET IT you don’t like arbitrage!
This person owns 7 short term rentals and has made the decision to mix things up and possibly try arbitrage. She asked a very simple question. Who on EARTH do you think you are to answer someone the way you just answered ?!? You have a condescending comment on every.single.arbitrage.thread. Move on … for the love of God … please MOVE ON! - NH · Member since 2021 · 17 posts · 11 votes3yMichael, thank you! We know you aren’t a fan of arbitrage but your comments are kind, thoughtful and helpful.
Quote from @Michael Baum:
Hey @Rachel Nkwenti, you know that arbitrage doesn't expand your portfolio right? All it does is create a new job for yourself.
Now having said that, maybe you are one of the rare people who can do arbitrage without risking all you have. If you have 7 performing STRs, then you should have a ton of cash built up to provide the buffer if things go south. Arbitrage is good way to lose money.
Most folks trying to do it have nearly zero cash to back them up but maybe this could work for you.
I second getting an attorney involved to cover your bases. No way I would trust something I found online for something this important.
- Rental Property Investor · Concord, NC · Member since 2016 · 1k+ posts · 3k+ votes3y
Quote from @Martha M.:
Quote from @John Underwood:
UGGGHHH not another person wanting to do arbitrage.
UGGGHH here comes John the self appointed arbitrage police! My GOD, John …enough already! 🙄 WHY on earth, if you are so opposed to arbitrage, do you even bother to read these threads?!? Honestly, it’s embarrassing to see how much you answer EVERY thread about arbitrage with your condescending attitude and drama! We GET IT you don’t like arbitrage!
This person owns 7 short term rentals and has made the decision to mix things up and possibly try arbitrage. She asked a very simple question. Who on EARTH do you think you are to answer someone the way you just answered ?!? You have a condescending comment on every.single.arbitrage.thread. Move on … for the love of God … please MOVE ON!Who the heck named you forum moderator? @John Underwood has made '0,000s of insightful posts helping others on BP for many years. He has earned the right to poo-poo arbitrage if he feels like it. BTW, UGGGHHH not another person wanting to do arbitrage
- 3yMichael BaumPro MemberOlympia, WA · Member since 2016 · 8k+ posts · 7k+ votes
Quote from @Martha M.:
Michael, thank you! We know you aren’t a fan of arbitrage but your comments are kind, thoughtful and helpful.Quote from @Michael Baum:
Hey @Rachel Nkwenti, you know that arbitrage doesn't expand your portfolio right? All it does is create a new job for yourself.
Now having said that, maybe you are one of the rare people who can do arbitrage without risking all you have. If you have 7 performing STRs, then you should have a ton of cash built up to provide the buffer if things go south. Arbitrage is good way to lose money.
Most folks trying to do it have nearly zero cash to back them up but maybe this could work for you.
I second getting an attorney involved to cover your bases. No way I would trust something I found online for something this important.
Thanks @Martha M.. I try not to be too discouraging to people researching, but there is just too much pie in the sky, blowing sunshine up the waazoo type of videos and posts about arbitrage. No one wants to hear the reality of it. I know 3 people who went bankrupt doing arbitrage. They will be 10+ years before they can start again. 2 have pending lawsuits.
To be honest, arbitrage might get better over time. STR rules and regs in a lot of municipalities might shake out allowing a more stable environment. Still, unless you have plenty of reserve cash on hand, it can be risky. Even if you have a decent portfolio, no one wants to lose money.
@John Underwood gets frustrated just like me with all the exact same questions. The arbitrage topic comes up 2-5x a week. No one seems to want to do a search first to read the many, many other threads on the topic.
Frankly I worry about people who join up and ask questions right away without ever looking at the forum first. They aren't willing to do some very easy legwork here to learn some basic info. How are they going to succeed when the chips are down? When things require a massive amount of research, planning, calling etc will they cut corners? It is a recipe for disaster.
John, like me, are just investors who spend time here trying to help others. We don't get paid anything, we just want to see people succeed. Try not to be too hard on those just trying to help out.
- Lender · New York, NY · Member since 2022 · 1k+ posts · 1k+ votes3y
Quote from @Michael Baum:
Quote from @Martha M.:
Michael, thank you! We know you aren’t a fan of arbitrage but your comments are kind, thoughtful and helpful.Quote from @Michael Baum:
Hey @Rachel Nkwenti, you know that arbitrage doesn't expand your portfolio right? All it does is create a new job for yourself.
Now having said that, maybe you are one of the rare people who can do arbitrage without risking all you have. If you have 7 performing STRs, then you should have a ton of cash built up to provide the buffer if things go south. Arbitrage is good way to lose money.
Most folks trying to do it have nearly zero cash to back them up but maybe this could work for you.
I second getting an attorney involved to cover your bases. No way I would trust something I found online for something this important.
