Did you know that you can achieve 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 Phoenix, its profitability, along with 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 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 Phoenix, Bart manages 34 listings and I’m pretty sure that he doesn’t own all the properties. He has made $2,107,979 in the last 12 months.
Is Rental Arbitrage Profitable in Phoenix?
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 Arcadia Lite, which is recognized for its modern and charming community.
Using Airbtics’ income generator, you can easily discover that rental arbitrage in Phoenix is profitable.
Profit & Monthly Expense in Phoenix
Based on Airbtics’ data, you can earn a whopping $6,055 per month for a 3-bedroom apartment in Arcadia Lite alone. With the data provided, you can certainly tell that investing in a property in Phoenix is profitable.
Average Rent Price | Airbnb Monthly Revenue | Monthly Expense | Monthly Profit |
---|---|---|---|
$3,195 | $6,055 | $1,211 | $1,649 |
Source: Airbtics dashboard
The monthly profit can be calculated by subtracting the Airbnb monthly revenue, the rental price, and the monthly expenses ($6,055 – $3,195 – $1,211 = $1,649).
Startup Cost in Phoenix
Now that you have an overview of how much your monthly expense & revenue, 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 |
---|---|
$8,390 | 5.1 months |
The average estimated startup cost (for furnishing) in Phoenix is around $2,000. To compute the total startup cost, it is necessary to add the 2 months of average rent price ($6,390). Now that we have a total startup cost of $8,390, cash return time can be calculated by dividing this by the monthly profit ($1,649).
Given your monthly revenue of $1,649, it will take approximately 5.1 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 Phoenix.
Best Areas for Rental Arbitrage in Phoenix
Before investing in a particular area in Phoenix, 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 Phoenix ranked by their annual revenue, along with their occupancy & daily rates!
1. Central City
This neighborhood in Phoenix covers the business districts and is nearby the Phoenix Sky Harbor International Airport. In addition to this, it also offers fine dining & art galleries! Check out the Airbnb data such as the average revenue, occupancy rates, and more in Central City:
Type of Bedrooms | Average Rent Price | Average Airbnb Revenue | Occupancy Rates | Average Daily Rate |
---|---|---|---|---|
1 bedroom | $1,426 | $2,340 | 79% | $135 |
2-bedroom | $1,926 | $2,824 | 79% | $170 |
3-bedroom | $2,515 | $3,905 | 71% | $240 |
According to our Airbtics Dashboard, there are more than 326 Airbnb listings with 49 condo property and 181 one-bedroom properties in this area. The monthly revenue for most properties in Central City is more than $2,478 per month with occupancy being more than 70%.
2. Midtown
Midtown is one of the most sought places to live in Phoenix and is convenient for commuters due to its accessible urban freeways. Check out the Airbnb data such as the average revenue, occupancy rates, and more in Midtown:
Type of Bedrooms | Average Rent Price | Average Airbnb Revenue | Occupancy Rates | Average Daily Rate |
---|---|---|---|---|
1 bedroom | $1,615 | $2,595 | 87% | $125 |
2-bedroom | $2,125 | $3,370 | 86% | $192 |
3-bedroom | $2,666 | $4,181 | 81% | $348 |
This area has a total of 201 Airbnb listings with 25 private room properties and 86 one-bedroom properties. The monthly revenue for most properties in Midtown is more than $2,651 per month with occupancy being more than 73%.
3. Arcadia Lite
Known for having popular spots for ice skating, this neighborhood also boasts a vast selection of wine cafes and restaurants. Check out the Airbnb data such as the average revenue, occupancy rates, and more in Arcadia Lite:
Type of Bedrooms | Average Rent Price | Average Airbnb Revenue | Occupancy Rates | Average Daily Rate |
---|---|---|---|---|
1 bedroom | $1,395 | $3,367 | 84% | $170 |
2-bedroom | $1,750 | $3,738 | 77% | $184 |
3-bedroom | $3,195 | $6,055 | 78% | $296 |
This area has a total of 70 Airbnb listings with 15 private room properties and 30 one-bedroom properties. The monthly revenue for most properties in Arcadia Lite is more than $2,990 per month with occupancy being more than 67%.
Short-term rental regulations in Phoenix
To begin with, it’s certainly important to be familiar with the Airbnb rules in Phoenix to make sure that your business will run smoothly. Here are some of the short-term rental regulations and laws to take note of:
- It is required for short-term or vacation rental owners to register with the city and provide emergency and complaint contact information.
- All residential rental units, including vacation and short term rentals, must be registered with Maricopa County.
- Phoenix requires owners and operators of hotels and certain property rentals to apply for a license to operate.
Rental Properties in Phoenix
To run an Airbnb rental arbitrage in Arizona, you can look at property websites and get a grasp of the ranging prices in Phoenix:
1. Zillow
2. Realtor
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!