How to speak to owners/landlords for rental arbitrage

[Joe Kim]

There are many ways to approach this difficult task of convincing a owner or landlord to rent to you as an investor ONLY to sublease (aka Master lease) the home to furnished short-term rental.

#1 NUMBERS GAME:  It's not easy.   When I first started, i called 5 owners and all of them told me "NO".   I met someone who was successful and he laughed at my 5 attempts and said, he called 300 owners before his first "YES".     Now, after doing this several times my success rate is around 1 out 5.    Here are some tips.

#2  MINDSET:  Just like some people will NEVER become real estate investors regardless of time, money, related profession, - MOST people will never become real estate investors.    Just ask your real estate agent if they own any rental properties.     

Along those lines, if the owner gives you a very FIRM "NO" when you present your proposal to rent their home for the purposes of doing STR (short-term rental). Move on.

If they say, "maybe" or have lots of questions about the details, then move forward and pursue.

#3  TRUST.   It's very important to establish trust as much as possible.   This is one strategy I used.  I tried to create rapport with the owner over the phone but waited to present my real agenda only in person.   However, this has back-fired because it takes time to drive out to the home only to get a firm "NO" to your request.    But if you lay out your plan to the owner over the phone, it's very hard to get a "yes" because trust is developed with a face to face meeting.

Trust can be established by talking about your past record (as an investor) but also if you have something positive about yourself (profession - real estate agent, nurse, teacher, fireman, doctor - any profession that can give you some added credentials).

#4 Owner vs. Property manager:    General wisdom is only talk to the owner as much as possible.  If there is a property manager, your success rate is going to be very low.   That being said, some "property managers" are real estate agents and NOT a property manager.   Those agents who are helping their clients finding a tenant are easier to talk to and my become your advocate.

Here is a huge exception.   A property manager may be a hard egg to crack but once cracked (built trust or relationship), they can open many doors since they can be your advocate and have access to many homes.

this is the case with apartment complexes.    Usually there is one owner and a property manager.   Some apartments are open to "corporate" housing.

#5  Airbnb - Do NOT mention "airbnb". Airbnb has many negative connotations. I do airbnb in all my rental arbitrage, they are the biggest player in the STR market. So how do I avoid talking about airbnb. I use the terms - "corporate furnished rentals", "short-term rentals", and talk about my target clients- Business travelers, traveling nurses, traveling healthcare workers.

#6  Knowledge - Know why STR is better for the landlord than traditional rentals. The wear/tear is much less for STR because the guests do not live their full-time. type of travelers especially business travelers, cook less, use the facilities less, and most of the time are at work during the day.

#7 AVOID - Avoid condos. Condos have many many owners and the HOA and management has to abide by the laws enacted by its owners. Therefore, this is not a type of home you want to mess around with. I made that mistake with a 2 bedroom condo - after 1 year, I had to shut down operations due to HOA rule violations of NO short-term rentals less than 30 days.

#8 The 30 day+ rule -  Certain places Airbnb is outlawed or a softer rule is the 30day+ rule.   meaning each guest must stay for 30+ days or more.    I really love Airbnb because they do all the marketing for me.   Also, for me 30+ bookings tend to be less profitable even though there are less vacancies.  

If you are desperate to get a landlord to say yes to you (don't be, just move on to the next home), one compelling thing you can do is ONLY do 30day+ bookings.   

#9  SWEETEN the POT:    Do not think that paying extra rent is going to entice owners to rent to you.  Do not offer to pay more rent ever to make the deal happen.    However, I have offered two things

A)  Higher deposit -  this way the owner's fears are alleviated somewhat

B)  Property management - offer the owner that you will essentially property manage the property for them.     Specific example,  I tell all my owners that any minor repair less than $150, i will fix for free.   Why?   time is money.   You cannot wait for an owner to fix things, you will lose bookings.

#10 CONTRACT - make sure what you are doing STR is listed in the contract - typically in the addendum section. That way you and the owner are in agreement and you have been green-lighted to go ahead and run your business.

[Ken Latchers]

Why are you starting a new thread when you posted this same stuff on an existing thread? 

Are you marketing something?.. 

You don't need to repeat.

I also consider this entire Arbitrage / master lease as passe'. There are many problems with the concept which you have not bothered to address. 

Terrible way for a newbie to get started. 

There are enough threads bouncing around on Arbitrage. Please stop spinning new ones.