Who has air bnb rentals that they don’t own?
Most Popular Reply
Robert GilstrapPro Member
Residential Real Estate Broker · Cartersville, GA · Member since 2015 · 575 posts · 581 votesEmily, don't listen to any of these naysayers; what a bunch of horse sh*t!
There is nothing, zero, nada wrong with rental arbitrage other than the old school, risk averse - "this is the only way I know how to do it" offering their advice saying it's "generally frowned upon".
This is more jealousy in my opinion of "why are you able to make as much or more than me without owning anything when I've had to spend all this money buying a property".
It's taken me 50 years to realize that real estate is nothing more than a tool; an asset, to help you leverage your way to financial freedom. Don't get too cozy with it. People have real lasting value; not property.
I own more real estate than many of these guys AND I also arbitrage because it's common sense smart leverage and it's win - win. If I can control an asset and gain the upside but also avoid the downside AND make a larger profit how in the world is that "not sustainable"? I negotiate solid, long term, below market rent deals with my owners that are 100% fully disclosed and I have more of them than I can handle. The world is full of landlords looking for a safe and easy (i.e. low but consistent) return on investment. Any talk of "ethical or legal practices" or "laws changing" just expose those investors who are strictly "in the box" thinkers whose lack of risk tolerance keeps them where they are comfortable. There is nothing legally or ethically wrong with rental arbitrage; nor is it more intrinsically risky than long term rentals provided you have your contractual agreements solidly worded.
Always fully disclose to your landlords what you are doing and don't worry that they will want to compete with you because 99% won't. It's too much work and a greater capital expenditure for them. They almost always opt for "easy street"; which is a steady, reliable (even below market), low hassle, guaranteed return vs. an unknown return that might be exponentially larger or may require more involvement and thought. Remember Maslows hierarchy of needs: humans always seek to avoid pain 1st. Seeking pleasure comes much later. This is why most Americans stay on the sidelines and end up living a life of mediocrity.
Provide a value to the landlord. (below market rent BUT stability + low risk + low maintenance + no/low mgmt. fees). The net to them should be greater than if they placed their property with a local mgmt company.
I just now realized I need to stand down from my soap box and stop talking but do not be dissuaded by those who would seek to squash your dreams...
78 Replies
- Investor · The worst town to live in, KS · Member since 2016 · 4k+ posts · 4k+ votes5y
It's called arbitrage. It's generally frowned upon by this forum, but there is a guy in California that has his ducks in a row with arbitrage. Here's my ducks in a row.
- Contractor · NYC · Member since 2020 · 87 posts · 64 votes5y
@Emily Kaye
Because it’s realistically not a sustainable model . At some point it will catch up to you . Laws change , etc ...
We like to promote ethical and legal practices on here .
@Rich Ramjatan looking into other forums about this, there seems to be an understanding between landlords and renters who then rent for air bnb. Win win situation for both unless it’s infringing on state guidelines. I do not see how this is unethical or illegal. Am I overlooking something?
- Rock Star Extraordinaire · Northeast, TN · Member since 2015 · 10k+ posts · 17k+ votes5y
Originally posted by @Emily K.:
@Rich Ramjatan looking into other forums about this, there seems to be an understanding between landlords and renters who then rent for air bnb. Win win situation for both unless it’s infringing on state guidelines. I do not see how this is unethical or illegal. Am I overlooking something?
I would never allow a tenant to do this with my property (what you are doing is subletting, whether for a day or a year), my leases specifically prohibit this, and I would evict any tenant caught doing it. Why?
1. If my property is going to suffer the wear and tear of a parade of boarders, why shouldn't I get the profit instead of you, who owns nothing and has no financial skin in the game? In other words, why not just do it myself and cut out the middleman - which is you -?
2. I have no realistic control or knowledge of what type of people to whom you are renting.
3. My insurance doesn't cover short term rentals.
4. My property wears out faster.
Bottom line for me is I think it is a lot of nerve to ask a landlord to hold the costs of owning the property while you insert yourself into the process in order to profit off of someone else's asset. This is meant for all "arbitrage" STR people so don't take it personal, but you should save some money and buy your own property if you want to run a hotel.
