There is a low-cost gamble with a very high earning potential. You can augment your income by renting out a property without actually owning it. Rental Arbitrage enables this setup. It is a smart way to earn passive income with only minimal investment!

In this guide, we’ll explain rental arbitrage in layman’s terms and provide some expert tips. We also included the best areas to do rental arbitrage in Las Vegas to help you make the best investment decisions. Stoked to learn more? Continue reading!

What is Rental Arbitrage?

Rental Arbitrage is a method similar to house hacking, where you rent out a spare room in your property. The difference between these two is you don’t need to own the house in rental arbitrage. Instead, you convince the property owner to allow you to sublease the house on Airbnb and VRBO.

Can you do Airbnb Arbitrage in Las Vegas?

Yes! Rental Arbitrage in Las Vegas is applicable to any type of residential real estate. These can be multi-room apartments, houses, condo units, duplexes, and triplexes. It is a smart way to add a stream of income through the short-term rental of your subtenants. This allows you to pay your own rent and earn more. 

Assuming you are renting a duplex in Las Vegas for $1,800/month. You are living by yourself on either side and you decide to sublease the other on Airbnb.  Let’s say you listed it for $100/day and got 80% occupancy. This will bring in approximately $2,600 per month in revenue. Not only will it fully cover your rent, but it will give you a profit of $800. This, in a nutshell, is called rental arbitrage.

Check out the wider definition of Rental Arbitrage based on the ultimate guide for STR investors!

Legality and Regulations in Las Vegas

Short-term rentals in Las Vegas are only permitted in owner-occupied properties with three or fewer bedrooms that are at least 660 feet distant from another short-term rental. Licensing, noise, and parking regulations all apply to rentals.

Short-term rental license applicants need to fill out this form. The code enforcement officer will then inspect the property after the payment of the application and annual permit fees. See here for the complete list of application requirements.

Please remember to follow Airbnb regulations in Las Vegas, particularly regarding noise, trash, and parking concerns. Las Vegas has an Airbnb complaint hotline 702-229-3500, so neighbors can easily report violations. 

How do I get my first Airbnb arbitrage?

1. Convince the landlord

Let’s say you want to get into Rental Arbitrage. Now comes the big question, how to find a good property and how to convince the landlord. Later in the blog, we’ll be explaining how to find a good property by doing proper research using Airbnb analytics. In this section, we will be focusing more on how to convince landlords. As you’ll begin your Rental Arbitrage journey, you’ll come to know that this is the hardest part of the whole process.

You need to be prepared and well-researched about the Airbnb demand in your area. Good communication skills will also come in handy here. Another thing to always keep in mind: never sublease without informing the landlord! There will be a huge number of people coming in and out when you’re sub-renting. It will only be a matter of time before the landlord figures out what you’re up to, and you might end up getting in trouble. 

For convincing the landlord, rule number one is always talking about the upsides. If you can rent the property on Airbnb, so can the landlord himself. You need to make a deal with the landlord that is beneficial to them. So they lease the property to you instead of renting it by themselves.

Points to tell an indecisive landlord.

• Doing rental arbitrage is a full-time business. It doesn’t generate passive income like long-term leasing. You should try approaching older people who are looking for some sort of passive income.
  They are more likely to agree to a fixed long-term lease. You can also reach out to full-time working professionals or business owners. They will also be happy with a source of passive income until their property is well maintained. This brings us to our next point.
• You’ll take care of the house better than a normal renter. As you are using the property for Airbnb, you will maintain it very well to make sure you get better reviews. Having a beat-up property isn’t good for business and you are more likely to monitor it often. 
  Not monitoring it will affect your revenue a lot. You may end up paying a huge sum of money for damages done by someone else. So telling this to the landlord might instill some confidence in them.
• You can ensure timely monthly rent. You can tell the landlord that doing rental arbitrage is a full-time business with ups and downs. It doesn’t guarantee fixed income at all like long-term leasing. But if they lease it to you, you’ll make sure to pay the lease no matter what. Either from the money made after rental arbitrage or from your savings. You need to ensure timely monthly lease payments to gain the trust of the landlord.

In conclusion, you need to take care of the property like your own. Make sure to timely pay the monthly lease and keep the situation beneficial for both parties. You can also use a free rental arbitrage email template and propose your ideas to landlords!

2. Ensure the property and gain the landlord’s trust

Being on the safe side is always a good idea. Use the right tools to ensure the property is safe, and the neighbors can go on with their lives happily while you do rental arbitrage. Many landlords will have this concern when renting out their property to you. They will be worried about neighbors raising noise complaints, and it’s a legitimate concern. To help you with all these problems, here are some suggestions that you can implement: 

• SimpliSafe – These are home monitoring tools that you can install in the house to make sure no suspicious activity is happening there. Make sure to let the guests know about them and have their consent.
• Auto host – Automatically screens problematic tenants.
• Alexa Guard: If you already own an Alexa, you can use its Alexa guard feature to detect parties. It is an inbuilt feature that monitors changes in sound and sends you an alert in case the guests are having a party and making too much noise.
• InsuraGuest – This insurance and tech company helps you with risk analysis and gives protection beyond Airbnb and VRBO policies.
• Airbnb Calculator – Give your landlord ease of mind by providing income estimates backed by Airbnb data.

Pros and Cons

Be prepared for what you can expect from Rental Arbitrage in Las Vegas:

• Pros

• • No purchase of property required
  • Low upfront costs
  • Opportunity to repeat and scale easily
  • Generate profit for other investments or business

• Cons

• • Invest money and time in furnishing the property