3 yrs. later and over $750k in bookings. What I've learned about rental arbitrage..

[Jake Mercer]

3 yrs. later and over $750k in bookings earned...Here's what I've learned about rental arbitrage. The Pro's AND the Con's

Pros:

1.) Low barrier to entry (<$10k to get started, don't need great credit & you don't need RE experience)

2.) Positive constant cash flow (You can expect $1k-$2500/month in profit) for a deal that won't break the bank to furnish

3.) Scalability - Grow quickly through creative agreements with landlords, furnished properties, biz credit and creative private financing (no mortgage necessary!!)

4.) You can go for high value, lux and unique properties that can generate HUGE profits.

5.) Be in first position to buy properties from landlords when they want to sell to you. You will have the historical data and numbers to present a lender or bank if it's the right deal!

Cons:

1.) Like anything the agreement and lease terms can protect or harm you. Exercise caution when finalizing your agreement. These terms can outline who is responsible for certain home repairs, maintenance and damages and should outline protections and assurances.

2.) Zero equity. You are building a business and you can bring in some SERIOUS revenue but in the eyes of your conventional lender and banker, you will still have a tough time purchasing assets based on income based on leases and contracts. To a banker this is a "liability"

3.) You are the middle man. You are not only fighting to keep the guests happy, but you are also keeping the landlord happy. When issues come up, you can feel "squeezed" without the right understanding and agreement in place

4.) Furniture is the only asset you own which depreciates over time. It also costly and extremely costly in terms of time and labor if you plan on growing to multiple units.

For me, it has been WORTH IT..

3 years later... I quit my 9-5, now own 2 single family homes a tiny home and 7 acres of land. I am just starting but it wouldn't have been possible without Arbitrage!

[Sarah Kensinger]

Great story and insights on rental arbitrage. This is why I would never throw the rental arbitrage strategy out the window...."don't throw the baby out with the bath water" type of thing. You never know what real estate strategy will change someone's life!