Skyline Properties - Rental Property Investor · Lakewood, OH · Member since 2016 · 119 posts · 156 votes5y
Originally posted by @Emily K.:
@Rich Ramjatan looking into other forums about this, there seems to be an understanding between landlords and renters who then rent for air bnb. Win win situation for both unless it’s infringing on state guidelines. I do not see how this is unethical or illegal. Am I overlooking something?
If you disclose what you are seeking to do its not unethical and your local laws will tell you if its illegal.
the issue is this - what happens if you sign a year lease and your airbnb fails?
What if a situation like covid hits? (There were some people who used the strategy you speak of and lost their shirts from being overleveraged)
you will be going against people who own their property and when we break even we are paying down our mtg with OPM. At that point you are paying someone else's mtg and not making a profit.
What if you create an awesome property get great reviews and your landlord kicks you out after a year? What if he sells the property?End of the day there are too many things out of your control
- Rental Property Investor · Lakewood, OH · Member since 2016 · 119 posts · 156 votes5y
I would never allow a tenant to do this with my property (what you are doing is subletting, whether for a day or a year), my leases specifically prohibit this, and I would evict any tenant caught doing it. Why?
1. If my property is going to suffer the wear and tear of a parade of boarders, why shouldn't I get the profit instead of you, who owns nothing and has no financial skin in the game? In other words, why not just do it myself and cut out the middleman - which is you -?
2. I have no realistic control or knowledge of what type of people to whom you are renting.
3. My insurance doesn't cover short term rentals.
4. My property wears out faster.
Bottom line for me is I think it is a lot of nerve to ask a landlord to hold the costs of owning the property while you insert yourself into the process in order to profit off of someone else's asset. This is meant for all "arbitrage" STR people so don't take it personal, but you should save some money and buy your own property if you want to run a hotel.
I think 1 and 4 are both wrong. A STR takes far less of a beating than a LTR. People cook far less. They don't move furniture in and out. My avg stay is probably 4 days.
number 2 and 3 are very realistic concerns in my opinion.
There are ways that an airbnb operation in your home could make sense
A) pay over market rent
B) profit share
C) guaranteed payment (from an established operator)
- 5yRobert GilstrapPro MemberResidential Real Estate Broker · Cartersville, GA · Member since 2015 · 575 posts · 581 votes
Emily, don't listen to any of these naysayers; what a bunch of horse sh*t!
There is nothing, zero, nada wrong with rental arbitrage other than the old school, risk averse - "this is the only way I know how to do it" offering their advice saying it's "generally frowned upon".
This is more jealousy in my opinion of "why are you able to make as much or more than me without owning anything when I've had to spend all this money buying a property".
It's taken me 50 years to realize that real estate is nothing more than a tool; an asset, to help you leverage your way to financial freedom. Don't get too cozy with it. People have real lasting value; not property.
I own more real estate than many of these guys AND I also arbitrage because it's common sense smart leverage and it's win - win. If I can control an asset and gain the upside but also avoid the downside AND make a larger profit how in the world is that "not sustainable"? I negotiate solid, long term, below market rent deals with my owners that are 100% fully disclosed and I have more of them than I can handle. The world is full of landlords looking for a safe and easy (i.e. low but consistent) return on investment. Any talk of "ethical or legal practices" or "laws changing" just expose those investors who are strictly "in the box" thinkers whose lack of risk tolerance keeps them where they are comfortable. There is nothing legally or ethically wrong with rental arbitrage; nor is it more intrinsically risky than long term rentals provided you have your contractual agreements solidly worded.
