According to the latest report by ATTOM Data Solutions, 80% of the 755 counties in the United States analyzed have seen house prices rise faster than wages. In the past few years, the average annual salary growth rate in the United States has been less than 3%, while house prices have increased by more than 5%. It all explains the frustrating fact: as the gap between salary and house prices widens, especially in the Bay Area, excessive housing prices make it increasingly difficult to buy a house.
In addition, after overcoming obstacles such as paying down payment and paying commission, people need to face the next longer-term pressure: buying a house is easier than maintaining a house. For example, a $ 500,000 house costs more than $ 30,000 per year in maintaining a house: a property tax ranging from 1% to 3% of the house price, and a housing insurance premium of more than $ 100 per month. In some areas, it needs to purchase additional natural disaster insurance.
In addition, house maintenance such as hiring people to build lawns, property management, etc. will also bring huge expenses. In contrast, renting a house not only saves a lot of trouble but also saves a lot of cost investment.
At the same time, another huge business opportunity has surfaced: Airbnb short-term leases. However, buying a house for rent seems out of reach for most people. If you don’t own a property and want to make money on short term rental on Airbnb, the method described below may be suitable for you.
What is Airbnb Rental Arbitrage?
‘Rental arbitrage’ is the act of renting a property long-term and then re-renting it on a short-term basis on platforms like Airbnb and HomeAway. Rental arbitrage is a business model that requires little investment, provides positive cash flow, and poses far less risk — and yes, it’s entirely legal.
If you’re wondering how to start an Airbnb business or considering a move into Airbnb arbitrage, we’ve got you covered. Here are the best arbitrage opportunities in the United States.
What property is best for Airbnb Rental Arbitrage?
When choosing a house, you must consider factors such as the location, area, size, and degree of decoration of the house. In addition, the two landlords also need to estimate the budget for rent and the interior decoration cost.
Ranked: The Best Counties for Rental Arbitrage
Data from airdna.co/ Copyright by original author Dillon DuBois
Other states that follow closely include Tennessee ($ 2,620), Wyoming ($ 2,492), Michigan ($ 2,353), Colorado ($ 2,341), Pennsylvania ($ 2,060), and Massachusetts ($ 2,059).
Best Cities for Airbnb Rental Arbitrage in California
Data from airdna.co/ Copyright by original author Dillon DuBois
Is Airbnb Rental Arbitrage Legal?
Once a renter realizes the revenue-generating potential of Airbnb arbitrage, naturally a question arises: "Does Airbnb consider renters to be legally compliant in the second lease?" At present, most laws in most countries do not specifically distinguish between owning property Landlords and landlords of rental properties. The law deals with short-term vacation rentals, regardless of who owns or operates them.
At the moment it seems that although market regulations are relatively lax, we strongly recommend that landlords maintain full transparency between owners and rental companies. You can draft a legal document outlining your intentions as a vacation host to ensure that everyone is involved.
In addition, when deciding whether to become an Airbnb host, you need to know the specific laws and regulations in your city. Some cities restrict landlords from renting out their homes to paying tenants for short periods of time; many cities require landlords to register and obtain a permit or license before listing or receiving guests.
We have summarized the short-term rental regulations in different cities in the Bay Area. If you want to see the short-term rental regulations in your city, please click: https://www.lucas.rentals/post/short-term-rental-ordinances-in-major-san-francisco-bay-area-cites-2019-dec
Notes and Tips
In addition to negotiating various details with the landlord in advance, the two landlords should not only calculate the monthly rent in addition to calculating the monthly rent, but also remember to add a two-month rent deposit, bed and breakfast supplies, and necessary furnishing costs as the starting cost. At the same time, don't be reluctant to spend money on decoration because the house is not yours. Renovated and upgraded houses can have higher occupancy rates, and in the long run, can get more benefits.
In addition to the basic conditions of the house, such as location and decoration, Airbnb is paying more attention to the participation of the landlord and the connection between the listing and the local culture. The detailed experience of booking, check-in, and departure. These are the experience points that can make your listings premium, in addition to the basic conditions of the house. Landlord's participation is the biggest difference between a hotel and a homestay.
Three elements of short-term rent
Site selection, customer persona, and cost control are the three elements of a short-term rental. The best place to choose is in the traffic arterial roads and sightseeing areas. The source of tourists can target tourists, business people or office workers. In addition, there is a certain cost for decorating, but you can increase the profit by choosing beautiful and affordable furniture.
As for how to stand out from many listings, grabbing the first two pages to display the layout depends on many factors such as photos, reviews, and response speed. New Airbnb users have novice benefits within 10 days before launch and will be placed on the first 3 pages of the homepage. The better the placement, the more likely it is to get an order. We recommend that you pick up orders at this stage to get more good reviews. After all, the review is an important indicator of the Airbnb platform. With good reviews, it is more likely to appear in front of the display page. cycle.
Of course, Airbnb's second-host business is not as simple and easy as imagined and often faces various unpredictable risks. For example, the landlord suddenly sells the house and breaks the contract; the neighbors find that strangers come and go every day to complain at the property office; and issues such as law and order, fire protection, and sanitation. Many landlords are resistant to short-term rentals. They think that different people move in every day will increase the wear rate of the house, and they are more willing to rent the house to individuals who live long-term. For this situation, landlords also need to make various preparations to respond in a timely manner.
In fact, the original intention of Airbnb was: Travel like a local, live where locals live. To provide tenants with first-class accommodation, warm hospitality, so that tenants can experience the local lifestyle through the landlord, and let tourists experience the local culture. For tenants to have a good experience, profitability naturally becomes a matter of course.
After becoming an Airbnb host, many friends feel that operating an Airbnb listing is a time-consuming and labor-intensive task. Communication and handover require time and cost. Not to mention, because Airbnb traffic is unstable, how to get more exposure when the room is vacant It is even more difficult. In addition, sometimes receiving bad reviews from critical customers is a pain that landlords can't escape.
If you want to avoid these problems to the greatest extent, Lucas rentals can help you. Lucas rentals will give you one-on-one advice on housing selection, and check related regulations, make income estimates, and ensure that the landlord's profit is maximized.
Finally, Lucas Rental reminds again: Before you want to rent out a rented house for Airbnb, you must coordinate with the landlord to obtain the consent of the landlord; you must also understand the laws and short-term rent regulations of your city; we have concluded The short-term rental regulations for different cities in the Bay Area. If you want to check the short-term rental regulations of your property, please click: https://www.lucas.rentals/post/short-term-rental-ordinances-in-major-san-francisco-bay-area-cites-2019-dec
Airbnb Rental Arbitrage in 2020: Where to Make Money Without Buying Property Dillon DuBois | February 14, 2020