Miami's Airbnb Arbitrage

[Alejandro Valbuena]

Hey everyone! 

I am a college student working at a property management firm and I am looking for way to get extra income to buy my first investment in the upcoming future while also gaining experience on the real estate industry. I have been thinking and investigating about AirBNB arbitrage. I currently live in Miami which as we know is a place full of demand for short term rentals. Having said this, I thought airbnb arbitrage was a good investment having in mind the little capital I can work with, the experience I have, and the risk I am willing to take. What are some advices you have received when it comes to airbnb arbitrage? What is something that I should be aware of? What areas should I be looking to do this? Am I being unrealistic by thinking of doing this? What is a common way I could monitor my numbers when it comes to making a deal for an AirBnB arbitrage? 

I appreciate the help and I apologize for the beginner questions.

Thanks!

[Richard Elvin]

I don't know that I agree that "Doing arbitrage is a low-risk...". (Not directing this at you @Yael Lederman, you just mentioned the concept in this thread and I thought I would post what I've been considering.)
I've noticed that the idea that somehow arbitrage is "low risk" keeps popping up in the forums. I've been trying to find arbitrage analysis numbers, and failing, so I've tried to account for things myself. First of, it is less cash out of pocket than a DP on a condo in Miami, but so is throwing $1,000 out a window. Just because the entry is less doesn't mean the risk is less, ie, a condo in Miami has a possibility of a return on investment vs the guaranteed loss of throwing $1k out a window.

A quick Google of "cost to setup a str arbitrage" shows a very general $5k-$10k. But that's just the cash out of pocket. In reality, as several have said, a multi-year lease is necessary to protect the investment of furnishing an str, so that needs to be factored in as risk. Another quick Google search has "miami average rent 2023" at $2,900/month for a 1/1 condo. So factor that in for a 36 month lease and we have $104,400 of lease risk. For the sake of quick analysis (and because most leases have some type of escape clause) we'll only factor in the first, last, and deposit of $11,600. So that gets us to what I feel is an optimistic $16,600 to $22,600 for real startup costs.
Let's look at numbers!
Overly optimistic arbitrage startup cost: $16,600.
Monthly income (Rabbu) $3,733 - Rent $2,900 - str insurance $? (I don't know this) = $833
Multiply rent x 36 month lease = $29,988
Total str rent $29,988 - startup cost $16,600 = $13,388 
So $13,388 is close to best case scenario after 3 years, without factoring in str insurance.
True risk is actually startup cost plus full lease = $109,400 and the risk of being sued if the lease agreement isn't fulfilled.
Is a real risk of almost $110k worth the $8k (minus insurance) return? Maybe for some. 
Another point, FHA loans are 3.5% down and USDA can be 0% down. That $16,600 could get you into a house hack.

Anyway, this has been on my mind. Thanks for reading and letting me get this out of my system. :)