Always fully disclose to your landlords what you are doing and don't worry that they will want to compete with you because 99% won't. It's too much work and a greater capital expenditure for them. They almost always opt for "easy street"; which is a steady, reliable (even below market), low hassle, guaranteed return vs. an unknown return that might be exponentially larger or may require more involvement and thought. Remember Maslows hierarchy of needs: humans always seek to avoid pain 1st. Seeking pleasure comes much later. This is why most Americans stay on the sidelines and end up living a life of mediocrity.
Provide a value to the landlord. (below market rent BUT stability + low risk + low maintenance + no/low mgmt. fees). The net to them should be greater than if they placed their property with a local mgmt company.
I just now realized I need to stand down from my soap box and stop talking but do not be dissuaded by those who would seek to squash your dreams...
- Rental Property Investor · Member since 2020 · 1k+ posts · 1k+ votes5y
I don’t see anything unethical about it as long as you are up front. I will say be prepared for a lot of rejection but you’ll eventually find someone however expect them to want a premium. My biggest concern is going to be that you have no skin in the game, if tenants trash the place and ruin the carpet you have said yourself you don’t have enough to buy, can you afford to repair. I would never allow it because you are getting all the upside while I am taking the risk but someone will. If you are looking to strengthen your offer consider above market rents, a higher deposit, and taking on some of the maintenance and repairs. While I feel most will likely say no that doesn’t mean all will and it only takes a few to get you on the right track. If you can build trust and show a track record you should be able to scale.
Originally posted by @Paul Sandhu:
It's called arbitrage. It's generally frowned upon by this forum, but there is a guy in California that has his ducks in a row with arbitrage. Here's my ducks in a row.
Those are some nice ducks, Paul.
- Rock Star Extraordinaire · Northeast, TN · Member since 2015 · 10k+ posts · 17k+ votes5y
Originally posted by @Robert Gilstrap:
Emily, don't listen to any of these naysayers; what a bunch of horse sh*t!
There is nothing, zero, nada wrong with rental arbitrage other than the old school, risk averse - "this is the only way I know how to do it" offering their advice saying it's "generally frowned upon".
This is more jealousy in my opinion of "why are you able to make as much or more than me without owning anything when I've had to spend all this money buying a property".
It's taken me 50 years to realize that real estate is nothing more than a tool; an asset, to help you leverage your way to financial freedom. Don't get too cozy with it. People have real lasting value; not property.
I own more real estate than many of these guys AND I also arbitrage because it's common sense smart leverage and it's win - win. If I can control an asset and gain the upside but also avoid the downside AND make a larger profit how in the world is that "not sustainable"? I negotiate solid, long term, below market rent deals with my owners that are 100% fully disclosed and I have more of them than I can handle. The world is full of landlords looking for a safe and easy (i.e. low but consistent) return on investment. Any talk of "ethical or legal practices" or "laws changing" just expose those investors who are strictly "in the box" thinkers whose lack of risk tolerance keeps them where they are comfortable. There is nothing legally or ethically wrong with rental arbitrage; nor is it more intrinsically risky than long term rentals provided you have your contractual agreements solidly worded.
Always fully disclose to your landlords what you are doing and don't worry that they will want to compete with you because 99% won't. It's too much work and a greater capital expenditure for them. They almost always opt for "easy street"; which is a steady, reliable (even below market), low hassle, guaranteed return vs. an unknown return that might be exponentially larger or may require more involvement and thought. Remember Maslows hierarchy of needs: humans always seek to avoid pain 1st. Seeking pleasure comes much later. This is why most Americans stay on the sidelines and end up living a life of mediocrity.
Provide a value to the landlord. (below market rent BUT stability + low risk + low maintenance + no/low mgmt. fees). The net to them should be greater than if they placed their property with a local mgmt company.
I just now realized I need to stand down from my soap box and stop talking but do not be dissuaded by those who would seek to squash your dreams...
