11d • General discussion
What Is Airbnb Rental Arbitrage? How People Build Cash-Flowing Engines Without Owning Property
Hello there, my name is Reese Bobier and I began doing Rental Arbitrage back in June 2019. After almost 7 years in this space there's lots I've learned that I want to share with you today surrounding the question I hear so often...."What is Rental Arbitrage"
In simple terms, the definition of rental arbitrage is:
A real estate strategy where someone leases a property long-term (1 year minimum) and then sublets it for short, mid & even long-term stays (days/weeks/months) on platforms like Airbnb or Vrbo, profiting from the price difference between the monthly rent and the higher nightly rates, all without owning the property
This creates a much lower barrier to entry for people to get into the space without owning their own property, and with the way housing prices have gone over the last decade, owning becomes more difficult for people, and this could be a way for them to get into real estate, with less risk than owing, turn a profit, save those profits and eventually have a down payment to go get their own property and start building equity.
Alternatively I've also seen people just run with this model and build multi-million dollar businesses without ever owning any real estate.
That's precisely what I did, and over the last several years I've launched over 75 properties under this model and have generated over $8,000,000 in revenue off of Airbnb alone.
Airbnb Earnings (See first image below)
That's a glimpse of what is possible with this model when you're willing to take on the risk of paying the rent and then executing successful launches and pricing strategy to make a profit.
These types of results came through blood, sweat and tears, sleepless nights, 18+ hour work days for years on end. But that's what the entrepreneur does, a word that's so mis used in today's social space. The original definition is quite literally: a person who organizes and operates a business or businesses, taking on greater than normal financial risks in order to do so.
I once wrote a post stating that "Greatness is not for the faint of heart. Greatness is not fair to the one who seeks it, albeit rewards the one who constantly pursues it in the face of adversity"
But this is just the field I chose to play on, and the unique thing about arbitrage is there's many fields to play on and you just need to start with 1 property.
To break down some simple math. We have a 3 bedroom townhome that cost $3,000/month in rent. Add in utilities and internet it's around $3,325 - that means our breakeven cost is roughly $110/night. The last 12 months that property did an average of $211/night at 89% occupancy:
3 bed townhome from our portfolio (see second image below)
That's a gross profit of roughly $37,500. On 1 property.
Imagine if all you did this year was set up 1 deal like this, and you put an extra $37K in your pocket.
That's what is possible with rental arbitrage, you don't need to do what I did, in fact, with my experience now there's a lot I would have changed. But I want to show you the power of operating just 1 - 5 properties and what that could do for you.
5 properties like this with similar numbers, would be $188,000 in profit/year in your pocket.
So how do you even get started?
Simple.
Inputs.
It truly is a numbers game when it comes to landing your first deal. If you're in Canada there's sites like RentFaster and Facebook Marketplace, even Kijiji where you can find properties for rent, approach the landlord with your value prop, get them to agree in a contract to let you legally sublet the property and handle everything A-Z.
If I called 50 landlords today, I guarantee I would add a new property to our portfolio. That's why I'm saying it simply is inputs. Of course there's sales involved, negotiations and so forth but landlords at the end of the day want piece of mind.
If you offered to rent their property for the next 3 years, furnish it and handle the operation while they sit back and collect rent from you for the next 36 months, there's a lot of landlords who are willing to do that. I know this from personal experience of doing it for 6+ years. This isn't me guessing, I've done it again and again, successfully.
Find a property --> Get the landlord interested in your offer --> View the property --> Close the deal with some concessions --> Furnish the property for free upfront (lots of unique ways we've done this) --> Get professional photos done and launch it on Airbnb for free
You can follow that exact process, the process is simple, but I'm not going to lie to you and say it's "easy", like I said earlier...greatness is not for the faint of heart.
This is how people build cash flowing engines with Arbitrage. They start with just 1 property making $2,000 - $5,000/month profit and they build it to whatever scale they want.
Yes there's risk, yes it's hard, yes there's more to it on the operations side of it but this is how you get started. There's so much valuable content on YouTube at at your fingertips to find every answer to any question you may have and I hope this article answered some of those.
If you have any feedback I'm always open to it in the comments below.
If this is something your serious about and want to learn directly from me, send me a DM and we can set up a call. I've succeeded, I've failed and I've succeeded again and I've got the exact blueprint on what to do, what to avoid and more.
Until then just know...
This is just the beginning...
I'm just getting started...
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What Is Airbnb Rental Arbitrage? How People Build Cash-Flowing Engines Without Owning Property
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