You can find rental arbitrage properties by:
Searching on social media platforms, like Facebook, Instagram, and TikTok. Using rental listing websites, like Apartments.com, Realtor.com, Zillow, and others. Contacting real estate agents in the local area you’re interested in. Joining networking events with real estate investors, found on MeetUp.com and EventBrite listing sites. Driving around your area to find properties for rent.
Rental arbitrage is an excellent business model for non-property owners who want to dip their toes into the real estate industry. Required startup costs are usually at $5,000 with a potential income of $2,500 per month.
5 Ways To Find Rental Arbitrage Properties In Any Area
To find rental arbitrage properties in any area, you should:
1. Search on social media platforms
Popular social media platforms can be a useful research tool for your rental arbitrage business. For example, you can check out Facebook, Instagram, or even TikTok to find rental properties in your area. Besides, many landlords and property owners post about their units online to gain attention among social media users.
You can search by location using hashtags like #airbnb, #airbnbbusiness, #apartment, #rentalarbitrage, #rentals, and #shorttermrental. You can also join groups for property owners and rental arbitrage entrepreneurs to find relevant information.
2. Use rental listing websites
Another idea is to browse around top rental listing sites, such as:
These resources contain detailed property listings that you can check out. You can even filter results by area, making it faster and easier for you to find units in any given location.
3. Contact local real estate agents
You can also consider tapping real estate agents in your area to save time. These experts have easy access to plenty of relevant information since they directly work with landlords and property owners. So if you’re looking for Airbnb property recommendations for your business, they’ll know how to help. These professionals are also constantly up-to-date on local laws in the short term rental industry so they can always provide answers for your questions. Just be ready to spend on commissions when taking this route.
4. Join networking events with real estate investors
For better results, you can also consider joining local real estate networking events. Be ready with your pitch as you meet people in these gatherings. Let them know about your plans to do rental arbitrage, the type of property you’re looking for, your budget range, and other important information. Also, gather contact information of relevant contacts, so you can make follow-ups with them soon.
Visit websites like MeetUp.com and EventBrite to find upcoming real estate networking events in your area.
5. Drive around your area to find properties for rent
This traditional approach may seem old school and time consuming but it can actually be effective in helping you identify available rentals in your area. Driving around and looking for “For Rent” signs can also give you the chance to have instant in-person meetings with property owners. See if they’re open about the idea of you offering their property on Airbnb and other short term rental platforms.
How to find an Airbnb friendly landlord?
You can find an Airbnb friendly landlord by checking out:
Real estate websites. As mentioned earlier, Apartments.com, Realtor.com, Trulia, Zillow, and other websites can help you find properties in any area. Many property owners who use these resources are open about working with rental arbitrage entrepreneurs.
Online marketplaces. You can also check out Google, Craigslist, or Facebook Marketplace to find houses or rooms for rent. These free resources can also point you in the right direction as you look for Airbnb friendly landlords and property owners.
Airbnb-friendly apartments program. Airbnb launched the Airbnb-friendly apartments program in November 2022. The platform partnered with US apartment buildings “to make it easier for renters to find apartments that allow hosting on Airbnb part-time.”
If you encounter a hesitant landlord or property owner, be ready to pitch your business idea with a prepared rental arbitrage script.
What is a rental arbitrage script?
A rental arbitrage script is a set of dialogue you tell a property manager or owner to convince them about the business model. As a prospective tenant, your goal is to help them realize that doing business with you will be worth it.
As an example, Greg Pimentel of the Rental Arbitrage Academy tells property owners:
“What I would like to do is welcome guests to stay in the property for two or three nights when they visit the city and offer them a place to stay… I help property owners avoid bad tenants that don't pay the rent on time and I can take on the responsibility of accommodating guests in the property.”
Meanwhile, Kyle Stanley of the Airbnb Kickstart Course approaches landlords this way:
“I'll be your best tenant. I'm not going to be a (difficult) personality you have to deal with… Let's say this relationship ever ends and you're worried about the turnover. I'm going to give you the property back in either the same or better condition than when you gave it to me because I have cleaners going there every single week. I've got eyes on that property.”
What is a rental arbitrage contract?
A rental arbitrage contract is an agreement between a landlord and a tenant who intends to use the property for rental arbitration purposes. The document usually contains basic information such as the names and contact information of both the landlord and the tenant. It also has details about the amount of monthly rent, payment due date, and lease duration. Terms and conditions regarding property usage, furnishings, and other relevant information are also included.
What is an example of an effective rental arbitrage contract template?
An effective rental arbitrage agreement ensures that both the property owner and renter understand their rights and responsibilities. Here’s a simple one page lease agreement as shared by the Airbtics website:
How do you use a rental arbitrage calculator?
A rental arbitrage calculator can be useful for keeping track of your business expenses and potential Airbnb income. YouTuber and real estate expert Joshua Baldovino has an excellent rental arbitrage calculator on his website. His spreadsheet sample covers everything from startup costs, competitive listing analysis, expenses and furnishing calculators, and more.
What is short term rental arbitrage?
Short term rental arbitrage is when a tenant rents a property from a landlord and offers it for rent on Airbnb, VRBO, and other vacation rental marketplaces. Through this business model, the tenant gets to start a real estate business without owning a property. In essence, the tenant acts as a middleman with the goal of earning more than the monthly rent through getting multiple bookings. Couples, families, students, business travelers and digital nomads are among the most common customers.
Today, the short term rental arbitrage industry continues to grow through the popularity of platforms like Airbnb. An increasing number of customers now prefer booking short term rentals than hotels during their vacations. Landlords have also become more accepting of the business model because it allows them to earn consistent income from their long term rentals.
