Last updated on June 22nd, 2023
Are you interested in achieving financial independence through passive income? Here’s a disclaimer: you don’t need to own a property to start the Airbnb rental arbitrage business! In this article, we featured the entire process of Airbnb rental arbitrage in Cardiff, its profitability, and the best areas and neighborhoods. Continue reading to learn more about short-term regulations and ways to convince landlords to sublet properties for rental arbitrage!
What is Rental Arbitrage?
Rental Arbitrage is a way to start an Airbnb business with no money. By convincing landlords to lease you a property, you can furnish and sublease it on Airbnb and VRBO. No need for you to buy a property!
It is perfectly legal and is a proven scalable business model. In my podcast, I have spoken to various entrepreneurs doing Airbnb arbitrage full-time.
Here’s a proof! In Cardiff, Sabina manages 47 listings and I’m pretty sure she doesn’t own the all properties. She made £683,088 in the last 12 months.
How much can I make with rental arbitrage in Cardiff?
Before you dive in and start putting out your hard-earned money on a property, it’s important to know how much profit you can make. For instance, the best neighborhood to invest in is Cathays located in the CF24 district because of its high demand for property buying.
Since Cathays is near Cardiff university, the student market is skyrocketing in this area. Now that we have the best neighborhood to invest in Cardiff, let’s talk about profitability and monthly expenses.
Profit & Monthly Expense in Cardiff
Based on Airbtics’ data, you can earn a whopping £3,988 per month for a 2-bedroom apartment in Cathays alone. With the data provided, you can certainly tell that investing in a property in Cardiff is profitable!
| Average Rent Price | Airbnb Monthly Revenue | Monthly Expense | Monthly Profit |
|---|---|---|---|
| £994 | £2,602 | £520 | £1,088 |
Source: Airbtics dashboard
The monthly profit can be calculated by subtracting the Airbnb monthly revenue, the rental price and the monthly expenses (£2,602-£994-£520 = £1,088).
Startup Cost in Cardiff
Now that you have an overview of how much your monthly expense and revenue is, let’s talk about the start-up cost! How long does it take for an investor like you to get back the startup cost? Let’s take a look at this calculation:
| Total Startup Cost (Average startup cost + 2 months rent price) | Cash Return Time |
|---|---|
| £3,988 | 4 months |
The average estimated startup cost (for furnishing) in Cardiff is around £2,000. To compute the total startup cost, it is necessary to add the 2 months of average rent price (£1,988). Now that we have a total startup cost of £3,988, cash return time can be calculated by dividing this by the monthly profit (£1,088).
Given your monthly revenue of £1,088, it will take approximately 4 months time to get back the startup cost! In such a short period of time, you can already expect profit and consider starting your second unit for rental arbitrage. If this sounds promising to you, then go ahead and look at the other best areas for rental arbitrage in Cardiff!
Best Areas for Rental Arbitrage in Cardiff
Before investing in a particular area in Cardiff, you have to take a look at the top markets and number of listings to set your expectations for success. Check out the top 3 neighbourhoods in Cardiff ranked by their annual revenue, along with their occupancy & daily rates!
1. Cathays (CF24)
Cathays is described as the best buy-to-let area for property investors because of its close proximity to universities and local businesses. Here’s what you can expect in this neighbourhood:
| Type of Bedrooms | Average Rent Price (pcm) | Average Airbnb Revenue | Occupancy Rates | Average Daily Rate |
|---|---|---|---|---|
| 1-bedroom | £701 | £1,530 | 49% | £119 |
| 2-bedrooms | £994 | £2,602 | 56% | £156 |
| 3-bedrooms | £1,171 | £2,646 | 36% | £924 |
According to our Airbtics Dashboard, there are more than 58 Airbnb listings with 5 private room properties and 13 one-bedroom properties in this area. The monthly revenue for most properties in Cathays is more than £3,494 per month with occupancy being more than 38%.
2. Roath (CF10)
Located in the inner-city suburbs, Roath is recognized for its chic and trendy vibe with a solid 4% yield. Here’s what you can expect in this neighbourhood:
| Type of Bedrooms | Average Rent Price (pcm) | Average Airbnb Revenue | Occupancy Rates | Average Daily Rate |
|---|---|---|---|---|
| 1-bedroom | £716 | £1,787 | 63% | £139 |
| 2-bedrooms | £921 | £2,273 | 57% | £187 |
| 3-bedrooms | £1,155 | £2,803 | 60% | £191 |
This area has a total of 185 Airbnb listings with 38 private room properties and 96 one-bedroom properties. The monthly revenue for most properties in Roath is more than £2,116 per month with occupancy being more than 42%.
3. Cardiff Bay (LE3)
Last but not least, one of the primary places that investors consider in Cardiff, The Bay! Surrounded by excellent waterfront sceneries, this neighborhood is usually abundant with tourists and various business professionals. Here’s what you can expect in this neighbourhood:
| Type of Bedrooms | Average Rent Price (pcm) | Average Airbnb Revenue | Occupancy Rates | Average Daily Rate |
|---|---|---|---|---|
| 1-bedroom | £786 | £2,074 | 69% | £151 |
| 2-bedrooms | £1,171 | £2,280 | 57% | £278 |
| 3-bedrooms | £1,355 | £4,032 | 50% | £464 |
This area has a total of 197 Airbnb listings with 41 private room properties and 90 one-bedroom properties in this area. The monthly revenue for most properties in Cardiff Bay is more than £2,557 per month with occupancy being more than 48%.
Short-term rental regulations in Cardiff
To begin with, it’s certainly important to be familiar with the Airbnb rules in Cardiff to make sure that your business will run smoothly. Here are some of the short-term rental regulations and laws to take note of:
- Compulsory landlord registration & licensing
The Housing (Wales) Act 2014 requires all landlords with property in Cardiff to register with Rent Smart Wales and to either be licensed themselves if they’re ‘self-managing’ or use a licensed agent. - It is required to pay a Council tax in Cardiff.
- BONUS: Recent Let Control Plans in Wales!
The Welsh Government is planning to introduce controls to limit the numbers of second homes and holiday lets, as well as a licensing scheme for anyone wanting to list units on booking platforms such as Airbnb.
How to Find Landlords for Airbnb Rental Arbitrage
Airbnb investment through rental arbitrage is one of the best strategies to have passive income. However, it could be a challenge to find a landlord that allows their property for subletting on Airbnb. You can also convince a landlord by following the rental arbitrage email template & be extra creative!
Here are ways how you can find landlords that allow Airbnb rental arbitrage:
- Real Estate Websites
Renters in the digital world who are looking for properties online can easily connect with landlords. Some of the most recommended online real estate websites which allow you to filter by city, state, or ZIP code are:
However, you can also find apartment & condominium properties online in the following websites:
Search Engines & Marketplaces
There are numerous property owners who are leasing their properties and you can easily find them on Google & online marketplaces. Check out some of the most recommended marketplaces:
- Craigslist allows renters to specifically state what kind of property they are looking for. You can try typing in ‘landlords allowing Airbnb’ or ‘sublease property in (city name)’ and try other keywords to get you on the right track.
- Facebook marketplace has a vast community of landlords & renters, so you can try joining the right groups to lead you on the right path. Here are some of the finest Facebook groups that you can join:
Communicate with Landlords
If you are currently renting a space or know someone who is, then it’s also recommended to speak with them. Start by asking if there are vacant rooms or properties and let them know about your intentions of putting them up for rental arbitrage. They might also be able to recommend neighbors or local friends who are also interested in this idea!
