By The Hospitable Team
Many people think that they must own property first before building an Airbnb business. That’s not true thanks to rental arbitrage. Through this business model, you can still become an Airbnb host even if you don’t own a house or apartment.
You can work with a landlord to rent their property and further lend it on Airbnb. The best thing about Airbnb rental arbitrage is that it allows you to get passive income without large capital.
Rental Arbitrage: Is It Right for Me?
Arbitrage is basically buying something at a low price and then selling it at a higher price for a profit. You may have seen this type of business in other online business models like Amazon retail arbitrage (often paired with fulfillment by Amazon—FBA)
Rental arbitrage is one of the forms of real estate arbitrage. In short, it means you rent a property long-term and then re-rent it to other occupants with the permission of the landlord.
What does it mean in reference to Airbnb? A real estate investor rents a condo, apartment, or a single-family home from a landlord, then lists it on Airbnb and collects the difference.
To make a profit with your rental arbitrage, you will need to have an Airbnb income that exceeds your expenses. They include the cost of rental, furnishing, managing the property, and other business-related expenses.
Essentially, the size of your income depends on the efficiency of your operations. You need to do your best to make the following happen:
- Your listing to appear high in Airbnb search results
- Get consistently good reviews
- Never lose a booking opportunity because of the late response to your guests’ questions
- Ensure excellent guest experience and never make stupid hosting mistakes
- Upsell services when relevant
Doing your best doesn’t mean doing it yourself.
Is rental arbitrage legal? On the Airbnb side, this activity is completely legal and allowed according to their terms of service. But before you start renting out on Airbnb, you should inform your landlord about your plans. If your landlord agrees, you should sign an agreement, preferably in the presence of a lawyer.
How Does Airbnb Arbitrage Work?
So, how do you get started with Airbnb rental arbitrage? Here are the essential steps.
Start with solid market research to identify profitable areas and cities, for example, in popular tourist destinations. Look for properties closer to the main attractions and amenities and check out rates of similar properties in the neighborhood. In this way, you’ll be able to estimate your earnings and choose the best option for you.
Get familiar with local regulations and laws because, in recent years, many cities have reinforced restrictions on short-term rentals.
Determine how much money you need to start your rental arbitrage business. The common starting costs include an application fee, deposit, insurance, furnishing, appliances, legal fees (licenses, permits, etc.).
List your property on Airbnb, include your schedule, daily prices, and requirements for guests. Optimize your profile by adding high-quality photos and including the right keywords in the rental property description. In this way, you will increase your listing visibility and generate more bookings.
Managing multiple rental arbitrage properties on Airbnb involves a lot of work. So you should get more tech-savvy and automate your business. By having proper systems and processes in place, you can run your business with minimal effort.
It’s easy to keep all your listings organized.
Check out how you can save time and get more opportunities to scale your business.
How to Make Money on Airbnb Without Owning Property?
Airbnb is becoming increasingly versatile, and there are many different ways to earn on this platform. You can take advantage of the short-term rental market without owning property. There are two ways you can do it.
You can become a property manager and help other people who want to be Airbnb hosts but don’t have the time to deal with it. The great part of this strategy is that you can run more than 1 Airbnb. You can make around 10%-20% of the revenue without risking investing in real estate.
Another way is rental arbitrage. This business model is one of the best ways to invest and make money on Airbnb without buying a property.
Whichever approach you choose, make sure to avoid the novice host mistakes. They can ruin your guest experience and thus drain your revenue.
Just do thorough market research, obtain all permits, and list the property on Airbnb. You will be able to pay for your rent and get a chance to become a prosperous full-time host. But that’s only the first step.
By automating your business, you can enhance your guest experience and save a lot of time on routine operations. That will open more opportunities for growing your business and increasing your rental income.
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Conclusion
Making money on short-term rentals is not exclusive to people who already own properties. Rental arbitrage is a business strategy that will allow you to start your short-term rental Airbnb operation without owning a house.
The great part about this strategy is that it doesn’t take too much money upfront, so anybody can get into it and become a profitable Airbnb host. You can use this strategy to raise money to begin your short-term rental business.
How to Start an Airbnb Business: Questions Answered
You are wondering how to be an Airbnb host? Anyone can list an extra room on the Airbnb website, and signing up to become an Airbnb host is fairly simple. Still, there’s a number of steps to take and pitfalls to avoid. Don’t worry, we’ll guide you.
Booking.com Host Guide for Beginners
Today, Booking.com is one of the largest accommodation booking platforms, with more than 28 million listings in 226 countries and territories across the globe. Planning to become the part of this crowd? Our guide will get you started.
Vacation Rental Investment: Is It Worth It?
Thinking about real estate investment to make money outside your 9-to-5 job? Buying a vacation rental home might be the best way to enter the real estate business and become a property investor.
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