When most people think of real estate investing, they usually assume a few things. One, they think they need a lot of capital to get started, and two, they think they need to own a lot of property to make money. That’s not true, thanks to rental arbitrage.
Owning property isn’t a bad thing, but it isn’t necessary under the arbitrage model. Through this method, you can work with a landlord to rent out their property on Airbnb—and make a lot of money doing so.
What Is Rental Arbitrage?
The word arbitrage is a financial term that basically means taking commodities from one marketplace and selling them for a profit in another.
In reference to Airbnb, it means an investor rents a property from a landlord, then lists it on Airbnb and collects the difference. For example, let’s say you rent a condo for $1,500 per month and list it on Airbnb for $4,500 per month. Before expenses, you collect $3,000 per month in profit. (Keep in mind that expenses can range from $250 to $1,000-plus per month, depending on your strategy.)
Most rental arbitrage investors aim to make around $1,000 net profit per property—although you can make much more.
Is Rental Arbitrage Legal?
When I first came across this model, I had several questions. Namely: Is this legal? And how will the landlord respond when they find out?
Fortunately, yes! It’s completely legal. In fact, the rental arbitrage strategy has been used for a long time—it’s just not talked about often. Like many creative investment strategies, it stems from the realm of commercial real estate.
First, you must tell the landlord about your intentions for the property. Some will be open to it; others won’t. If you encounter one who isn’t, you move on. Honesty is key.
Keep reading the article “Rental Arbitrage: The Secret to Making a Fortune on Airbnb Without Owning Property” by Jason Allen here:
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