Will you rent your house for short term rental arbitrage?
Investor · Los Angeles, CA · Member since 2023 · 165 posts · 65 votes
Will you rent your house for short term rental arbitrage?
Most Popular Reply
Rental Property Investor · Phoenix, AZ and Rehoboth Beach DE · Member since 2019 · 1k+ posts · 1k+ votes
2yYou'd think STR would cause more wear and tear, but the host has to keep it up in great condition to get 5 star reviews. And with cleaners going in after stay, it gets cleaned way more than with LTRs. I have an LTR that was occupied for 8 years by one tenant, and it was sooo much work after they left. It cost us a lot of time and money to get it back in shape. With an STR, it would have been kept in much better shape.
Short term guests are frequently on vacation, and are outside of the house a lot of the time, sightseeing, eating out. Versus long term guests who are home most of the time, cooking most meals in, putting maximum wear and tear on a place. I would consider allowing someone to arbitrage a rental house of mine for STR it if it were empty and I was having a hard time finding a tenant. I would be a stickler about making sure they had the correct insurance. Unlike some people here, I don't think arbitrage is any riskier than having a bad tenant on your own.
41 Replies
- Investor · VA · Member since 2015 · 21k+ posts · 19k+ votes2y
@Justin Brin
1. I would not rent my house short term. I live in dc area and could do it especially at inauguration etc but for us it’s not worth it in the sense of our house is our house - not someone else’s. Sometimes not about the $.
Now this is my opinion and for others it’s very different depending on the situation - I just wanted to share an alternative point of view
Regarding what has more wear and tear, I would say short term rentals have more wear and tear to them than long term tenants but also depends on the tenants.
7e investments53 Reviews - Rock Star Extraordinaire · Northeast, TN · Member since 2015 · 10k+ posts · 16k+ votes2y
My personal house or one of my investment homes?
My personal house, no way would I STR it at all. My investment homes, maybe but I'd do it myself if I was going to do so. I wouldn't be kicking out all the profit to someone who has no equity in the property.
Skyline Properties - Rental Property Investor · Phoenix, AZ and Rehoboth Beach DE · Member since 2019 · 1k+ posts · 1k+ votes2y
You'd think STR would cause more wear and tear, but the host has to keep it up in great condition to get 5 star reviews. And with cleaners going in after stay, it gets cleaned way more than with LTRs. I have an LTR that was occupied for 8 years by one tenant, and it was sooo much work after they left. It cost us a lot of time and money to get it back in shape. With an STR, it would have been kept in much better shape.
Short term guests are frequently on vacation, and are outside of the house a lot of the time, sightseeing, eating out. Versus long term guests who are home most of the time, cooking most meals in, putting maximum wear and tear on a place. I would consider allowing someone to arbitrage a rental house of mine for STR it if it were empty and I was having a hard time finding a tenant. I would be a stickler about making sure they had the correct insurance. Unlike some people here, I don't think arbitrage is any riskier than having a bad tenant on your own.
- 2yAndrew SteffensBusiness MemberTampa, FL · Member since 2022 · 3k+ posts · 3k+ votes
I would not let some arbitrage my property because I can do it myself and cut them out :)
Even if you are not interested you could hire a good local manager and still cut them out.
Vacation Rentals of Florida53 Reviews - 2yMichael BaumPro MemberOlympia, WA · Member since 2016 · 8k+ posts · 7k+ votes
Hey @Justin Brin, nope. I wouldn't arbitrage my place.
- Investor · Los Angeles, CA · Member since 2023 · 165 posts · 65 votes2y
Quote from @Chris Seveney:
@Justin Brin
1. I would not rent my house short term. I live in dc area and could do it especially at inauguration etc but for us it’s not worth it in the sense of our house is our house - not someone else’s. Sometimes not about the $.
Now this is my opinion and for others it’s very different depending on the situation - I just wanted to share an alternative point of view
Regarding what has more wear and tear, I would say short term rentals have more wear and tear to them than long term tenants but also depends on the tenants.
If you can get more rent from short term arbitrage and also you have someone that is responsible to keep your property in good condition in order to receive 5 stars will you consider it?
- Investor · Los Angeles, CA · Member since 2023 · 165 posts · 65 votes2yWhen you do it yourself it will require more time from you and also in slow seasons you might not make much money. Additionally if you do not have experience doing short term it will take you time to get the experience and the ratings on the short term rental websites.
