Blog posts Rental Arbitrage

The Ultimate Guide: How to Find Rental Arbitrage Properties

Last updated on November 15th, 2022

Here is a simple concept of the rental arbitrage business: I have $10,000. What’s the fastest way to double this? I’d say rental arbitrage. In one of our interviews with an Airbnb host, we met a 21-year-old who rented three $1,000/mo condos in Miami, furnished them, and rent them out to generate $8,000 monthly revenue.

So, how can I find rental arbitrage properties? You can find it on property websites, Craiglist, realtors, social media, and so on. Then, you need to pitch to landlords to get permission to run it as a short-term rental. In this blog, we will go in-depth to show you how you can find profitable rental properties like a pro!

Airbnb is undoubtedly an additional resource for people who are looking for extra income. However, they also have one common misinterpretation about the whole Airbnb idea:

You need to own a property in order to begin investing in Airbnb.

Quite frankly, it’s NOT necessary to own a property at all! You’d be surprised to know that there are numerous strategies that you can do if you would like to try the short-term rental investment without owning a property –  and the answer is through Airbnb rental arbitrage. In this article, you can learn how to find the best properties, and followa step-by-step guide on how to  set up and manage your Airbnb rental.

What is Airbnb rental arbitrage?

Airbnb rental arbitrage refers to the practice of renting one or more properties for the sole purpose of subletting them on Airbnb & other similar short-term rental platforms. If you’re still saving up money to purchase a property before starting to invest in one, then Airbnb rental arbitrage is the best strategy for you!

This is how you do rental arbitrage in 3 simple ways:

Step 1. Find landlords willing to rent a property for you to run  as a short-term rental

Step 2. Furnish it, take nice Airbnb photos, and upload them on Airbnb

Step 3. You’ll receive bookings!

Is Airbnb rental arbitrage legal?

As long as you adhere to your preferred region’s laws and liability guidelines, Airbnb arbitrage is certainly legal! It’s also truly important to check on the top cities where Airbnb is legal or illegal. In order for your business to successfully operate, make sure to check if it’s necessary to apply for a permit or license before starting to invest in Airbnb rental arbitrage.

How much profit can you earn with Airbnb rental arbitrage?

Monthly profit = Revenue from Airbnb bookings – (Expenses and rent)

Starting cost = Furnishing cost + deposit + first-month rent  

Let’s conclude that you already found the perfect property that’s suitable for your budget and would like to start putting it up on Airbnb. For instance, you found a 2-bedroom apartment for rent in San Diego that costs $1,875 per month. Using an Airbnb calculator, you can gauge your monthly expense & one-time cost accurately.

Rental Arbitrage Properties

5 Ways to Find Rental Arbitrage Properties

1. Look for the best rental listing sites

This way, you can easily differentiate the properties in your preferred area and easily view the extra categories such as the square footage & amenities of properties. Here are the top 3 of the most recommended listing sites:

  • Apartments.com – one of the major rental portals with simple tools designed for DIY landlords or small property management companies. 
  • Zillow
  • Zumper
2. Look for landlords that allow Airbnb online

Although some landlords may think subletting is illegal, there are certainly numerous owners who allow subleasing. You can either look on search engines such as Google, Facebook marketplace, or directly go to Craigslist and look for sublease apartments!

Be creative. Here’s my tip. This is just an example, and you can tweak this to find your own profitable property acquisition pipeline.

I noticed that many “expats” are not good at advertising their properties to the local people and they tend to use expat Facebook groups to find their tenants. Quite often, they are not even in the city, so they are looking for someone to take over their property at a cheap price and just maintain them well. Just type “Expats in CITY_NAME (E.g. Lisbon)” on Facebook.

3. Join local real estate investor meetings & spark relationships

Through networking, you can easily get to make a good pitch and meet people to see if they could get leads on your target property. You can also visit meetup.com, type in your preferred city, and immediately look for real estate-related meetings & events!

4. Speak to your local real estate agents about your intentions of finding the best rental arbitrage property

You can easily find local real estate agents online or by looking at the best real estate websites. Be honest with them that you want to start a rental arbitrage business. Tell them you are aiming to manage 20+ properties within the next 6 months. This kind of pitching works well with realtors as you can potentially become their significant source of income. Here are some of the most recommended websites:

  • Realtor.com – the most accurate real estate website which is affiliated with the National Association of Realtors. 
Rental Arbitrage Properties
  • Trulia branded as the best mobile app, you can easily look for real estate properties.
Rental Arbitrage Properties
5. Speak to Airbnb hosts 

You might not have expected this! Try reaching out to Airbnb hosts with listings that have 0 reviews, bad photos, and bad descriptions. Even better if they have a lower than 50% host response rate. These hosts are often the homeowners who are open to letting  out their properties on a short-term basis, but they aren’t making good money.

You can speak with them and let them know that you can give them guaranteed income every month for the next 12-24 months and they may love the idea.

Useful resources 

Are you looking for a specific city? Check out the articles that I’ve written about the best cities for rental arbitrage:

There are some successful rental arbitragers and do you know what their secret is? 

They know how to leverage tools & technologies! 

Our tool, Airbtics, is designed for you to find emerging and profitable areas to start your rental arbitrage business. Use our tool to figure out the following important key points:

– Find a location that produces the highest profit & STR demand.

– Look for a market that has at least above 50% occupancy rate annually.

– Discover how many Airbnb listings your preferred market has, international traveller ratio, historical trends, and so much more!

General Conclusion

There are certainly various ways to find rental arbitrage properties and it may take some time to figure out the best ones for you if you don’t conduct the research carefully. 

However, if you are truly certain about investing, learning more through market research & want the most accurate data on hand, then using a precise STR analytics tool is recommended to have clear insights into the market.

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