Thanks @Martha M.. I try not to be too discouraging to people researching, but there is just too much pie in the sky, blowing sunshine up the waazoo type of videos and posts about arbitrage. No one wants to hear the reality of it. I know 3 people who went bankrupt doing arbitrage. They will be 10+ years before they can start again. 2 have pending lawsuits.
To be honest, arbitrage might get better over time. STR rules and regs in a lot of municipalities might shake out allowing a more stable environment. Still, unless you have plenty of reserve cash on hand, it can be risky. Even if you have a decent portfolio, no one wants to lose money.
@John Underwood gets frustrated just like me with all the exact same questions. The arbitrage topic comes up 2-5x a week. No one seems to want to do a search first to read the many, many other threads on the topic.
Frankly I worry about people who join up and ask questions right away without ever looking at the forum first. They aren't willing to do some very easy legwork here to learn some basic info. How are they going to succeed when the chips are down? When things require a massive amount of research, planning, calling etc will they cut corners? It is a recipe for disaster.
John, like me, are just investors who spend time here trying to help others. We don't get paid anything, we just want to see people succeed. Try not to be too hard on those just trying to help out.
Michael, if you don't mind, can you explain/draw out ways in which Arbitrage can go south? I have always considered it a low risk/floor investment because the barrier to entry is so low. Not like you're forking over tens of thousands of dollars to get in, so let's say it blows up, how much are you really out? Would love to hear your assessment.
- 3yDon KonipolBusiness MemberInvestor · The Woodlands TX / Avon, CT · Member since 2009 · 6k+ posts · 10k+ votes
I have utilized an arbitrage STR strategy in the past as well as owned STR properties. In my case I found STR model (both ways) to consume too much time and effort to continue with them so discontinued it. It was profitable, but not enough for myself.
I don’t know if the arbitrage model “opponents” on the forum are actually all that negative on the concept itself, or are negative on the fact that people asking the questions having just seen the videos are naive and belief that with little knowledge, experience, capital and business management ability they can easily earn a ton of money. Very similar to the people who think the same about wholesaling.
A big "divide" (IMO) is that STR arbitrage, like real estate wholesaling is NOT real estate INVESTING. It is a business within the general real estate category. Why is this important? Because, historically, real estate investing has been very forgiving of mistakes, bad timing, economic turmoil, etc. The key is staying power. Enough in reserve, no excessive leverage, and you should be able to survive most problems. Not so with a BUSINESS. The "90% of startups fail" is just as true for real estate related BUSINESSES as any other BUSINESS.
In fact, you can think of it like this. 90% of the people starting off investing in a real property will still be property owner/investors earning satisfactory returns after 10 years. 90% of the people attempting wholesaling or arbitrage STR will have failed endeavors, lost money, "went broke" or at best earned unsatisfactory returns in the same time period. In fact, other than utilizing excessive leverage, or having the plain incredibly bad luck (or lack of foresight) to have invested in a mining town where the mine subsequently closed down, "go broke" investing in real property is pretty hard to do.
Bottom line; SOME people can run a successful arbitrage STR operation. They will have sufficient managerial and administrative talent, real estate and business knowledge, specific education, and the CAPITAL necessary to be successful. But will it be worth their time? Many think the big "liquidity event" is what building a business is all about. It's hard to see a big payday coming from the sale of an STR arbitrage business.
- 3ySarah KensingerPro MemberReal Estate Consultant · OH · Member since 2023 · 2k+ posts · 1k+ votesGood points! Like you said if a person has good business knowledge etc. they can do extremely well. Michael and Elizabeth Cheng founders of STR Like the Best, made 2 million+ on rental arbitrage which made them enough money to buy millions of dollars in real estate. I believe most of their personal properties are in the smokies since they don't like to spread out too many different markets but just a couple. Unfortunately, most people don't like to take the time to learn, discipline themselves, or have self-control. So, no not many people can make a go with a real estate business enough to buy property. They are too busy trying to get rich quick and jump in on what looks like an easy big money maker.
Quote from @Don Konipol:
I have utilized an arbitrage STR strategy in the past as well as owned STR properties. In my case I found STR model (both ways) to consume too much time and effort to continue with them so discontinued it. It was profitable, but not enough for myself.
I don’t know if the arbitrage model “opponents” on the forum are actually all that negative on the concept itself, or are negative on the fact that people asking the questions having just seen the videos are naive and belief that with little knowledge, experience, capital and business management ability they can easily earn a ton of money. Very similar to the people who think the same about wholesaling.
A big "divide" (IMO) is that STR arbitrage, like real estate wholesaling is NOT real estate INVESTING. It is a business within the general real estate category. Why is this important? Because, historically, real estate investing has been very forgiving of mistakes, bad timing, economic turmoil, etc. The key is staying power. Enough in reserve, no excessive leverage, and you should be able to survive most problems. Not so with a BUSINESS. The "90% of startups fail" is just as true for real estate related BUSINESSES as any other BUSINESS.