Quote from @JD Martin:
My personal house or one of my investment homes?
My personal house, no way would I STR it at all. My investment homes, maybe but I'd do it myself if I was going to do so. I wouldn't be kicking out all the profit to someone who has no equity in the property.
Is there a way to estimate how much your renter is making from the short term rental on your property ? - Investor · Los Angeles, CA · Member since 2023 · 165 posts · 65 votes2yI guess I can ask for more rent from the host than from a regular tenant?
Quote from @Lauren Kormylo:
You'd think STR would cause more wear and tear, but the host has to keep it up in great condition to get 5 star reviews. And with cleaners going in after stay, it gets cleaned way more than with LTRs. I have an LTR that was occupied for 8 years by one tenant, and it was sooo much work after they left. It cost us a lot of time and money to get it back in shape. With an STR, it would have been kept in much better shape.
Short term guests are frequently on vacation, and are outside of the house a lot of the time, sightseeing, eating out. Versus long term guests who are home most of the time, cooking most meals in, putting maximum wear and tear on a place. I would consider allowing someone to arbitrage a rental house of mine for STR it if it were empty and I was having a hard time finding a tenant. I would be a stickler about making sure they had the correct insurance. Unlike some people here, I don't think arbitrage is any riskier than having a bad tenant on your own.
- Investor · Los Angeles, CA · Member since 2023 · 165 posts · 65 votes2yI guess I can try first with arbitrage and if goes good for them I can switch and say I want them to be my manager instead of arbitrage?
Quote from @Andrew Steffens:
I would not let some arbitrage my property because I can do it myself and cut them out :)
Even if you are not interested you could hire a good local manager and still cut them out.
If you do it yourself you need to pay for all the furniture and in slow seasons you might not get paid much.
What is the best way to get an estimate how much the property can make as STR? AirDNA? How accurate are those estimates ? - Investor · Los Angeles, CA · Member since 2023 · 165 posts · 65 votes2yWhy not?
Quote from @Michael Baum:
Hey @Justin Brin, nope. I wouldn't arbitrage my place.
- Rental Property Investor · Phoenix, AZ and Rehoboth Beach DE · Member since 2019 · 1k+ posts · 1k+ votes2y
Quote from @Justin Brin:
When you do it yourself it will require more time from you and also in slow seasons you might not make much money. Additionally if you do not have experience doing short term it will take you time to get the experience and the ratings on the short term rental websites.Quote from @JD Martin:
My personal house or one of my investment homes?
My personal house, no way would I STR it at all. My investment homes, maybe but I'd do it myself if I was going to do so. I wouldn't be kicking out all the profit to someone who has no equity in the property.
Is there a way to estimate how much your renter is making from the short term rental on your property ?Exactly. Don't forget the cost to furnish the house, including linens, kitchen stuff, etc. Some owners don't want to put out tens of thousands more to outfit a high quality STR. As you say, some don't have the time to manage it themselves. And hiring a property manager will cost you 20-40% of your gross. It's not as simple as everyone saying do it yourself. You have to want to, and have the time.
The fact that someone wants to arbitrage your property is a sign that it might be a good STR, but you have to investigate. Airdna, Mashvisor, Awning, Rabbu, and AllTheRooms have calculators to help you estimate what you could make from a particular property. The gross amounts usually include cleaning fees, which you then pay right out to your cleaner, so factor that in when you figure out your net. Remember your costs will be more for an STR, you'll be paying for a lot of things you wouldn't with an LTR - higher STR insurance, all utilities including internet, supplies like toilet paper, paper towels, dishwasher detergent etc, upkeep on furniture and linens if damaged, yard maintenance and grass cutting/snow removal, trash removal, etc.
The other way is called the Enemy Method, where you go to Airbnb and Vrbo, look at your direct competitors, and figure out how full their calendars are, at what prices, keep a tally of their income, and make a guess as to their yearly gross. In a seasonal area, that requires time to look at them over the year.And yes, you can ask for more from an arbitager. And as I said before, you need to make sure they have and continue to have STR insurance, not just homeowner-type or renter's insurance.
- 2yMichael BaumPro MemberOlympia, WA · Member since 2016 · 8k+ posts · 7k+ votes
Quote from @Justin Brin:
Why not?Quote from @Michael Baum:
Hey @Justin Brin, nope. I wouldn't arbitrage my place.
