Anyone doing the rental arbitrage model?

[Jingru Sui]

Just want to see if anyone had success doing the rental arbitrage model? master lease from developer and operate them as short term rental? Any success story? I've reached out to a lot of apartments in area my company want to go but a lot of them have company policy that doesn't allow Airbnb type short term. Any developer here are thinking about partner up with a short term rental company? 

[Jingru Sui]

@Ken Latchers Ken no need to be Sarcastic. My company Own and operates over 70 Airbnb units in downtown Atlanta and Columbus Oh and has been great so far. We just want to explore some new ways to expand into other market. That’s all. Just trying to see if people had success doing the master lease scenario and learn from their experience. If you don’t have something to share you don’t have to attach without knowing me. We are all here to make connections and learn from each other after all

[Luke Carl]

Oh lord 

[Paul Sandhu]

Most people here will pooh pooh it.  But there is a person on here from California that is very successful with this thing you call arbitrage.

[John Underwood]

Not recommended on here.

[Michael Baum]

I am just gonna.....

[Ken Latchers]

Hi, I am the 300th person who came into this forum that heard about a book/course/ blog/(insert source) about a really clever way to make lotsa money. I dont know what I am doing but...

[Jingru Sui]

@Lucas Carl

Not sure what you mean..

[Jingru Sui]

@Paul Sandhu thank you Paul! Do you remember what’s this person’s name?

[Jingru Sui]

@John Underwood thanks John. Could you share some insight on why?

[Jingru Sui]

@Michael Baum not sure what you mean either...

[Jingru Sui]

@Ken Latchers Ken no need to be Sarcastic. My company Own and operates over 70 Airbnb units in downtown Atlanta and Columbus Oh and has been great so far. We just want to explore some new ways to expand into other market. That’s all. Just trying to see if people had success doing the master lease scenario and learn from their experience. If you don’t have something to share you don’t have to attach without knowing me. We are all here to make connections and learn from each other after all

[Luke Carl]

@Jingru Sui . Ok here's the deal. This question is asked on this (STR) forum OFTEN. It's the number one question we get. There are a select few of us (all of which replied to you) that are regulars here. Everyone else is a first timer that usually finds the forum by accident (google).

Truth is we're all ANTI arbitrage. We do not have an arbitrage expert hanging out here. