• This blog navigates you through the process of Airbnb rental arbitrage in the evolving landscape of New Zealand.
• Uncover essential insights on startup costs, cash return times, and how to find potential landlords for successful arbitrage in NZ.
• Delve into the process, regulations, and potential profits of Airbnb arbitrage in NZ, and use Airbtics’ Airbnb host calculator to evaluate your venture’s viability.

Airbnb Arbitrage in NZ: A Guide to Profitable Short-Term Rentals with Minimal Initial Investment

Rental arbitrage emerges as an ideal way to start a short-term rental business without the need for large upfront capital as you won’t have to buy a property straight away. 

Since you came into this blog, we assume that you are thinking of doing rental arbitrage in New Zealand. This island country became quite the catch for investors thanks to its strong tourist market, solid short-term rental market, and flourishing economy.

Yet, it’s important to consider if this type of business would turn into a viable investment. Why? Because even if you won’t invest a large amount of money, that doesn’t mean you won’t be putting some funds at stake. And the primary goal is to generate income rather than incur significant debt.

In this article, we delve deeper into the entire process of Airbnb rental arbitrage in NZ, its legality, and profitability, along with some of the top cities to consider subletting in. Keep reading to find out more about this business model.

What is Airbnb Rental Arbitrage?

Rental arbitrage, also known as subletting, is the practice in which a tenant rents out the property they have leased to another person. In this case, the tenant becomes a “sublessor” by listing the dwelling for short-term use on platforms like Airbnb and VRBO.

This is a legal business model that allows you to begin your venture into the Airbnb world with no money. The short-term rental income can help you cover the long-term lease on the property, allowing you to keep the remaining surplus at the end of each month after paying the long-term lease. 

Is Airbnb Arbitrage Legal in NZ?

Wondering if rental arbitrage is worth it? Subletting a property is a worthwhile investment idea. But first, you need to know what are you getting yourself into. It’s important to consider the short-term rental market conditions of the city you want to target as well as its rental regulations and subletting laws in NZ. 

Short-term rentals are legal in New Zealand. However, lessors and sublessors must review the rental rules set by the local councils in NZ, as certain regions may require property registration and obtaining resource consent. 

Doing rental arbitrage is also legal in NZ, but tenants must speak with their landlord a get written consent before renting out the property to another person. The conditions for this will also depend on whether the rental will be a holiday or long-term:

1. If a tenant sublets their residence on a long-term basis, they must sign a written residential tenancy agreement with the subtenant. This sub-tenancy agreement follows standard tenancy rules of the Residential Tenancies Act. 
2. For holiday sublets as they are not covered by the Act, no residential tenancy agreement is needed, but the landlord’s consent is still required.

Subletting a property without the landlord’s permission is considered an unlawful act that must be avoided. Otherwise, this may result in a financial penalty of up to $1,000 and potential compensation owed to the landlord.

How Much Profit Can You Make from Subletting a Property in New Zealand?

Before investing your money in a rental arbitrage business, it’s crucial to understand the potential profit of a STR in your target market. For instance, let’s say you’re targeting Auckland, particularly its central business district, a sought-after location for Airbnb investment. 

By making use of a free Airbnb calculator, you can quickly discover the profitability of rental arbitrage in New Zealand.

Let’s say that the estimated startup cost for furnishings in New Zealand is around $2,000. To determine the total startup cost, you should add 2 months’ worth of average rent prices ($5,000). With a total startup cost of $7,000, the cash return time is calculated by dividing this by the monthly profit ($1,176). Thus, you can anticipate recovering the startup cost in approximately 6 months. 

If these results sound promising to you, then go ahead and look at other recommended areas for rental arbitrage in New Zealand.

Top 3 Profitable Locations for Airbnb Arbitrage in NZ

Prior to making an investment in a specific New Zealand market, you need to research the best locations for short-term rental investments and consider factors like seasonality and local events that can affect the occupancy rates. This will help you to establish realistic expectations and guarantee your success.

Explore other top cities aside from Auckland in New Zealand, along with their annual revenue, monthly profit rates, cash return time, and more.

1. QUEENSTOWN

Queenstown is a popular destination for tourists with breathtaking surroundings, featuring crystal-clear lakes, snow-capped mountains, and lush landscapes. For this reason, it has become an attractive area for investors targeting the hospitality and short-term rental sectors.