Because I do it myself. Like @Andrew Steffens said, I don't need to arbitrage it.
Regarding some of your other points. You won't be paying me what I make as a STR. If you did, then you wouldn't make a dime. So for you to make money, I make less.
I can see some folks allowing it, but I doubt that many here would allow it. We all run our STRs ourselves for the most part.
In the end, I never know how an arbitrager would do. Most don't have any experience at all and are using my property as a test case.
I could get stuck with a house full of substandard furniture and accessories that I need to deal with. Possible damage that didn't get fixed because the arbitrager wasn't able to make a go and they just walked away.
There are all sorts of possibilities for problems.
- Investor · Los Angeles, CA · Member since 2023 · 165 posts · 65 votes2y
Quote from @Lauren Kormylo:
Quote from @Justin Brin:
When you do it yourself it will require more time from you and also in slow seasons you might not make much money. Additionally if you do not have experience doing short term it will take you time to get the experience and the ratings on the short term rental websites.Quote from @JD Martin:
My personal house or one of my investment homes?
My personal house, no way would I STR it at all. My investment homes, maybe but I'd do it myself if I was going to do so. I wouldn't be kicking out all the profit to someone who has no equity in the property.
Is there a way to estimate how much your renter is making from the short term rental on your property ?Exactly. Don't forget the cost to furnish the house, including linens, kitchen stuff, etc. Some owners don't want to put out tens of thousands more to outfit a high quality STR. As you say, some don't have the time to manage it themselves. And hiring a property manager will cost you 20-40% of your gross. It's not as simple as everyone saying do it yourself. You have to want to, and have the time.
The fact that someone wants to arbitrage your property is a sign that it might be a good STR, but you have to investigate. Airdna, Mashvisor, Awning, Rabbu, and AllTheRooms have calculators to help you estimate what you could make from a particular property. The gross amounts usually include cleaning fees, which you then pay right out to your cleaner, so factor that in when you figure out your net. Remember your costs will be more for an STR, you'll be paying for a lot of things you wouldn't with an LTR - higher STR insurance, all utilities including internet, supplies like toilet paper, paper towels, dishwasher detergent etc, upkeep on furniture and linens if damaged, yard maintenance and grass cutting/snow removal, trash removal, etc.
The other way is called the Enemy Method, where you go to Airbnb and Vrbo, look at your direct competitors, and figure out how full their calendars are, at what prices, keep a tally of their income, and make a guess as to their yearly gross. In a seasonal area, that requires time to look at them over the year.And yes, you can ask for more from an arbitager. And as I said before, you need to make sure they have and continue to have STR insurance, not just homeowner-type or renter's insurance.
How accurate are the estimates from "Airdna, Mashvisor, Awning, Rabbu, and AllTheRooms"? - Investor · Los Angeles, CA · Member since 2023 · 165 posts · 65 votes2y
Quote from @Michael Baum:
Quote from @Justin Brin:
Why not?Quote from @Michael Baum:
Hey @Justin Brin, nope. I wouldn't arbitrage my place.
Because I do it myself. Like @Andrew Steffens said, I don't need to arbitrage it.
Regarding some of your other points. You won't be paying me what I make as a STR. If you did, then you wouldn't make a dime. So for you to make money, I make less.
I can see some folks allowing it, but I doubt that many here would allow it. We all run our STRs ourselves for the most part.
In the end, I never know how an arbitrager would do. Most don't have any experience at all and are using my property as a test case.
I could get stuck with a house full of substandard furniture and accessories that I need to deal with. Possible damage that didn't get fixed because the arbitrager wasn't able to make a go and they just walked away.
There are all sorts of possibilities for problems.
I forgot to mention that the arbitrage renter is a very experience host with good reviews for many years and with a team in place. - Member since 2019 · 60 posts · 31 votes2y
@Justin Brin I do have a trusted, competent successful arbitrage operator for my out of state rental and it has been great for several years. It all comes down to the quality of the operator. I would not consider arbitrage for my other properties as I don't have that quality of an operator available for these locations. I do carry STR insurance myself that allows arbitrage and it costs several times as much as landlord insurance.
- 2yMichael BaumPro MemberOlympia, WA · Member since 2016 · 8k+ posts · 7k+ votesSo if that arbitrager would pay me 25% over what I make with it as a STR, covers all repairs and maintenance, then maybe.
