The Truth About Airbnb Arbitrage: Nightmare or Goldmine?
Airbnb Arbitrage can be a nightmare for some and a goldmine for others. If you've been wondering whether to start an Airbnb Arbitrage business, this guide will walk you through what you need to know to get started, how to secure your first property within 30 days, and the truths that most people won't tell you. By the end, you'll know if this business is right for you.
Key Takeaways
- Airbnb Arbitrage involves renting a property from a landlord and subleasing it on Airbnb.
- Success in this business requires belief in the model, good communication skills, and the ability to handle rejection and risk.
- Initial steps include forming an LLC, obtaining an EIN, and securing funding.
- Location and a solid pitch to landlords are crucial for success.
Understanding Airbnb Arbitrage
Airbnb Arbitrage is when you rent a property from a landlord and then sublease it on Airbnb. The landlord benefits by having a long-term tenant, and you benefit by making money from short-term rentals. This model works because many landlords prefer the stability of a long-term lease over the complexities of managing an Airbnb property themselves.
Setting Up Your Business
- Form an LLC: Register your business as a legal entity to separate your business assets from your personal assets. This adds a level of professionalism and allows you to open a business bank account. Websites like Incfile.com can help you with this process for a fee of around $85.
- Get an EIN: Your Employer Identification Number (EIN) is like a Social Security number for your business. You can obtain this from the IRS website.
Choosing the Right Location
When starting out, it's advisable to choose a location close to home. This gives you more control if something goes wrong. For example, Glendale, Arizona, is a good choice due to attractions like the Cardinal Stadium and the upcoming Mattel Adventure Park, which increase demand for Airbnb properties.
Finding a Profitable Property
Use Zillow to search for rental properties near major attractions. Once you find a property, use tools like AirDNA to estimate its profitability. Only proceed if the property shows a healthy profit margin.
Pitching to Landlords
A successful pitch is crucial. Focus on the problems landlords face with traditional tenants, such as unpaid rent and property damage, and explain how your business model solves these issues. Avoid asking directly if they allow Airbnb or subleasing; instead, ask if they allow corporate leasing or business applicants.
Securing Funding
Starting an Airbnb Arbitrage business can cost between $8,000 to $15,000. If you don't have this capital, consider leveraging credit. Many banks offer credit cards with 0% interest for the first 18 months, requiring only a minimum monthly payment.
Listing Your Property
Once you have your LLC, EIN, business bank account, property, and funding, list your property on Airbnb. Don't overthink this step; the key is to get started.
Are You Cut Out for Airbnb Arbitrage?
To succeed in this business, you need to be okay with rejection, have decent communication skills, be aware of the risks, and believe in the business model. If you answered 'yes' to all these questions, you might be built for this.
Most people look into Airbnb Arbitrage because they want more out of life, whether it's financial freedom, the ability to travel, or building a legacy. If you believe this is the right path for you, commit to it and go all in.
