Hosting Hotline: How to Leverage Airbnb for Rental Arbitrage

Welcome to another Ask Me Anything (Ask Us Anything?) episode! Each week, we’ll answer your questions on STR, real estate, OTAs, and everything in between.

How to Approach a Potential Rental Arbitrage Business Plan

Celia asks:

I’ve been researching and preparing to get into the STR business. How do you pitch a landlord on subletting a property to list on Airbnb (aka rental arbitrage)?

A Few Tips for Entering the Rental Arbitrage Space

1. Our first piece of advice for approaching a rental arbitrage business plan is to go the mom-and-pop route, talking to someone that you potentially already know. Lead with full transparency, exactly how you intend to utilize the property by renting via an OTA. We would absolutely recommend starting there. 

2. If there’s someone in your personal network that you know, that owns properties that you can really sit down and explain to them how you want to use the property, that’s how we would start.

3. The cool thing is, Airbnb is no longer this thing where people don’t know what it is or they don’t understand the success it can bring. So the conversation that you have with a landlord is going to go a lot easier than it did back in 2015, ’16, ’17, ’18. So there’s that. But there isn’t any other option than to be completely transparent because you don’t want to break the law and you don’t want to sign a lease that you’re responsible for and not have a full understanding of what that lease means and whether or not you and the landlord are on the same page. Educate yourself a little bit, understand what you’re signing yourself up for. You are responsible for rent each month. Make sure you do your numbers correctly. But I think another place, if you don’t have it in your immediate circle, is to go to real estate meetups. People who are trying to leverage their property in diverse ways, they’re going to love this conversation with you.

4. What do you ask the landlord? Not only in terms of getting permission to do this with them, but also interviewing them as landlords. Because since you don’t own the property and you’re not in a managerial position with them, like as their property manager, you are a tenant, what kind of landlord are they going to be for you because you are now going to be at the mercy of them taking care of important fixes. What happens when the furnace goes down or the fridge breaks? Some arbitrageurs will assume they’ll just take care of those things, but are you allowed to do that? Make sure you understand too what that tenant-landlord relationship is going to be like in special circumstances like that; remember, in this scenario, your landlord is a linchpin in your success.

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Download a full transcript of this episode on rental arbitrage.