6 Benefits of Rental Arbitrage

Rental Arbitration has many benefits. In fact, it’s a rapidly growing industry because of all of the benefits! With more people seeking short-term rental opportunities than ever before, the timing is perfect for anyone who wants to start a rental arbitration business. Here are 6 benefits of rental arbitrage.

What is Rental Arbitrage?

Rental Arbitrage is a business model that allows you to rent out an already rented property. By signing a long-term rental agreement, and then subletting that same property to short-term renters (typically vacationers, relocating tenants, or corporate renters), you are able to turn a profit quickly without having to go through the hassle of purchasing a property. For a full rundown of rental arbitration, check out my post here.

Benefit #1- Low Upfront Costs

With traditional rental property management, you have to purchase the properties yourself and then find long-term renters for those properties. This is cost-prohibitive to many people. Home prices are rising and saving up for a mortgage down payment and closing costs can take a while. With rental arbitration, you only need to save up for the fees associated with your lease agreement and any furnishings your property needs. When you compare these cost differences, you’ll see how much sense it makes to get into rental arbitration!

Benefit #2- Quick Turnaround Time

Besides the benefit of the low upfront costs to rental arbitration, another benefit is the quick turnaround time to making a profit. Before you have the keys you can begin to market your property on sites like Airbnb! This way you will be able to fill your vacant property with short-term renters quickly. In fact, I recommend having your property rented out and bringing in money within the first week or two of signing the lease.

Benefit #3- Profit Potential of Having Rental Arbitrage Properties

One of the reasons I love teaching people about rental arbitration is because of the profit potential. With low upfront costs, you are able to recoup your initial investment more quickly than with traditional property management businesses. This means that your profit potential is greater.

Another reason your profit potential is so great is that you are able to make back your initial investment much faster than when purchasing a property. Once you earn enough to cover your initial rental deposit and the cost of furnishing your property, you only need to cover your monthly rent with bookings. Look at it this way, if your monthly rent is $1,000 and you are able to sublet your property for 15 nights in a month, you will earn $2100. Minus your $1,000 rent, you will have a profit of $1100. Imagine what you can earn with more bookings!

Benefit #4- Ability to Save Money for Other Investments

Now that we’ve gone over the potential for high profits with rental arbitration, let me tell you the next benefit on my list of 6 benefits of rental arbitrage. Because of the low initial investment and the lower monthly costs of building a rental arbitration business, you are able to save money for other investments.

Saving for other investments is also made easier because you can automate your Airbnb guest experience. I always recommend hiring a cleaning service, a bookkeeping service, and creating an electronic check-in/out process. See my post here to learn more about automating your rental arbitrage business.

Benefit #5- Scaling Quickly

As you begin to turn a regular profit with your Bnb property, you will want to scale your business. Again, scaling a rental arbitration business is easier than scaling a business in another industry. This is because of the reasons listed above in my list of 6 benefits of rental arbitrage. If you desire, you’ll be able to quickly grow your business and turn it into a fully functioning empire in no time.

Benefit #6- You Can Use the Property Yourself

The last benefit I want to make note of is the one that is the most fun! Because you have access to a short-term rental property, you can take advantage of it for your own use. In fact, you should take advantage of it for yourself and any guests you may want to join you. This is especially true if your property is in a prime location. Don’t forget that you are building a rental arbitrage business to create a life that you love!