Are you interested in achieving 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 Devon, its profitability, and 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 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 Devon, Emilie manages 26 listings and I’m pretty sure she doesn’t own the all properties. She made £ 1,788,855 in the last 12 months.
How much can I make with rental arbitrage in Devon?
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 Torquay located in the CF24 district with a possibility of a 9.27% yield!
Torquay is popular with investors for the excellent value of buy-to-lets because of the perfect combinations: tourist & retirement properties! Now that we have the best neighborhood to invest in Devon, let’s talk about profitability and monthly expenses.
Profit & Monthly Expense in Devon
Based on Airbtics’ data, you can earn a whopping £4,812 per month for a 2-bedroom apartment in Torquay alone. With the data provided, you can certainly tell that investing in a property in Devon is profitable!
| Average Rent Price | Airbnb Monthly Revenue | Monthly Expense | Monthly Profit |
|---|---|---|---|
| £1,406 | £2,132 | £426 | £300 |
Source: Airbtics dashboard
The monthly profit can be calculated by subtracting the Airbnb monthly revenue, the rental price and the monthly expenses (£2,132-£1,406-£426= £300).
Startup Cost in Devon
Now that you have an overview of how much your monthly expense and revenue is, let’s talk about the start-up cost! How long does it take for an investor like you 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 |
|---|---|
| £4,812 | 16.1 months |
The average estimated startup cost (for furnishing) in Devon is around £2,000. To compute the total startup cost, it is necessary to add the 2 months of average rent price (£2,818). Now that we have a total startup cost of £4,812, cash return time can be calculated by dividing this by the monthly profit (£300).
Given your monthly revenue of £300, it will take approximately 16.1 months time to get back the startup cost! After this 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 Devon!
Best Areas for Rental Arbitrage in Devon
Before investing in a particular area in Devon, you have to take a look at the top markets and number of listings to set your expectations for success. Check out the top 3 neighbourhoods in Devon ranked by their annual revenue, along with their occupancy & daily rates!
1. Torquay (TQ1)
This neighborhood offers competitive property prices, however, this in return will mean exciting yields for property investors! Here’s what you can expect in this neighbourhood:
| Type of Bedrooms | Average Rent Price (pcm) | Average Airbnb Revenue | Occupancy Rates | Average Daily Rate |
|---|---|---|---|---|
| 1-bedroom | £817 | £1,200 | 55% | £133 |
| 2-bedrooms | £1,406 | £2,132 | 55% | £206 |
| 3-bedrooms | £1,334 | £2,183 | 56% | £269 |
According to our Airbtics Dashboard, there are more than 161 Airbnb listings with 17 private room properties and 70 one-bedroom properties in this area. The monthly revenue for most properties in Torquay is more than £1,983 per month with occupancy being more than 40%.
2. Exeter (EX1)
Exeter has the sixth-highest employment level in the country, therefore catering to professionals across various industries! The rental growth in this neighborhood is also consistently emerging, with yields around 3-4%. Here’s what you can expect in this neighbourhood:
| Type of Bedrooms | Average Rent Price (pcm) | Average Airbnb Revenue | Occupancy Rates | Average Daily Rate |
|---|---|---|---|---|
| 1-bedroom | £1,029 | £1,929 | 72% | £126 |
| 2-bedrooms | £1,303 | £2,858 | 72% | £165 |
| 3-bedrooms | £1,694 | £3,268 | 73% | £215 |
This area has a total of 298 Airbnb listings with 101 private room properties and 165 one-bedroom properties. The monthly revenue for most properties in Exeter is more than £1,989 per month with occupancy being more than 50%.
3. Plymouth (PL1)
Last but not least, one of the cheap property hotspots in any southwest city, Plymouth! This area is also perfect for investors because of the student and tourist rental demands. Here’s what you can expect in this neighbourhood:
| Type of Bedrooms | Average Rent Price (pcm) | Average Airbnb Revenue | Occupancy Rates | Average Daily Rate |
|---|---|---|---|---|
| 1-bedroom | £720 | £1,184 | 58% | £115 |
| 2-bedrooms | £730 | £1,292 | 60% | £195 |
| 3-bedrooms | £853 | £2,666 | 53% | £215 |
This area has a total of 108 Airbnb listings with 17 private room properties and 38 one-bedroom properties in this area. The monthly revenue for most properties in Plymouth is more than £1,659 per month with occupancy being more than 39%.
Short-term rental regulations in Devon
To begin with, it’s certainly important to be familiar with the Airbnb rules in Devon to make sure that your business will run smoothly. Here are some of the short-term rental regulations and laws to take note of:
- The Council of Devon will regard bed and breakfast hotels as HMOs if they are housing any people who use the hotel as their main residence for more than 30 consecutive days. Where this accommodation is used as the main residence, the same standards as for other HMOs should be met.
- Homeowners in Devon are allowed to rent out their properties for short-term lets without planning permission for up to 90 nights a year.
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!
