Should I let someone Airbnb Arbitrage my home?

Question

One of my rental homes in Phoenix will soon be vacant. I have it listed on Zillow and have had tons of people reach out to me about arbitraging my home. I was wondering if anyone has any experience renting to someone who is going to use the home for Airbnb? I'm not thrilled on the idea, but could be persuaded for the right premium. Any input is appreciated.

Brooklyn McCarty · Answer

Why not do it yourself?

Dan H. · Answer

Question why would you choose to have someone that likely has no training, insurance, licensing, team, minimal capital, etc when you can hire a professional PM that is licensed, has training, has insurance, has a large support team?

If you do decide to arbitrage, make sure you have a very high umbrella policy and that the unit has an insurance policy that covers STRs.  Your liability if something goes terribly wrong is very high because you know the person doing this is unlicensed and likely uninsured.

Good luck

Michael Baum · Answer

Hey @Kerns Churchill, I am not a fan of arbitrage but here is my opinion.

First find out about them. Most of what we see here are people who don't have 2 nickels to rub together. They can barely come up with the basic lease cashola let alone setting it up for success.

Most also have never done STRs before. Zero experience is high risk of failure leaving you with a broken lease and maybe a house full of furniture you need to deal with.

I am not saying don't look at it, just do a search here and read about arbitrage first. Then vet the heck out of whomever contacts you. Don't buy buzz words like Corporate Rentals and the like. Most of the time it is a single person with an LLC.

Why not give it a shot yourself? Phoenix is a solid market and you should be able to do OK.

Curtis Porter · Answer

Be careful, A lot of these requests come from Indonesia etc.  I currently arbitrage a place in Scottsdale and it’s going very well, but I have a legit local Airbnb business.  It can be good for your property especially with how many cleans it gets per month and all the upkeep and maintenance it needs to stay rentable and get good reviews.  BUT there’s a lot of dumb kids trying get rich schemes and have no business trying to arbitrage.  If your property is STR worthy I would think about doing it yourself or partnering with someone.  Start up costs to furnish are $15-$20k. Realistically mid range rentals are going to gross $50k year one depending on what city, amenities etc. My arbitrage deal is for 3 years as the first year is basically break even.  Where is yours located?

Richard Elvin · Answer

@Kerns Churchill What @Dan Heuschele said. Why would you choose an arbitrager vs a professional managment company? There would need to be some serious upside to working with some random person off Zillow vs a pro company. This is also just my opinion, which is some random person from BP. lol

Josh Young · Answer

@Kerns Churchill I would make sure that they are also on the lease as a personal guarantee, I would charge first, last, and security deposit, and I would make sure you are charging a premium of at least 25%.  I would also make them responsible for paying for all repairs under $500, except major mechanical and roof. Think of it more like a commercial lease.

Chris Seveney · Answer

@Kerns Churchill

As mentioned unless they want to pay months in advance and an increased deposit I would pass

Account Closed · Answer

Depends. Where in Phoenix is the property, do people want to be in that area, is it in an HOA, will AirBNB numbers work, who takes responsibility for AC, Water, Power, Garbage, pool, maintenance, etc?What happens if there is a porn shoot like they did in Paradise Valley or a large rowdy party and AirBNB delists the property, what about guests with drugs and police calls? Who takes responsibility? Not that those can't be pre-empted to a certain degree but you have to limit your exposure to liability.Fun to think about, but there are real questions you have to ask yourself first.

KiKi Chase · Answer

It could go well, but I would make sure to take the necessary precautions! Make sure you have a solid lease, that states they're fully liable for anything that happens while arbitraging, if AirCover doesn't cover it. Also, make sure it's solid how you get paid, what happens if a guest damages your home. There are some great leases online that outline this, but make sure it is solid, and talk to an attorney to be sure!

Quinn Olivarez · Answer

I have a property I thought about making available to an arbitrage person, but it's already 95% furnished and I like designing STRs so I decided to keep the project in-house

Should I let someone Airbnb Arbitrage my home?

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