Thoughts:
1. You are certainly entitled to your opinion. That doesn't make anyone else's invalid.
2. Who cares how much real estate you own? Do you think that makes you king of opinions?
3. You are a middle man, which is likely why you think it's a great idea.
4. Real estate is a commodity like virtually anything else. Give me a list of other products in which the product owner leases the product to an individual and allows them to sublease the product to someone else for their own profit with zero input from the product owner. Cars? I wonder how Hertz would feel about me leasing their cars and then re-renting them from "JD's Nice Car Rental lot"? How about copiers? Power tools and heavy equipment? Boats?
Frankly, I couldn't care less if other property owners want to let their tenants sublet. I would never do it. No one is going to make money on my property except for me. It has nothing to do with jealousy. I do very well with my properties and if there was any meat on the bone to turn my properties as STRs that meat would be going to me, not to someone who wants to "manage" my property. And I suggest that if someone's "dream" is to make money with no money and no assets, they would be better served using that energy to acquire some capital and leverage their own property.
PS: I'd love to know how someone who is not financially prepared to buy their own property is financially prepared to maintain the hotel they're running on someone else's property.
Skyline Properties - 5yMichael BaumPro MemberOlympia, WA · Member since 2016 · 8k+ posts · 7k+ votes
Hey @Emily K., just to be clear. You are happy to be told by someone that arbitrage works for them. He is someone who has millions of dollars in assets and 2 property management companies. @Robert Gilstrap is very successful and respected investor. What he just said is true....for him. He can leverage owners to get better deals just because of his investments. He has contacts all over the place and has the cash to move forward on a moments notice.
You on the other hand have no assets and can't afford to buy a property. That makes your position much weaker for arbitrage. Yes you can succeed in this model with nothing. Yes, 2020 is littered with corpses of arbitrage investors like yourself who lost everything and went bankrupt.
I hate to discourage you, but arbitrage can be a good thing or a one way trip to the poorhouse. Really do your homework. All it takes is one change to regulations in your area and poof, you are done for. Unless you can afford to carry a lease at a above market rate.
True, we only own one property that we can afford to own without a single guest. Right now we are about to start our 4th year of all 5 star reviews and are nearly fully booked for our primary season. I could go try the arbitrage thing and test it out, but I would much rather own another place, which we are looking at now.
But I could be full of bullsh*t...
- 5yKenneth GarrettPro MemberInvestor · Florida Panhandle/Illinois · Member since 2016 · 4k+ posts · 3k+ votes
I know people who have used the arbitrage method. Very successful. They pay a higher rent to use the property as described here not a lower rent. It works for them. Yes, they were told many times “No” till they got a yes from Landlord. I’m not a fan because if the regulations prohibit it in the future your going to be stuck at a loss. Of course you could rent it as a furnished corporate rental. Just like any investment you need multiple strategies to resolve issues. Who anticipated a pandemic to bring to the list of challenges.
Good Luck.
- Property Manager · Columbia, SC · Member since 2017 · 121 posts · 163 votes5y
We have 6 properties that we master lease in our portfolio. I prefer not to call it arbitrage because it doesn't really fit that definition of being a pure middleman taking advantage of pricing imbalances for the same product in two markets. You are changing what what the product is and the value it provides by furnishing it and offering it on shorter term duration contracts.
Our units have done very well for us, even under COVID in an urban market but it's not a free lunch and you'll need to work hard to make sure you do this right. Here are some points to consider if you're going to go this route:
- You need to be scanning the rental sites 24/7, Zillow, Facebook, Craigslist and only reach out to owners that have set their rents at or under market, and you should know what that is for your neighborhood. Do NOT offer above market rents, owners will rent to you if you solve a vacancy issue for them and are honest with them.
- Look out for red flags with owners. I won't go into the details, but we've had to terminate leases with owners who we signed leases with against our better judgement. This is a partnership, and they need to allow you to operate your business the way you need to, and you need to be their most reliable tenant that always sends a rent check like clockwork each month.
- Even if you get at or below market rents, you need to have a good idea of what your operating expenses will be (utilities, cable, consumables, damaged linens, etc.) and make sure the numbers leave you room for profit. Many operators won't even look at a place unless they see $1,000 in profit.
