Subleasing Air BNB??

Question

Has any one here actually made money off of subleasing a rental.

More specifically the Brian Page method.

Renting a normal apartment as if you were a live in tenant, the subleasing on air bnb to make a profit.

I can’t find any information on if this strategy works for some quick cash to fund long term rentals.

Does anyone know anything about this? I would really appreciate the help.

If you don’t know what I’m talking about here it is.

https://youtu.be/J0H6l1wjmd8

Nathan Gesner · Answer

I almost did it last week with a long-term rental. Many mom-and-pop investors rent well below market. This particular owner had a house that rents for $1,000 a month and they were happy with that. I knew it could rent for $1,500 a month.

i considered leasing it with permission to sublease. They would get guaranteed payments of $1,000 even during vacancy and I would cash flow $500 a month when rented.

However, I couldn't bring myself to take advantage of their ignorance. I told them what it was worth and offered my management services, which they happily accepted. I only make $150 a month but at least I have a clean conscience.

Ethan Cooke · Answer

@James Baker - Rental arbitrage is a very viable business, but it takes work: you need to earn and maintain the trust of landlords, negotiate win-win deals, manage cleaners and maintenance people, and do very good marketing and customer communications. It also helps if you are good at using repeatable and automated processes and doing accounting/record-keeping (my weaknesses). There are many good BP threads on this topic including this one:

https://www.biggerpockets.com/forums/530/topics/694441-airbnb-rental-arbitrage

I manage 25 furnished rental units in the San Francisco Bay Area and earn a decent income. Two years ago I stepped away from 25 years as an HR Generalist/Director in Corporate America to build and manage a furnished rental business, and I haven't looked back. I love the freedom of running my own business and hanging out with my teenager daughters whenever they will tolerate their dad! I know many other BP'ers who do arbitrage successfully in markets across the US, including my mentors, @J. Martin, who travels the world while his team runs his business; and @Al Williamson who has a great course on how to do this from A-Z with a focus on 30+ day rentals.

The risk of dropping revenues in this business is real: as new Short-term Rental restrictions are passed in a city or state, or a furnished rental market gets saturated with units and/or the travel economy weakens, then the revenues and profits in rental arbitrage drop. But if you rent places at or below market rent that will still be strong rental properties in a down economy, you can usually re-rent them without losing money (especially if you leave the furniture which has value to a renter). You will then need to replace some of your income.

The risk of losing more than a few thousand dollars on a rental arbitrage property is very low compared to buying a rental property in a hot market and then needing to sell it later during a down economy at a loss of $20K or $200K. I invest in property too and I love it, but the financial risk of owning property compared to rental arbitrage is simply higher.

James Baker · Answer

Ethan thank you. That was extremely helpful!

John Underwood · Answer

Search Arbitrage on here and you will find out most investors here on BP are against it for many reasons.

Michael Baum · Answer

Hi @James Baker, do a search on here about arbitrage. You will get a ton of hits. People come to the forum and ask this exact question about 5 times a week or so.

Personal opinion is that I will not lease a place hoping to make a buck and not own it. Too much risk IMHO.

Now, if you have a ton of revenue from other sources, you might take a risk and see how it goes. But one rule or law change and you could lose the ability to AirBNB it and you are stuck with the lease.

There are people who reportedly do well. Again, do a search on this topic. Arbitrage.

Puri Indah · Answer

Stressful times for many of us with no income especially for small businesses who are forced to close, Airbnb hosts and those who are doing arbitrage. Wondering how you guys doing/managing these days?

Josi Gass · Answer

We are looking to buy now. Yeah that's the idea get a multifamily or a place with extra bedrooms and keep doing it.

Paul Sandhu · Answer

Good for you mang.  Most people would be losing money or breaking even when you factor in their time.  Maybe you could move to a bigger rental property and keep doing what you are doing?

Josi Gass · Answer

Hey James! We have "subleased" by Airbnbing out extra bedrooms in the rental we live in. We make profit and pay rent. All the money we are making is saving to buy our first investment.

Ken Latchers · Answer

By its very definition, Arbitrage is an attempt to capture the difference between two related Investments. The reality is arbitrage tends to go away easily.

there are some here who try to Champion it as a great way to invest. By and large most of them do not understand all the risks.

decide whether or not you want to be the next deer in the headlights.

Subleasing Air BNB??

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