New Member looking for opprtunities / strategies to start out STR - Rental Arbitrage

[David Jean-Georges]

Hello Everyone,

I am new to BiggerPockets and the real estate Industry. We bought a single family home in Deltona Florida in July 2022, but honestly we were really blind and ignorants through the whole process. A few months after moving into the house things get tough with the mortgage and all the utility bills and day to day expenses.

At that time I started looking for how can I make money using our house, and found biggerpockets on youtube... I realized we did the wrong thing because we should be buying a multi-family house instead of a single one. What we can do? What are our options?

1. We were thinking of doing airbnb in one of the rooms (3 bedrooms, 2 bathrooms), but one of the bathrooms is out of service. It doesn't make sense to me to have guests now and let them use the only available bathroom (in the master bedroom).

2. About getting money from the house (equity, refinance, etc.). I don't think it's really possible because we got it at the end of July 2022 and we started the monthly mortgage payment in September (only 5 months of payment)

3. I kept looking to see how to have another source of income, how to have cash flow and I heard about short term rentals, specifically "Rental Arbitrage". Over the past 2 weeks I have listened to several youtube videos (Biggerpocket podcast with Avery Karl, Tony Robenson and so on) and Avery Karl's book.

I think the least complicated way for us to start "investing" in real estate MIGHT be rental arbitrage.. So, I'm looking for opportunities, and as you can imagine... I'm out of money. I am not to far from Orlando Florida, this us why I want to do tbe Rental Arbitrage around Orlando

I've heard of the DSCR loan which would be great because (as I understand) it doesn't depend on your income or credit score but on the expected income from the property. II wonder if it is possible to have a DSCR with no down payment or with a really low down payment (<10%)

Any comments or advice from the community will be helpful.

[Michael Baum]

First thing @David Jean-Georges, arbitrage is not investing. It is a job.

We get this question/idea weekly from folks looking to get started. Like you, most don't have 2 nickles to rub together but still want to get started.

Frankly, you don't have the money to get started on any kind of investing. Arbitrage will cost you at a bare minimum: first, last and deposit. Any owner who thinks about this will want a premium for the rent and maybe a larger deposit.

Then you have to furnish it which could cost 15-25k. That all depends on the size and area.

Then it comes down to being in one of the most competitive markets in the US. There are a ton of STRs in Orlando. I have a pretty good feeling you will lose money hand over fist on something like this. The Orlando scene is great if you have a 9bed/10bath fully themed out. They bring in the cashola.

What you should do is live cheap. Save every dime. Put money into fixing that bathroom. Then you can think of renting a room. It won't bring in much. Save all that comes in from that to get to a decent down. Then start looking for a place.

Maybe turn your current home into a LTR, use FHA to buy a 4 plex. Live in one, rent the others. Continue to save. Then move, rent that final unit after refinancing out of the FHA.

There are a lot of ways to get started in investing. Maybe try wholesaling? 

Do a search on arbitrage and you will find a ton of info on here.