The Rise of the Airbnb Rental Arbitrage Model – Why Does It Work?
If you’re a travel enthusiast, you’ve probably heard of Airbnb. It is a popular online platform where you can book rooms or even entire houses to stay while on vacation.
But besides using the app to improve your “location”, did you know that you can also use it to earn extra income?
According to Airbnb, their hosts are average $13,800 per month Which is a pretty decent amount for a side hustle.
Of course, it still depends on the type of property you own, where it’s located and what kind of amenities you can afford.
But what if you don’t own any property? Like zero, shake, zilch. So is there really no way to join your business? Well, luckily, there is.
And today, you’re going to find out how people can start an Airbnb business and earn 5 figures a month without owning or buying property.
The Power of the Airbnb Rental Arbitrage Model
Setting up an Airbnb business is much easier if you have vacant real estate or enough capital to buy. However, most people don’t and that’s why it can be a challenge to get started.
The good news here is that the old adage still holds true – when there’s a will, there’s a way.
And for those who want to launch an Airbnb business without buying or owning property, there are actually two ways to do it:
Subleasing
Subleasing A form of Rent Arbitrage Where you are looking for a property to rent.
Once you’ve done that, you’ll need to contact the landlord or owner and ask them if you can use the property as a short-term rental on Airbnb.
When you get a yes from the landlord, you can now sign a legal agreement that you now have permission to use the property as a short-term rental, and then furnish it so you can launch it on Airbnb.
Co-hosting
Co-hosting Another strategy that allows you to earn through Airbnb is by offering your services.
Some owners may not have enough knowledge to set up their place, or they may need an extra hand managing their Airbnb – that’s where you come in.
The best thing about this method is that it will allow you to earn without actually spending money as capital.
Does the Airbnb rental arbitrage model really work?
Now that you know what strategies to use to start your Airbnb from scratch, you can feel more confident about launching one.
And that’s great because this business is a great source of passive income.
However, you might be wondering – is it really profitable? What about the competition?
Well, apart from other listings in the same area, Airbnbs biggest direct competitor is hotels
And this is true in any area because guests are always looking for better options.
It might make you wonder if your future Airbnb hotels will have a chance to see a profit if they’re around.
Short answer, yes. In fact, here are 3 reasons why people prefer Airbnbs over hotels
1. Airbnbs are cheap
A hotel stay can cost more than an Airbnb rental, especially if your guests are traveling in a group.
Let’s say they are traveling with their family of 10. When they book a hotel, they will stay in a separate room and incur an additional cost per room.
They will have less time to interact with their families.
However, with Airbnb, they can rent an entire house with 5 bedrooms and live together.
They can even cook, have breakfast and have a better experience at a fraction of the cost.
2. Airbnbs have more advantages
Although some hotels have pools, guests may not choose to share their space with others for health and safety reasons.
So, some people book Airbnbs with pools that they can enjoy all to themselves.
Other visitors may like your place better if you have a foosball table, a game room, arcade, and other amenities that they can enjoy with their families.
Remember, people aren’t just thinking about places to stay, they’re also looking for memorable experiences to try.
3. Airbnbs offer more privacy
Imagine your family traveling together, having a great time, laughing, making new memories and enjoying each other’s company in a new place.
Only you wake up the next morning to find out you’re sharing it with someone else. It would bum you out, wouldn’t it?
Well, many people feel the same. And that’s why some people prefer to have a personal experience at Airbnbs over hotels.
We mentioned earlier that the average income of an Airbnb host exceeds 5-figures a month.
How this may be true for other people depends on the kinds of assets and experiences they can provide.
But with all the factors mentioned above, it is safe to say that your future Airbnb business, if you choose one, will not be inferior to a big hotel.
This is why Airbnbs just work.
Checklist for your Airbnb business
So let’s get back to starting your business without owning or purchasing property.
Now have two tricks in your arsenal?
Well, let me show you four important things to keep in mind when using subleasing and cohosting strategies for your Airbnb business.
1. Contracts and Agreements
Both subleasing and cohosting strategies require you to keep things in black and white.
Contracts and agreements are the most fundamental part of these strategies and not having them can lead to future legal battles
For subleasing, your contract must show that your landlord knows you are using their property as a short-term rental and that they have given you permission to do so.
They must also agree to change their locks for the duration of the lease.
For cohosting, you should have a contract that clearly shows the most important elements of your contract.
This includes your compensation, tenure and the exact role you play in the business.
2. Property rights
Finding the right properties to launch is challenging because not all spaces are created equal. But here are some tips:
For subleasing, you need to look for properties that the city has:
- Allow short-term rentals
- Heating and cooling systems are already installed
- Keep parking space good for two cars
- Well within your budget.
If you have real estate agents in your contacts or are a real estate agent yourself, you can also offer your services as a cohost.
3. Know how to talk to landlords
Learning how to talk to landlords is an essential skill, especially if you want to sublease properties.
If you want to co-host, on the other hand, you can also use this skill to help new entrepreneurs find properties that they can sublease and earn money in return.
4. Inventory Management
Managing and scheduling maintenance and cleaning can be a handful.
But these are essential parts of an Airbnb business and without them, your business will not grow and thrive.
So if you’re worried you can’t do them yourself, don’t bother. You can always delegate these steps and automate your systems and processes as well.
All this so that you can pay Stellar customer service to your guests.
These are some of the most important things to add to your checklist when starting an Airbnb business.
If you want to know more, feel free Download and view our free training guide here.
Related reading:
The Rise of the Airbnb Rental Arbitrage Model – Why Does It Work?
*disclosure: I only recommend products that I would personally use and all opinions expressed here are our own. This post may contain affiliate For links that are at no additional cost to you, I may receive a small commission.
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The Rise of the Airbnb Rental Arbitrage Model – Why Does It Work?
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The Rise of the Airbnb Rental Arbitrage Model – Why Does It Work?
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George Contreras
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Remote work is counterintuitive
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