Airbnb Arbitrage in Austin, TX

[Aaron Daniel]

Planning to try my hand at Airbnb arbitrage. I have never owned or been a host/landlord and am itching to get in the business. Due to limited capital I’m planning to give Airbnb arbitrage a go.

The strategy is to sign a long term lease at an apartment complex that allows their units to be rented as Airbnb’s. I’ve read in Austin this can be legally done by obtaining a license and in fact know a guy who does it.

Curious if anyone has given this strategy a go? Any pointers for a newbie?

Thanks,

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[Allen Duan]

Quote from @Bill B.:

I’ve never heard of a landlord knowingly allowing this (why would they let people they haven’t screened use their property.) usually this is done by lying or “forgetting to tell” the landlord. 

As long as you have no net worth (so you can't be sued) there's almost no risk to you other than the furniture loss. If the city suddenly outlaws STR or says owner occupants only you just bail on the lease, lose your security deposit and dare them to sue you because you have nothing.

I was going to say I guess you could Airbnb rooms in a place you were living in as a bad alternative to a bad job, but that’s probably not allowed under most leases. This is just bad all around. You’re not building any equity or net worth and you can be shut down at anytime by the landlord or the government. 

 I know rental arbitrage gets a bad rap in the BP community, but only a bad operator would do it without permission from the landlord. We got started with arbitrage and always partnered with the landlord or property manager. There are reasons a landlord would work with an arbitrage operator. 

That being said, rental arbitrage is not real estate investing. It's a service oriented business that's focused on cash flow with no assets. In the beginning you're creating a job for yourself. But it's possible to scale and turn it into a business where you can move out of the day to day. Depends on your long term goals :)