In fact, you can think of it like this. 90% of the people starting off investing in a real property will still be property owner/investors earning satisfactory returns after 10 years. 90% of the people attempting wholesaling or arbitrage STR will have failed endeavors, lost money, "went broke" or at best earned unsatisfactory returns in the same time period. In fact, other than utilizing excessive leverage, or having the plain incredibly bad luck (or lack of foresight) to have invested in a mining town where the mine subsequently closed down, "go broke" investing in real property is pretty hard to do.
Bottom line; SOME people can run a successful arbitrage STR operation. They will have sufficient managerial and administrative talent, real estate and business knowledge, specific education, and the CAPITAL necessary to be successful. But will it be worth their time? Many think the big "liquidity event" is what building a business is all about. It's hard to see a big payday coming from the sale of an STR arbitrage business.
- 3yJay ThomasPro MemberReal Estate Agent · Houston, TX · Member since 2021 · 1k+ posts · 715 votes
Exploring real estate opportunities can be a great way to diversify your portfolio and build long-term wealth. With the right research and understanding of the market trends, you can makeh sound investments that could pay off big in the future. I wish you luck as you continue on your journey of building an impressive portfolio!
- 3yMichael BaumPro MemberOlympia, WA · Member since 2016 · 8k+ posts · 7k+ votes
Hey @Zach Edelman, so there are a bunch of ways it can south depending. I will give you real world examples that crushed some "investors".
Pandemic rules in some states were clearly a problem for many of us. Arbitrage people we unable to get anyone staying and had to pay above market rates for their leases. Not enough cash reserves and done tom turkey.
Restrictions going in place. You need to live within 50 miles of a unoccupied STR, you need to be living there, lottery system for new permits and you don't get one, STRs are banned overall in certain zones, HOA votes to disallow STRs. These are all examples of how you can lose. All of this is out of the arbitragers control.
Regarding the cash outlay, you are forking over thousands of dollars. Let's say you find someone who normally rents a nice condo for $1750 a month. You agree to pay $2000 a month. So you have first, last and a deposit. Let's say all that is $5000. It is a 2/2 condo of about 1200sqft.
Now add in full furnishings. In order to be successful, you can't really skimp. I am a big proponent of looking on Craigslist, FB Marketplace and OfferUP for deals on USA made furniture. Even doing that you are going to be in it for about 10k all said and done and that is on the cheap...if you get lucky. More if you just call Wayfair and do it all there. You need furniture, linens, appliances big and small, cleaning stuff etc. The list is long. Some estimates are $10 per sqft, some say 10k per bedroom.
We started from scratch with our 2700sqft lake house. Nothing was left except the fridge. I was living on those classifieds sites snapping up whatever I could find that looked great and fit the comfortable family home style we were shooting for. A lot of stuff we got for free. We were still about 25k all said and done and I really worked hard to get the price down.
That is just the things that come to mind. What if you are doing great. The owner of the property is seeing it and decides not to renew the lease and do it themselves. Then you are stuck with a place full of furniture, linens etc that you have to move out and store or give away (to me) and you have to start over.
I am not saying it is a bomb, but to say it is low risk is just incorrect. It isn't an investment at all as you have nothing. You have the stuff you bought. Which is depreciated to next to nothing.
The reason I come down hard on these dreams is most of the folks who ask about it have nearly zero dollars. They can barely afford to rent the place let alone furnish properly.
Most owners are getting pretty savvy on this so if they do decide to allow it, you can expect to pay above market rates and a larger deposit. You will most likely be responsible for repairs (within reason) and maintenance. You might also have to give the owner a percentage of the gross.
- Lender · New York, NY · Member since 2022 · 1k+ posts · 1k+ votes3y
Quote from @Michael Baum:
Hey @Zach Edelman, so there are a bunch of ways it can south depending. I will give you real world examples that crushed some "investors".
Pandemic rules in some states were clearly a problem for many of us. Arbitrage people we unable to get anyone staying and had to pay above market rates for their leases. Not enough cash reserves and done tom turkey.
Restrictions going in place. You need to live within 50 miles of a unoccupied STR, you need to be living there, lottery system for new permits and you don't get one, STRs are banned overall in certain zones, HOA votes to disallow STRs. These are all examples of how you can lose. All of this is out of the arbitragers control.
Regarding the cash outlay, you are forking over thousands of dollars. Let's say you find someone who normally rents a nice condo for $1750 a month. You agree to pay $2000 a month. So you have first, last and a deposit. Let's say all that is $5000. It is a 2/2 condo of about 1200sqft.
