Air Bnb Rental Arbitrage

19 Replies

Investment Info:

Single-family residence other investment.

Purchase price: $1,000
Cash invested: $1,000

Airbnb - Rental Arbitrage. Working on growing this. This one is a partnership with home owner. We split air bnb profits 50/50. It was for rent and we agreed to a deal.

@Alexander Ryan-Bailey congrats on getting an owner "over the hump", that can be the hardest part. Is this your 1st unit? Who's paying for furnishing? If he is, you're getting the better end of this deal by about 25%!

@Justin Ellis , thanks! This is my first Rental Arbitrage unit. I've done Abnb before. My goal is to reach out to For Rent, pitch my air bnb model, and go from there. Typically I just pay them rent, and furnish the property. I get all profits. But for the ones who say "No", many can change their mind if your partner up and split the air bnb profits. I'm not on the lease or anything like that. If I'm leasing and getting 100% profit, they I furnish. If they want to partner up we split the furnishing or have them do it. 

To furnish it's usually 2x the amount of rent. 3x to get it real nice. 

I’d love to do that before jumping into buying! Can you do it with apartments too or just houses? Is this in SLC? I’d love to know what kind of person/property you approach and how you approach them (as a property manager? A tenant? What do you say?).


nice work!

Interesting topic here. I am a landlord in Cincinnati, Ohio. I have a 4 unit building that is roughly 15 mins from downtown in a solid B/B- neighborhood. Interested in converting my units into this type of model if the right group presented a viable proposal. I ran an Airbnb in a SFR in Cincinnati and it did extremely well. Feel free to reach out to discuss opportunities.

Originally posted by @Jack Hostutler :

@Alexander Ryan-Bailey - how did you go about re-working the lease agreement with the property owner to be able to rent it out as an STR? Do you recall any specific provisions you had to modify, remove or add to make the lease support the use case?

 You said it yourself you just "rework" the lease. Reach out to your attorney and they can help you with the paperwork. Takes a few minutes. 

I'm definitely planning to do that. I just didn't figure many attorneys have dealt with this scenario yet and thought the scope might fall outside a simple removal of a no-subleasing clause.

I will let you guys know what info I get when I talk with my attorney

Originally posted by @Jillian Ez :

I’d love to do that before jumping into buying! Can you do it with apartments too or just houses? Is this in SLC? I’d love to know what kind of person/property you approach and how you approach them (as a property manager? A tenant? What do you say?).


nice work!

Hi! I know some do it in apartments, I haven't quiet yet. I focus on SFH 3 Bedrooms / 2 Bath. I also like smaller 1 bedrooms as well or condos. If there is a hotel in the area this will work. I approach the owner as a renter. Get them on the phone or meet in person, and go over my idea. I want to say 5/10 are into it, especially if you discuss splitting profits 50/50 then you're not on a lease + instead of getting $1400 in rent they will probably get around $1900 which is mind blowing.

AirbBnB: Why an owner would do that vs rent it out?
*Professionally cleaned almost every day

*Don't need to worry about maintenance (under $500 - so almost everything)

*Possibly another couple $hundred coming their way

*LESS wear and tear

*Much more

 

Originally posted by @Osric Harris :

@Alexander Ryan-Bailey do you recommend leasing the properties under an LLC, or are the leases that you are on, under your name? My wife and I want to get started with this in Greenville, SC but are unsure if we can have multiple leases under our names.

Never thought about it. I set my LLC up in about 30 minutes, never thought about doing this without one.

Originally posted by @Osric Harris :

@Alexander Ryan-Bailey do you recommend leasing the properties under an LLC, or are the leases that you are on, under your name? My wife and I want to get started with this in Greenville, SC but are unsure if we can have multiple leases under our names.

Also I recommend a business. You can always sell that (not in my plan but just a thought). I.e. for example if you NET around $300,000 in your real estate or airbnb biz, you can sell your LLC / Business for close to $2 million or so. I believe the hotel industry is paying around 7x of your net biz. Or somewhere around that.

thank you!!! Why wouldn’t they need to worry about maintenance?

you probably make a lot of these prospecting calls—do you have a script you follow? If so, I’d love to take a look!


Originally posted by @Alexander Ryan-Bailey :
Originally posted by @Jillian Ez:

I’d love to do that before jumping into buying! Can you do it with apartments too or just houses? Is this in SLC? I’d love to know what kind of person/property you approach and how you approach them (as a property manager? A tenant? What do you say?).


nice work!