- Start with small units with the lowest risk, in my opinion (studio, 1 or 2 bedrooms)
- Have a master lease / corporate lease addendum ready to add to the lease that you sign that (at a minimum) states the intent to sublease
- You won't be profitable until 6 -12 months in because you'll be recouping the cost of furniture. Consider signing multi-year leases because moving after one year will likely put you in the red.
- You need to have a checklist of items you need to be true for the short term rental to work (parking, laundry hookups, etc.) and not rent if it doesn't meet certain criteria...you need a good product that works for your operations.
- You need to be able to have a good design sense and be able to add value to the unit with your furnishings & overall design...again you need to have a good product. Here is one that we rent, its an example of a good product - bonus points for being unique: https://heartwoodfurnishedhome...
- You need to be a very good operator and be very good at revenue maximization & pricing. This can swing your margins 20-30% and will be the difference between being profitable or not.
Last point is there are a lot of resources that I recommend. For master leasing, BiggerPockets isn't really the best because the focus is on owning the assets. Check out Airbnb Automated channel on YouTube, Sean has a ton of content to help you be a better operator. Also check out STR Success Stories (podcast) - its an interview format where there are many successful master lease operators.
That's a quick list but feel free to reach out if you have any questions.
@JD Martin okay my responses:
1.) You would cut out the middle man-me. But would you do the work? Would you answer constant questions, even as simple as "what are the best things to do around here" "are there toiletries" " we ran out of ___" "places we should avoid" ect. People are chatter boxes. Would you do the cleaning and laundry and restocking after each renter? It's not a hands off job and traditional landlord have more freedom with their time. That may seem more desirable, but STR can change the game financially.
2.) You actually do have an idea if they type of person you are renting to. Sites such as Airbnb allows a screening process of your choice. All IDs required upon booking ( yes, I have performed little facebook stalks) and best of all, I do not allow people to book who do not have more than 3, 5 star reviews (yes, that is okay to do) You can see their cleanliness and other characteristics rated by previous hosts.
3.) Your insurance doesn't cover this, but mine might. People form LLC and insurance will cover damages up to a certain amount. Another thing, you can require str tenants to purchase their own insurance through the app before booking and if everything is left as it was, they get refunded.
4.) You say you’re rental wears out faster. Your rental property will be deep cleaned at least 3 times each month vs. whenever your long term tenants decide to clean. Things are usually more preserved with str.
my first home will be a triplex and I'm not financially prepared for that at the moment, but you're right I am going to work towards that goal this year. In the almost 3 years I have been managing, I have never had a bad renter that destroyed anything other than a pair of sheets. Call me lucky I guess. One week of Airbnb and the rent for the month is paid. I have turned $700 monthly rentals into $2k+ per month rentals by converting to STR. And the return was QUICK after listing. The Airbnb's I managed have not suffered at all during this pandemic. If anything, People have spent an avg of 2 weeks to a month here at them and they are thriving. I have a 3 monther right now! Mostly quarantining and visiting family. Have you done str? There is "meat" in the game.
Putting myself in your shoes, I see the concerns and I’m not invalidating them in any way. But see it from my experiences. And hey, what landlord wouldn’t want an above avg rent?
- Rental Property Investor · Harrisburg, PA · Member since 2018 · 369 posts · 406 votes5y
Originally posted by @JD Martin:
Originally posted by @Emily K.:
@Rich Ramjatan looking into other forums about this, there seems to be an understanding between landlords and renters who then rent for air bnb. Win win situation for both unless it’s infringing on state guidelines. I do not see how this is unethical or illegal. Am I overlooking something?
I would never allow a tenant to do this with my property (what you are doing is subletting, whether for a day or a year), my leases specifically prohibit this, and I would evict any tenant caught doing it. Why?
1. If my property is going to suffer the wear and tear of a parade of boarders, why shouldn't I get the profit instead of you, who owns nothing and has no financial skin in the game? In other words, why not just do it myself and cut out the middleman - which is you -?
