airbnb arbitrage and real estate license in NC

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airbnb arbitrage and real estate license in NC

Member since 2019 · 29 posts · 15 votes

I am interested in airbnb arbitrage, and am trying to figure out if a brokers license is required? Specifically, I would sign a lease with an owner, and then list the rental on airbnb. The North Carolina real estate commission representative we spoke with said because we are marketing and making a profit, a brokers license is required. Does anyone in North Carolina have experience with this?

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Sean McDonnell

Real Estate Agent · Surf City, NC · Member since 2017 · 648 posts · 597 votes

I do not think that is accurate. Of course the NC real estate commission will say you need a license because they will get more money and they love putting up bureaucratic red tape.

If you have the owners written permission and get the owner to sign a sublease, that should suffice to legally. I am not a lawyer nor have I done this before but I know a few people who have successfully done Airbnb arbitrages here and they do not have their NC real estate licenses.. PM me and I will get you in touch with them.

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John UnderwoodPro Member
Investor · Greer, SC · Member since 2014 · 13k+ posts · 17k+ votes
6y
You are acting as a PM. What requirements does NC have to manage properties for someone else for profit?
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Nancy Bachety
Rental Property Investor · North Fork, NY · Member since 2016 · 1k+ posts · 631 votes
6y
@Mark Lee As you do your research on that, (Good question) read these forums to research Airbnb arbitrage if you haven’t already. Find others who do it now, and who did it pre-Covid. I know it’s not what you’re asking, but you’ll get more than you asked for here.

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Luke CarlPro Member
Rental Property Investor · Tennessee Florida · Member since 2016 · 4k+ posts · 5k+ votes
6y
Arbitrage is a job and it's not a good one in my opinion. I think I'd rather use that same license to actually sell houses.
Podcast Guest on Show From Surviving on $30/Day to 30+ Properties Thanks to Blue-Collar Skills
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Sean McDonnell
Real Estate Agent · Surf City, NC · Member since 2017 · 648 posts · 597 votes
6y
I do not think that is accurate. Of course the NC real estate commission will say you need a license because they will get more money and they love putting up bureaucratic red tape.
If you have the owners written permission and get the owner to sign a sublease, that should suffice to legally. I am not a lawyer nor have I done this before but I know a few people who have successfully done Airbnb arbitrages here and they do not have their NC real estate licenses.. PM me and I will get you in touch with them.
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Paul Sandhu
Investor · The worst town to live in, KS · Member since 2016 · 4k+ posts · 4k+ votes
6y
How many other AirBnB properties have you managed? If this is your first, it's like trying to learn how to juggle before learning how to walk.
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Michael BaumPro Member
Olympia, WA · Member since 2016 · 8k+ posts · 7k+ votes
6y
WhoooHooo! Arbitrage! The way to quick wealth and fame!

So @Mark Lee, do you have a large stockpile of cash? There are a lot of arbitrage people that have lost their shirts this year due to the pandemic.

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Mark Lee
OP
Member since 2019 · 29 posts · 15 votes
6y
@John Underwood - thanks for the question. I think this is where the real estate license comes in. I don't believe we are acting as property managers. There is an interesting case in Pennsylvania which appears to have much more strict laws than NC does where an airbnb host has had to stop her business and is being asked to get a brokers license. We would be signing a lease and then subletting, which is as far as I can tell ok to do, as long as the lease doesn't have any clauses preventing one from subletting.
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Mark Lee
OP
Member since 2019 · 29 posts · 15 votes
6y
@Nancy Bachety - thanks for the suggestion! I am a huge bigger pockets fan and have found the forums incredibly useful.
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Mark Lee
OP
Member since 2019 · 29 posts · 15 votes
6y
Originally posted by @Luke Carl:
Arbitrage is a job and it's not a good one in my opinion. I think I'd rather use that same license to actually sell houses.

Luke, I am in total agreement with you. I wouldn't want to be dealing with short term rentals. However, my partner really enjoys interacting with people, and wants to be an ambassador for people visiting our lovely city. She is also looking for a job. When this real estate license came up, I asked her if she wants to be a more traditional agent, and she has no interest in showing houses and dealing with people buying houses. Thanks for your input.

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Mark Lee
OP
Member since 2019 · 29 posts · 15 votes
6y
@Sean McDonnell - Sean, thanks for the response to my question. After some input on other forums, I have come to the same conclusion.
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Mark Lee
OP
Member since 2019 · 29 posts · 15 votes
6y
Originally posted by @Paul Sandhu:
How many other AirBnB properties have you managed? If this is your first, it's like trying to learn how to juggle before learning how to walk.

