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 Merseyside, 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 Merseyside, Katy, Joe & Team manage 75 listings and I’m pretty sure they doesn’t own the all properties. They made £2,767,840 in the last 12 months.
How much can I make with rental arbitrage in Merseyside?
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 borough to invest in is Knowsley located in the L14 district with a possibility of a 8% yield!
Knowsley provides attractively priced land and sites for property investors. Based on a recent survey, Knowsley borough has a higher demand for rented properties and is short on supply. Now that we have the best neighborhood to invest in Merseyside, let’s talk about profitability and monthly expenses.
Profit & Monthly Expense in Merseyside
Based on Airbtics’ data, you can earn a whopping £1,312 per month for a 2-bedroom apartment in Knowsley alone. With the data provided, you can certainly tell that investing in a property in Merseyside is profitable!
| Average Rent Price | Airbnb Monthly Revenue | Monthly Expense | Monthly Profit |
|---|---|---|---|
| £688 | £1,312 | £262 | £362 |
Source: Airbtics dashboard
The monthly profit can be calculated by subtracting the Airbnb monthly revenue, the rental price and monthly expense (£1,312-£688-£262= £362).
Startup Cost in Merseyside
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 |
|---|---|
| £3,376 | 9.3 months |
The average estimated startup cost (for furnishing) in Merseyside is around £2,000. To compute the total startup cost, it is necessary to add the 2 months of average rent price (£1,376). Now that we have a total startup cost of £3,376, cash return time can be calculated by dividing this by the Airbnb monthly revenue (£362).
Given your monthly revenue of £362, it will take approximately 9.3 months time to get back the startup cost! After this 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 Merseyside!
Best Areas for Rental Arbitrage in Merseyside
Before investing in a particular area in Merseyside, 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 Merseyside ranked by their annual revenue, along with their occupancy & daily rates!
1. Knowsley (L14)
This borough is one of the largest employment areas in Europe, hence, it’s home to business executives and 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 | £898 | £1,862 | 69% | £138 |
| 2-bedrooms | £978 | £2,216 | 68% | £142 |
| 3-bedrooms | £1,378 | £3,255 | 60% | £272 |
According to our Airbtics Dashboard, there are more than 42 Airbnb listings with 17 private room properties and 27 one-bedroom properties in this area. The monthly revenue for most properties in Knowsley is more than £361 per month with occupancy being more than 40%.
2. Sefton (L29)
This metropolitan borough is one of the best areas to invest in buy-to-let in Merseyside because of its businesses and affordable properties! 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 | £695 | £1,556 | 75% | £97 |
| 2-bedrooms | £866 | £1,805 | 72% | £89 |
| 3-bedrooms | £1,550 | £2,460 | 71% | £118 |
This area has a total of 273 Airbnb listings with 120 private room properties and 152 one-bedroom properties. The monthly revenue for most properties in Sefton is more than £1,226 per month with occupancy being more than 47%.
3. Wirral (CH41)
Last but not least, the borough of Wirral is also one of the best areas for property investment due to its close proximity to major cities like Liverpool and pristine beaches. 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 | £507 | £1,411 | 62% | £114 |
| 2-bedrooms | £616 | £2,379 | 70% | £138 |
| 3-bedrooms | £709 | £2,739 | 73% | £159 |
This area has a total of 227 Airbnb listings with 87 private room properties and 113 one-bedroom properties in this area. The monthly revenue for most properties in Wirral is more than £1,482 per month with occupancy being more than 48%.
Short-term rental regulations in Merseyside
To begin with, it’s certainly important to be familiar with the Airbnb rules in Merseyside to make sure that your business will run smoothly. Here are some of the short-term rental regulations and laws to take note of:
- No restriction on the number of days. It can be for as long as 6 months.
- It is required to pay a Council tax in Merseyside.
- Any property with five or more people who form unrelated households, and share amenities such as a kitchen or bathroom, must have an HMO licence. Learn more about an HMO licence in Merseyside.
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!