2. I have no realistic control or knowledge of what type of people to whom you are renting.
3. My insurance doesn't cover short term rentals.
4. My property wears out faster.
Bottom line for me is I think it is a lot of nerve to ask a landlord to hold the costs of owning the property while you insert yourself into the process in order to profit off of someone else's asset. This is meant for all "arbitrage" STR people so don't take it personal, but you should save some money and buy your own property if you want to run a hotel.
THIS. Save your own money and buy your own property. WHEN (not IF) this plan goes south on you you'll be the first one to bail and say "Whew, thank goodness I didn't own that place"!! People are people, and with no skin in the game they don't care about other people's properties...and as much as they say they do, they don't.
- Rock Star Extraordinaire · Northeast, TN · Member since 2015 · 10k+ posts · 17k+ votes5y
Originally posted by @Emily K.:
@JD Martin okay my responses:
1.) You would cut out the middle man-me. But would you do the work? Would you answer constant questions, even as simple as "what are the best things to do around here" "are there toiletries" " we ran out of ___" "places we should avoid" ect. People are chatter boxes. Would you do the cleaning and laundry and restocking after each renter? It's not a hands off job and traditional landlord have more freedom with their time. That may seem more desirable, but STR can change the game financially.
2.) You actually do have an idea if they type of person you are renting to. Sites such as Airbnb allows a screening process of your choice. All IDs required upon booking ( yes, I have performed little facebook stalks) and best of all, I do not allow people to book who do not have more than 3, 5 star reviews (yes, that is okay to do) You can see their cleanliness and other characteristics rated by previous hosts.
3.) Your insurance doesn't cover this, but mine might. People form LLC and insurance will cover damages up to a certain amount. Another thing, you can require str tenants to purchase their own insurance through the app before booking and if everything is left as it was, they get refunded.
4.) You say you’re rental wears out faster. Your rental property will be deep cleaned at least 3 times each month vs. whenever your long term tenants decide to clean. Things are usually more preserved with str.
my first home will be a triplex and I'm not financially prepared for that at the moment, but you're right I am going to work towards that goal this year. In the almost 3 years I have been managing, I have never had a bad renter that destroyed anything other than a pair of sheets. Call me lucky I guess. One week of Airbnb and the rent for the month is paid. I have turned $700 monthly rentals into $2k+ per month rentals by converting to STR. And the return was QUICK after listing. The Airbnb's I managed have not suffered at all during this pandemic. If anything, People have spent an avg of 2 weeks to a month here at them and they are thriving. I have a 3 monther right now! Mostly quarantining and visiting family. Have you done str? There is "meat" in the game.
Putting myself in your shoes, I see the concerns and I’m not invalidating them in any way. But see it from my experiences. And hey, what landlord wouldn’t want an above avg rent?
Hi Emily,
First, kudos to you for the intelligent, non-emotional response. Many others would have cried and screamed because I "stomped on their dream."
You make a good argument - that is true, for example, that there is work to be done on a constant basis with STR.
But the bottom line for me is that a rental property is a commodity that has to be properly managed and maintained in order to preserve and increase its value. No subletter is likely to maintain it to the owner's standard because that costs money. And if/when things go wrong, the subletter walks off into the sunset while the owner deals with the fallout. Let's suppose one of the guests starts a fire in the kitchen. My insurance says "Sorry, not covered because it was a sublet that you allowed", so now I have to depend on the good graces of you/your insurance to repair the place. If your insurance company gives me a hard time, my only leverage is to sue them.
I suspect if your property owners contacted their insurance companies (and their lenders, probably as well), they would find out that what they are doing is against the terms of their insurance and that everyone would have to lie in order to cover a claim.
In any case, good luck to you. Others may feel different but that is my stand.