Now add in full furnishings. In order to be successful, you can't really skimp. I am a big proponent of looking on Craigslist, FB Marketplace and OfferUP for deals on USA made furniture. Even doing that you are going to be in it for about 10k all said and done and that is on the cheap...if you get lucky. More if you just call Wayfair and do it all there. You need furniture, linens, appliances big and small, cleaning stuff etc. The list is long. Some estimates are $10 per sqft, some say 10k per bedroom.
We started from scratch with our 2700sqft lake house. Nothing was left except the fridge. I was living on those classifieds sites snapping up whatever I could find that looked great and fit the comfortable family home style we were shooting for. A lot of stuff we got for free. We were still about 25k all said and done and I really worked hard to get the price down.
That is just the things that come to mind. What if you are doing great. The owner of the property is seeing it and decides not to renew the lease and do it themselves. Then you are stuck with a place full of furniture, linens etc that you have to move out and store or give away (to me) and you have to start over.
I am not saying it is a bomb, but to say it is low risk is just incorrect. It isn't an investment at all as you have nothing. You have the stuff you bought. Which is depreciated to next to nothing.
The reason I come down hard on these dreams is most of the folks who ask about it have nearly zero dollars. They can barely afford to rent the place let alone furnish properly.
Most owners are getting pretty savvy on this so if they do decide to allow it, you can expect to pay above market rates and a larger deposit. You will most likely be responsible for repairs (within reason) and maintenance. You might also have to give the owner a percentage of the gross.
Thank you. No crumbs left! Much appreciated explanation.
- 3ySarah KensingerPro MemberReal Estate Consultant · OH · Member since 2023 · 2k+ posts · 1k+ votes
Quote from @Michael Baum:
Hey @Zach Edelman, so there are a bunch of ways it can south depending. I will give you real world examples that crushed some "investors".
Pandemic rules in some states were clearly a problem for many of us. Arbitrage people we unable to get anyone staying and had to pay above market rates for their leases. Not enough cash reserves and done tom turkey.
Restrictions going in place. You need to live within 50 miles of a unoccupied STR, you need to be living there, lottery system for new permits and you don't get one, STRs are banned overall in certain zones, HOA votes to disallow STRs. These are all examples of how you can lose. All of this is out of the arbitragers control.
Regarding the cash outlay, you are forking over thousands of dollars. Let's say you find someone who normally rents a nice condo for $1750 a month. You agree to pay $2000 a month. So you have first, last and a deposit. Let's say all that is $5000. It is a 2/2 condo of about 1200sqft.
Now add in full furnishings. In order to be successful, you can't really skimp. I am a big proponent of looking on Craigslist, FB Marketplace and OfferUP for deals on USA made furniture. Even doing that you are going to be in it for about 10k all said and done and that is on the cheap...if you get lucky. More if you just call Wayfair and do it all there. You need furniture, linens, appliances big and small, cleaning stuff etc. The list is long. Some estimates are $10 per sqft, some say 10k per bedroom.
We started from scratch with our 2700sqft lake house. Nothing was left except the fridge. I was living on those classifieds sites snapping up whatever I could find that looked great and fit the comfortable family home style we were shooting for. A lot of stuff we got for free. We were still about 25k all said and done and I really worked hard to get the price down.
That is just the things that come to mind. What if you are doing great. The owner of the property is seeing it and decides not to renew the lease and do it themselves. Then you are stuck with a place full of furniture, linens etc that you have to move out and store or give away (to me) and you have to start over.
I am not saying it is a bomb, but to say it is low risk is just incorrect. It isn't an investment at all as you have nothing. You have the stuff you bought. Which is depreciated to next to nothing.
The reason I come down hard on these dreams is most of the folks who ask about it have nearly zero dollars. They can barely afford to rent the place let alone furnish properly.
Most owners are getting pretty savvy on this so if they do decide to allow it, you can expect to pay above market rates and a larger deposit. You will most likely be responsible for repairs (within reason) and maintenance. You might also have to give the owner a percentage of the gross.
This is pretty much all the cons spelled out great! But one thing I've noticed on here that a lot of people bring up is rental arbitrage is done by people who are usually broke. That is not the case at all unless they have a number of credit cards they max out. And that is most certainly a way to crash and burn in a hurry. But from what I have heard and my calculations from nearly furnishing a 2/2 1000sq condo, it would take about $20,000 or a bit more to get the first house up and going. And that's only a 2 bed/2 bath! I had chosen good quality furniture, wallpaper, and other regularly used items that would be durable for a rental and eye catching (an experience type look) to get those bookings. I would say $20,000+ is a decent bit of money for rental arbitrage being a "broke" persons way.
- 3yMichael BaumPro MemberOlympia, WA · Member since 2016 · 8k+ posts · 7k+ votes
Well, if you have to do everything on credit cards, you are broke and should be saving some cashola.
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