Learn how to do Airbnb rental arbitrage in Sydney, Australia! Find out your profitability with subletting rented properties to guests.
- Last updated on
- September 4, 2023
Do you want to have financial freedom through passive income? Here’s a great way to do so: Invest in a property! And no – 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 Sydney, its profitability, Airbnb key metrics including occupancy & average daily rates, along with the best areas for investment. 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 perfect 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 Sydney, Ken manages 45 listings and I’m pretty sure he doesn’t own all the properties. Overall, he made A$848,587 in the last 12 months.
Is Rental Arbitrage Profitable in Sydney?
In order to start a rental arbitrage in Australia, particularly in Sydney, it’s primarily important to take note of the overall cost & potential revenue.
For instance, the best neighborhood to invest in is Darlinghurst, which is the most eclectic neighborhood in Sydney. Using Airbtics’ income generator, you can easily discover that rental arbitrage in Sydney is profitable.
Profit & Monthly Expense in Sydney
Based on Airbtics’ data, you can earn a whopping A$10,634 per month for a 3-bedroom apartment in Darlinghurst alone. With the data provided, you can certainly tell that investing in a property in Sydney is profitable.
| Average Rent Price | Airbnb Monthly Revenue | Monthly Expense | Monthly Profit |
|---|---|---|---|
| A$5,866 | A$10,634 | A$2,127 | A$2,641 |
Source: Airbtics dashboard
The monthly profit can be calculated by subtracting the Airbnb monthly revenue, the rental price, and the monthly expenses (A$10,634 – A$5,866 – A$2,127 = A$2,641).
Startup Cost in Sydney
Now that you have an overview of how much your monthly expense & revenue are, let’s talk about the start-up cost! How long does it take for an investor 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 |
|---|---|
| A$13,732 | 5.2 months |
The average estimated startup cost (for furnishing) in Sydney is around A$2,000. To compute the total startup cost, it is necessary to add the 2 months of average rent price (A$11,732). Now that we have a total startup cost of A$13,732, cash return time can be calculated by dividing this by the monthly profit (A$2,641).
Given your monthly revenue of A$2,641, it will take approximately 5.2 months time to get back the startup cost in Sydney!
In such a brief 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 Sydney.
Best Areas for Rental Arbitrage in Sydney
Before investing in a particular area in Sydney, you have to take a look at the top markets and number of listings to set your expectations towards success. Check out the top 3 suburbs in Sydney ranked by their annual revenue, along with their occupancy & daily rates:
1. Darlinghurst
Home to Australia’s biggest gay and lesbian community, Darlinghurst is a promising suburb that offers high-end apartments and condominiums. Check out the Airbnb data such as the average revenue, occupancy rates, and more in Darlinghurst:
| Type of Bedrooms | Average Rent Price | Average Airbnb Revenue | Occupancy Rates | Average Daily Rate |
|---|---|---|---|---|
| 1-bedroom | A$2,129 | A$3,884 | 81% | A$215 |
| 2-bedrooms | A$3,911 | A$7,066 | 78% | A$344 |
| 3-bedrooms | A$5,866 | A$10,634 | 64% | A$1,750 |
According to our Airbtics Dashboard, there are more than 194 Airbnb listings with 11 condo properties and 90 one-bedroom properties in this area. The monthly revenue for most properties in Darlinghurst is more than A$3,539 per month with occupancy being more than 63%.
2. Redfern
This neighborhood in Sydney is a flourishing urban Aboriginal community and has many Victorian-terraced housings. Check out the Airbnb data such as the average revenue, occupancy rates, and more in Redfern:
| Type of Bedrooms | Average Rent Price | Average Airbnb Revenue | Occupancy Rates | Average Daily Rate |
|---|---|---|---|---|
| 1-bedroom | A$2,151 | A$4,302 | 81% | A$200 |
| 2-bedrooms | A$3,259 | A$4,904 | 82% | A$336 |
| 3-bedrooms | A$5,214 | A$9,779 | 65% | A$423 |
This area has a total of 86 Airbnb listings with 24 private room properties and 40 one-bedroom property. The monthly revenue for most properties in Redfern is more than A$3,307 per month with occupancy being more than 56%.
3. Manly
Manly is one of the world’s first surf life-saving clubs and has a must-see diversity of flora and fauna. Check out the Airbnb data such as the average revenue, occupancy rates, and more in Manly:
| Type of Bedrooms | Average Rent Price | Average Airbnb Revenue | Occupancy Rates | Average Daily Rate |
|---|---|---|---|---|
| 1-bedroom | A$2,455 | A$4,671 | 83% | A$278 |
| 2-bedrooms | A$3,802 | A$7,011 | 82% | A$519 |
| 3-bedrooms | A$5,214 | A$8,596 | 79% | A$779 |
This area has a total of 252 Airbnb listings with 37 private room properties and 90 one-bedroom properties in this area. The monthly revenue for most properties in Manly is more than A$4,932 per month with occupancy being more than 61%.
LOOKING FOR MORE PROFITABLE RENTAL MARKETS IN AUSTRALIA?
Discover other top cities with the highest rental demand in Australia!
Short-term rental regulations in Sydney
To begin with, it’s certainly important to be familiar with the Airbnb rules in Sydney to make sure that your business will run smoothly. Here are some of the short-term rental regulations and laws to take note of:
- 180-day booking cap (with an exemption for bookings 21 days or longer)
For properties where the host is not present on the premises (non-hosted STRA) and located in Metro/Greater Sydney and several regional local council areas, the dwelling can be rented on a short-term for up to 180 days per year. - Residents can let their premises as a short term rental without the need for council approval, provided they meet the exempt development requirements.
- All hosts must comply with the fire and safety requirements and agree to follow the NSW Fair Trading Code of Conduct for the STRA Industry.
- Hosts are required to pay a registration fee of $65 for the first 12 months and an annual renewal fee of $25.
- Local residents will be restricted on the number of days they can use their premises for short-term lets.
Rental Properties in Sydney
To run an Airbnb rental arbitrage in Australia, you can look at property websites and get a grasp of the ranging prices in Sydney:
1. Homely
2. Domain
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!
Short-Term Rental Data
Short-Term Rental Data
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