Out of State STR vs. Assignment of Contracts

[Arlyssa Warner]

Hi everyone!

My name is Arlyssa, and I'm a 27-year-old newbie investor with a goal of eventually buying a multifamily property to house hack with my boyfriend. Currently, you could say we are both low-income; I'm a barista and he works in sales. We're looking for ways to increase our income and have decided to obtain an LLC.

Initially, I planned to use the LLC for a rental arbitrage business in Anaheim, CA, near Disneyland due to its high tourist appeal. However, I discovered that Anaheim isn't allowing new short-term rentals and that the strict regulations in California make arbitrage nearly impossible.

I then came across the assignment of contracts strategy and thought it could be a good way to generate income. However, I'm a bit confused about the process, specifically:

1. Who is responsible for paying the closing costs, and how do you bring it up?
2. Do I draft the contract, or does the seller's agent provide one?
3. Do I find the title company during the inspection period?

Additionally, I'm considering whether I could use my LLC for rental arbitrage in another state, like Las Vegas.

Lastly, any general advice on the best route to take would be greatly appreciated.

Thanks for your time!

[Allen Duan]

I got my start in 2017 doing what you tried, STR arbitrage near Disneyland. We had up to 13 units before the pandemic when we lost them all. I agree with Travis that co-hosting has a lot going for it and that's what I pivoted to. Arbitrage can work still in the right market. You can also MTR arbitrage in a market that doesn't allow STRs.

My company now does property management for STRs and MTRs, very similar to co-hosting. I'd love to be a resource for you as a local LA MTR, co-hosting, and arbitrage expert. Happy to share everything I've learned.