What are rental arbitrage apartments?
Rental arbitrage apartments are properties that allow rental arbitrage operations. Rental arbitrage listings usually range from houses, condos, private rooms, and apartments. In many ways, apartments have become among the most popular property types among arbitrage entrepreneurs because it allows them to rent and sublease multiple units in a single location. This means an Airbnb entrepreneur only has to deal with one landlord, which simplifies the negotiation process. Maintaining properties also becomes much easier when rented units are located close to each other.
Does Airbnb allow rental arbitrage?
Airbnb allows rental arbitrage on their platform. This business model allows non-property owners to list rented properties on the website as long as they:
1. have permission from landlords/property owners
2. meet local laws in their area
To make the most of an Airbnb listing, a rental arbitrage entrepreneur should post a detailed property description. Also, it helps to have clear photos of both the interior and exterior to give potential guests an idea of what they’re getting.
Listing a rental arbitrage property on Airbnb is entirely free. However, hosts are required to pay a 3% flat service fee from the booking subtotal so make sure to consider this as you come up with your pricing strategy. According to their official website, the subtotal is “your nightly price plus any optional fees you charge guests, like a cleaning fee, and doesn’t include Airbnb fees and taxes.”
What are the best cities for Airbnb arbitrage in the US?
The best cities for Airbnb arbitrage in the United States are:
- Nashville, Tennessee
- Charleston, South Carolina
- Boston, Massachusetts
- Savannah, Georgia
- San Diego, California
On average, Airbnb entrepreneurs can make around $96 a day in Nashville, TN. Meanwhile, you can gain a $77 daily profit in Charleston, SC and around $66 a day in Boston, MA. In Savannah, GA and San Diego, CA, Airbnb properties usually yield an average daily profit of $65.
SUMMARY
Ultimately, Airbnb's profitability depends on the average occupancy rate per month, the nightly rate, and the property’s location. For more on this topic, go check out one of our previous articles where we discuss the 15 best cities for Airbnb arbitrage in greater detail. We also debunk 10 locations that are actually not as profitable.
Is rental arbitrage legal?
Rental arbitrage is legal in most areas. However, local regulations may vary from one location to another. This includes zoning laws as well as licensing and registration rules. So before investing money in a property, it’s always best to do your research to learn about laws in your area. That way, you can make sure you comply with the government’s requirements and can operate your business legally. You also get to avoid fines and lawsuits.
Where is rental arbitrage illegal?
Locations have varying regulations on Airbnb and short term rentals in general. While others permit the rental arbitrage model, some have stricter rules or entirely prohibit it such as the cities of Dallas and Newport.
Recently, the Dallas City Council announced a ban on Airbnb, VRBO and other short term rentals from single-family zoned areas. According to news reports, this ban will begin enforcement in December 2023. It will directly affect over 1,000 registered STRs and “likely thousands more operating unlicensed in the city.”
On the other hand, Newport City, Rhode Island passed an ordinance last year prohibiting short term rentals in residential areas. According to their official website, “property owners in Newport’s Residential Zones are no longer permitted to rent their properties for less than 30 days, unless the home serves as a primary residence.”
How to start a rental arbitrage business?
To start a rental arbitrage business, you should:
- Check local laws
- Estimate your startup cost
- Find a property and get approval from the landlord
- Furnish the unit
- Consider starting an LLC
- List the property in online marketplaces
1. Check local laws. First, you will need to check existing short term rental arbitrage laws in the area where you plan to establish your business. Complying with local regulations and requirements is a must, especially if you’re aiming to do this for the long haul. Visit city government websites to learn about current policies and be sure to stay updated for any sudden changes.
2. Estimate your startup cost. Do your research to determine how much you will need to start your business. Generally, upfront costs include cleaning services, furnishings, utilities, insurance, licenses, security deposit for the property, and more.
3. Find a property and get approval from the landlord. Next, look for a property you can rent. When negotiating with the landlord, explain what you do as a rental arbitrage entrepreneur. Seek their permission before proceeding with your business.
4. Furnish the unit. As needed, furnish the unit to make it comfortable and attractive for your potential guests. Provide necessary amenities and decorate the place to make it stand out among other similar listings..
5. Consider starting an LLC. While this may not be a requirement in some areas, forming a Limited Liability Company has its advantages. For example, an LLC can provide tax flexibility and protection for your personal assets.
6. List the property in online marketplaces. Start joining short term rental platforms like Airbnb, VRBO, and others. You can start earning as you gain attention from your target market through these sites.
Airbnb arbitrage Reddit reviews
Here’s what some Reddit users have to say about the Airbnb rental arbitrage business model:
Related Articles on Airbnb Arbitrage
Final thoughts: Is rental arbitrage worth it?
Rental arbitrage can be worth it if you have great property management skills and are operating in a profitable location. This real estate strategy can prove lucrative, especially in cities where short term rentals are in high demand.
Be warned, however, that it can be a tricky business model to navigate, particularly during slower months. In some cases, you may lose money by paying a full month’s rent even when you receive only a few bookings. Another common challenge among arbitrage entrepreneurs is that it can be a time-consuming business to run. Usually, you’ll have to be available during weekends and holidays to accommodate your customers’ needs. Plus you may have to deal with legal issues when your location implements a sudden policy change.
My recommendation? You’re better off doing lead generation. In comparison, this business model is less complicated since it’s not as expensive or risky to operate. All you’ll have to do is to pick a niche, build a site, and boost that site’s search engine presence. Once your site begins to attract organic traffic, you can then offer the leads to potential customers.
Personally, I make a passive income of up to $52,000 a month from my lead gen biz. Plus I also teach a course for interested learners who want to learn how to do it the right way.