This will be our first. It sounds like you have some experience. Are there any resources you would refer us to or tips so that we don't drop all the proverbial balls?
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Mark Lee
OP
Member since 2019 · 29 posts · 15 votes
6y
Originally posted by @Michael Baum:
WhoooHooo! Arbitrage! The way to quick wealth and fame!

So @Mark Lee, do you have a large stockpile of cash? There are a lot of arbitrage people that have lost their shirts this year due to the pandemic.

We are well funded, and surprisingly, Charlotte's STR market rebounded quite quickly after the stay at home orders were lifted. In many parts of the country, it does look like we are seeing the dreaded COVID-19 second wave, and I wouldn't be surprised if we get a bump here as well. However, we have planned for the possibility of another lock down and have enough funds and contingency plans in place. If you have any contacts that were doing arbitrage and struggled, would you be willing to put me in contact with them? I'd obviously find it very useful to learn from their experiences and understand what lessons they might have learned.

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Sofia Sharkey
Property Manager · Kansas City, MO · Member since 2018 · 280 posts · 221 votes
6y
@Mark Lee my husband and I arbitrage a few units and they have been very profitable. You need permission to sublease from the owners / landlords but unless your city calls it specifically, you do not need a brokers license (from what I’ve leaned). Of course it wouldn’t hurt to have it if you want to do this long term.
We recorded a podcast with lots of info on how to do arbitrage the right way, I hope it helps you as you embark on this journey (podcast: short term rental success stories episode 72) https://podcasts.apple.com/us/podcast/short-term-rental-success-stories/id1457263788?i=1000487281611
Good luck and keep us posted on how it goes!
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Paul Sandhu
Investor · The worst town to live in, KS · Member since 2016 · 4k+ posts · 4k+ votes
6y
As with any business transaction...one party gets richer, one party gets wiser.
Your main problem is going to be this: Expected Cash Flow > Actual Cash Flow. ">" = "greater than".
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Marc RiceBusiness Member
Real Estate Agent · Columbus Cleveland Dayton, OH · Member since 2018 · 2k+ posts · 1k+ votes
6y
@Mark Lee
If you’re managing it for yourself and not giving the owner any profit then you shouldn’t need...
[email protected]614-363-2787
Marc Rice | Investor Friendly Agent at Reafco Tailwind Team574 Reviews
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Nate Sanow
Investor & Agent · Tulsa, OK · Member since 2016 · 1k+ posts · 1k+ votes
6y
@Mark Lee
I feel like your question is valid and useful.
To me it sounds like you are wanting to be ethical while making a buck. Who doesn’t?
The question becomes: is subleasing legal? (In your state) and a different but important question: do you have cash or even credit reserves to cover the added liabilities? Which makes me then consider: do you get the necessary insurance or does the owner?
All things to consider either instead of or in addition to getting a license. I recently got my license in part because they are pushing that more and more for wholesaling... so from that perspective I can relate but I am not familiar personally with the bnb arbitration model.
No matter what you do, good luck and keep exploring.
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Jeremy Wirths
Auburn, NH · Member since 2016 · 235 posts · 207 votes
6y
@Mark Lee reach out to @Shelby Osborne at Five Pillars Realty Group. They are in Fayetteville and have had success using the arbitrage model and could talk to you about using your license
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Mark Lee
OP
Member since 2019 · 29 posts · 15 votes
6y
Originally posted by @Paul Sandhu:
As with any business transaction...one party gets richer, one party gets wiser.
Your main problem is going to be this: Expected Cash Flow > Actual Cash Flow. ">" = "greater than".

Thanks Paul, we'll make sure to do a detailed cash flow analysis.
0 Reply
Andria Kobylinski
Rental Property Investor · Richmond, VA · Member since 2018 · 76 posts · 28 votes
5y
@Mark Lee I am so interested to know if you moved forward with the arbitrage deal. I have recently gotten into them and they have been very profitable in VA. Did your partner end up getting a RE license if you did move forward?
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Mark Lee
OP
Member since 2019 · 29 posts · 15 votes
5y
@Andria Kobylinski, sorry for the late reply. I didn't get an email for some reason. After several attempts at arbitrage, we honestly gave up. We simply couldn't find renters willing to work with us. We changed direction, and have one long term rental which is cash flowing for us, and are in the process of buying a vacation home as a short term rental investment. I am so glad its working out for you! I still think its a great strategy and maybe will find the right opportunity in the future.
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