Skyline Properties @Michael Baum @Michael Baum I am “happy” that someone gave me advice based off of actual experience vs. a theoretical analysis of what could happen. Not because it positively aligns with my question and that’s the answer I want to hear, but because it was an answer based off of practice and experience. I want to hear experience, success and/or failures. Not discouraging advice on something that person has not done. Of course failure is a concern and I agree 100% that owning your own property eliminates many potential issues. I’ll unlikely take to this route but I like to hear what people say. Also people say the pandemic has left people high and dry in this industry but we still performed very well. Personal stats that obviously doesnt depict the industry as a whole.
- Rental Property Investor · Houston, TX · Member since 2017 · 50 posts · 39 votes5y
@Emily K.
I had two rental arbitrage AirBnB properties (yes I had permission from the landlord to do so). He was very interested in seeing how his properties would perform as STR's. So basically he got a free consultation on how his properties did by allowing us to rent them and put them on AirBnB. He also received a very fair rent and his properties were always show ready with us taking such great care of them and them being cleaned and touched up regularly.
So for two and half years it was very viable and mutually beneficial. However, then COVID happened and we had about 3-4 months with no revenue all while we continued to pay the rents. And we also had one AirBnB property that we owned that we had to make mortgage payments on while it was sitting empty for 3-4 months. So with the 3 properties running dry for 3-4 months our reserves were wiped clean. Thankfully we weren't like a lot of people I know that spent it as quickly as it came in. We survived and eventually ended up not renewing our leases on the arbitrage properties just with all of the uncertainty over the past year and potentially next year.
All this is to say that it is a viable business model, however you may have more challenges with the current state of affairs to get a landlord on board with the risk. Also, be sure to keep plenty of reserves for when the stuff hits the fan.
- Real Estate Broker · Portland, OR · Member since 2019 · 4k+ posts · 2k+ votes5y
This means I would pay the original landlord the monthly rent and keep additional profits for myself. Has anyone done this?
1) Does the owner allow sub-leasing on the lease? At a min, I'm sure he wants to know what you're charging.
2) Cities are getting really picky about VRBOs. Think just changing use from an apt to VRBO is opening a whole can of worms. Govt usually wants some kind of motel tax.
- Member since 2020 · 27 posts · 27 votes5y
Hi @Emily K., finding a landlord willing to sublet under these terms may be challenging, but it's not impossible. You may have to negotiate concessions with a prospective landlord to get their buy in. Like increasing the security deposit, having supplemental insurances in place, or assisting with the improvement of the property in certain ways. To narrow the scope, I'd start with looking up landlords that have multiple properties on zillow rentals, and asking if they allow subletting in any of their properties. From what I've seen, owners with medium to small portfolios often seem to be more open to negotiations. As a renter and student in the past, larger cities with transient populations and college towns seem to have more sublet friendly landlords as well.
I'm not familiar with the laws per state or even county levels, but I know this could be another challenge. Before you even reach out to landlords, do some research on airbnb friendly areas, and maybe even consult with a lawyer to narrow your scope. It could be a worth while investment before subletting in an area that prohibits short term rentals.
I am certainly not an expert on this particular strategy, but I did a lot of research when considering my real estate options in South Florida in the past, and this was one of my favorite strategies. I just found the limitations at a county and sometimes neighborhood level were just too dense to make this work in that area, but I'd certainly consider it again in other areas if I'm strapped for cash flow.
Best of luck.K
- Flipper/Rehabber · San Francisco, CA · Member since 2017 · 176 posts · 70 votes5y
Yes, you can do Rental Arbitrage or a Master Lease. Some companies that do it, Zeus Living, Blue Ground, and Sonder for residential (I believe they are all Corporate Rentals). WeWork, Industrious, and Spaces in Office. Youtube channel to follow: Airbnb automated - He has a mix for STR and Monthly Stays. Extended Stay for Lanndlord by Al Williamson that focuses on Corporate Rentals.
We manage 14 properties in the Bay Area as a property manager. We do have a rental arbitrage on a studio in San Mateo. Landlord was open to the idea and they aren't doing well with getting tenants so they went with us.
Join the conversationCreate a free account to reply, vote on answers and follow this thread.