Airbnb arbitrage - challenges and solutions?

Question

I'm interested in airbnb arbitrage near Knoxville area. I'd like to spend some time throughout the year.

i'm curious if anyone with airbnb arbitrage has gone over any challenges and how you guys overcame them.

for a couple things, I think there could be

- finding a landlord who would let me rent their place potentially for airbnb

- managing it out of state

Thank you in advance!

Bruce Woodruff · Answer

Best advice I'd have is to do a deep-dive search on this very forum and stay up all night reading the responses. If you still choose to proceed than you would have only yourself to blame.... :-)

Jaron Walling · Answer

The biggest thing we learned about Airbnb arbitrage is not doing arbitrage.

Sarah Kensinger · Answer

Here are a few resources you can check out...

Michael and Elizabeth Chang in many ways are the leaders of STR arbitrage. They have some resources online and if your serious about creating a business model, their course may be a good option for you to go through.

Rob Abasolo, Biggerpockets own Robuilt, does some rental arbitrage. He doesn't talk about it extensively, but you'll probably find some info on his story through his YouTube channel. Lately, he's been saying it's a great way to start right now, due to interest rate and how much cash you need for a decent STR property.

Jake Mercer has been a frequent poster on this forum lately. Over the last several years he has built a successful STR arbitrage business and would a good contact to reach out to.

I can't tell you how many people do arbitrage and done well at it! In our STR mastermind there's a large percentage that do arbitrage on 1 or more units. Our group doesn't focus on that strategy, but it's great to hear of people that used it as a launch point to get started! Hope that helps!

Travis Timmons · Answer

If I were starting out, I'd focus on a co-hosting business before pursuing arbitrage. If you can charge 20-25% of gross booking revenue to manage, that piles up in a hurry. It also takes just as much effort to get a landlord on board for arbitrage as it would to convince a property owner to either switch PMs or to let you manage for them. It's just a lower risk, better business.

Jaron Walling · Answer

You don't own anything. You have no control over the asset. The landlord is receiving the biggest benefits (taxes, principle paydown, appreciation, cash-flow, leverage).

Be the landlord.

Michael Baum · Answer

Hey @Boo Ja. Just do a search on arbitrage right here on this forum and you will find a ton of info.

Mostly against. If you have a nice amount of cash to fall back on then it can work. There are a lot of risks.

Andrew Steffens · Answer

As someone who started out in arbitrage and had great success (In 2017) I think it is dead at this point.  The amount you will likely spend on furniture and deposits etc will take a year or more to get back.  The reason it worked for me in 2017 is I found a beachfront estate home in Florida in foreclosure cheap.  I rented for $5,500 per month, furnished for about $20,000 and rented for about $30,000 per month gross.  Nowadays the house would probably bring in about the same in gross rent (there is more competition but rates have gone up as well) but the rent for that house would be $20-25,000 per month as the demand and shortage in housing has caused a great increase in price.

Long story short is you would need to find a home run deal on a multi year lease and avoid any issues (i.e. Covid) to turn a profit.

Michael Alexander · Answer

Rental arbitrage has the same challenges as any short term rental, the difference is that upfront “product sale” where you need to get the landlord on board to rent you their property for this purpose. We offer Draft Emails to send to landlords to help start the conversation but it’s more than just that initial conversation. You need to have proof of concept and have the answers to all of those what if questions. Like “Why would I rent to you instead of a traditional long term rental?” The more you know about the process the better you can position yourself.

Airbnb arbitrage - challenges and solutions?

Most Popular Reply