Hi! I know some do it in apartments, I haven't quiet yet. I focus on SFH 3 Bedrooms / 2 Bath. I also like smaller 1 bedrooms as well or condos. If there is a hotel in the area this will work. I approach the owner as a renter. Get them on the phone or meet in person, and go over my idea. I want to say 5/10 are into it, especially if you discuss splitting profits 50/50 then you're not on a lease + instead of getting $1400 in rent they will probably get around $1900 which is mind blowing.

AirbBnB: Why an owner would do that vs rent it out?
*Professionally cleaned almost every day

*Don't need to worry about maintenance (under $500 - so almost everything)

*Possibly another couple $hundred coming their way

*LESS wear and tear

*Much more

 

 

Originally posted by @Jillian Ez :
thank you!!! Why wouldn’t they need to worry about maintenance?

you probably make a lot of these prospecting calls—do you have a script you follow? If so, I’d love to take a look!

That’s one pro for them. I take care of the maintenance of $500 or less per month. Also I don’t talk to to many... if you call or meet with 10 you should be able to consistently see 5-7 be open to the idea. No script I just talk to them. 

”You wouldn’t be interested in... would you?”

”What if....?”

 

That’s so interesting! That’s one of your tools to sweeten the deal. I didn’t realize maintenance was such a big annoyance/concern but it makes sense. That doesn’t eat until your profits though? Or you just charge the Airbnb person if they make any damage so you pass most costs through? What if there’s an ongoing issue related to something that’s out of your control, like ongoing issues with the toilet, for instance. You pay up to $500 per month to fix it? 

Remind me—are you locked in for 12 months or do you get them to give it to you month-to-month?

i wonder if there are any good areas for that near me in LA. Maybe Santa Barbara?



Originally posted by @Alexander Ryan-Bailey :
Originally posted by @Jillian Ez:
thank you!!! Why wouldn’t they need to worry about maintenance?

you probably make a lot of these prospecting calls—do you have a script you follow? If so, I’d love to take a look!

That’s one pro for them. I take care of the maintenance of $500 or less per month. Also I don’t talk to to many... if you call or meet with 10 you should be able to consistently see 5-7 be open to the idea. No script I just talk to them. 

”You wouldn’t be interested in... would you?”

”What if....?”

 

 

Originally posted by @Jillian Ez :
That’s so interesting! That’s one of your tools to sweeten the deal. I didn’t realize maintenance was such a big annoyance/concern but it makes sense. That doesn’t eat until your profits though? Or you just charge the Airbnb person if they make any damage so you pass most costs through? What if there’s an ongoing issue related to something that’s out of your control, like ongoing issues with the toilet, for instance. You pay up to $500 per month to fix it? 

Remind me—are you locked in for 12 months or do you get them to give it to you month-to-month?

i wonder if there are any good areas for that near me in LA. Maybe Santa Barbara?

I don’t actually pay $500 a month in repairs. I’ve actually maybe spent $100 over the past 4 months for light bulbs and very minor things.... I can go UP to $500 though if something happens. Yes 12 months. Although I’ve heard of others going month to month or 6 mo. 

if you partner with the owner and split profits vs doing it all yourself then you’re not on a lease. You’re just managing the bnb and giving them half of what you make + covering their rent. 

Originally posted by @Alexander Ryan-Bailey:
Originally posted by @Jillian Ez:
thank you!!! Why wouldn’t they need to worry about maintenance?

you probably make a lot of these prospecting calls—do you have a script you follow? If so, I’d love to take a look!

That’s one pro for them. I take care of the maintenance of $500 or less per month. Also I don’t talk to to many... if you call or meet with 10 you should be able to consistently see 5-7 be open to the idea. No script I just talk to them. 

”You wouldn’t be interested in... would you?”

”What if....?”

 

 

 

Great work!  


Any concern from owners about not covering their monthly normal lease amount due to low/slow time of year, etc... and how you are overcoming the objection?


Updated almost 2 years ago

@Alexander Ryan-Bailey Great work! Any concern from owners about not covering their monthly normal lease amount due to low/slow time of year, etc... and how you are overcoming the objection?

@Danny Wood hi Danny, I specialize doing STR (short term rental) setups and have been working with investors to make it a passive investment that increases their cashflow significantly. If this sounds interesting to you, send me a message. Thanks!

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