Quote from @Justin Brin:
I forgot to mention that the arbitrage renter is a very experience host with good reviews for many years and with a team in place. - Investor · Los Angeles, CA · Member since 2023 · 165 posts · 65 votes2y
Quote from @Warren Powers:
@Justin Brin I do have a trusted, competent successful arbitrage operator for my out of state rental and it has been great for several years. It all comes down to the quality of the operator. I would not consider arbitrage for my other properties as I don't have that quality of an operator available for these locations. I do carry STR insurance myself that allows arbitrage and it costs several times as much as landlord insurance.
In California insurance went up a lot even for regular landlord insurance so currently here the difference is not much.
Are you asking for more rent from your arbitrage operator than you will ask from a regular tenant?
- Contractor · Sheboygan, WI · Member since 2016 · 921 posts · 266 votes2y
@Justin Brin long term rentals definitely have greater wear and tear. STVR guests are rarely in the home. They occupy a property 60-70% of the time , nights booked per year and are not in the property most of time while on vacation.
Set your mind at ease by triple net leasing your property( leasing company pays for furniture, RE taxes, insurance and interior maintenance.) As a triple net lease tenant the property will get cleaned weekly, while making sure the property is properly maintained.
- Investor · Los Angeles, CA · Member since 2023 · 165 posts · 65 votes2y
Quote from @Todd Goedeke:
@Justin Brin long term rentals definitely have greater wear and tear. STVR guests are rarely in the home. They occupy a property 60-70% of the time , nights booked per year and are not in the property most of time while on vacation.
Set your mind at ease by triple net leasing your property( leasing company pays for furniture, RE taxes, insurance and interior maintenance.) As a triple net lease tenant the property will get cleaned weekly, while making sure the property is properly maintained.
Sounds good! Do you have experience with short term arbitrage?
- Contractor · Sheboygan, WI · Member since 2016 · 921 posts · 266 votes2y
@JD Martin Passive investors don t want to manage hospitality properties. They don t want another business to take away from higher priorities of family and living life.
Most investors are happy getting a 15%+ cash on cash return that is tax free from a STVR without needing to actively manage the investment.
- Property Manager · Miami · Member since 2024 · 21 posts · 8 votes2y
I think it all comes down to who the VR manager is. I'd get legit references, see how many units he/she has, probe them on how they solve problems and on that basis make your decision. It's not black and white, it all comes down to who that person is, their track record and the interview.
- Contractor · Sheboygan, WI · Member since 2016 · 921 posts · 266 votes2y
@Justin Brin what’s your understanding of arbitrage? I explained it to you in terms of triple net leasing. There is no reason to rent a property to someone vs lease long term. As a property owner you have considerably more safeguards in place with a triple net lease where a management company has skin in the game vs a simple rental agreement.
- 2yAndrew SteffensBusiness MemberTampa, FL · Member since 2022 · 3k+ posts · 3k+ votes
Quote from @Justin Brin:
I guess I can try first with arbitrage and if goes good for them I can switch and say I want them to be my manager instead of arbitrage?Quote from @Andrew Steffens:
I would not let some arbitrage my property because I can do it myself and cut them out :)
Even if you are not interested you could hire a good local manager and still cut them out.
If you do it yourself you need to pay for all the furniture and in slow seasons you might not get paid much.
What is the best way to get an estimate how much the property can make as STR? AirDNA? How accurate are those estimates ?Well they are likely going to tie up the property with a lease, contract or both. It is true they supply the furniture, but ask yourself who would be willing to do all that without a guarantee of income. Obviously there is no guarantee but if someone with a high level of success and experience was willing to do all that, it is likely a go.
Yes it is true there is seasonality in hospitality but with proper budgeting you will be fine.
For estimates I personally use AirDNA (Paid version) and then double check it using enemy method.
Vacation Rentals of Florida53 Reviews - Investor · Los Angeles, CA · Member since 2023 · 165 posts · 65 votes2yWhat do you mean "double check it using enemy method."?
Quote from @Andrew Steffens:
Well they are likely going to tie up the property with a lease, contract or both. It is true they supply the furniture, but ask yourself who would be willing to do all that without a guarantee of income. Obviously there is no guarantee but if someone with a high level of success and experience was willing to do all that, it is likely a go.
Yes it is true there is seasonality in hospitality but with proper budgeting you will be fine.
For estimates I personally use AirDNA (Paid version) and then double check it using enemy method.
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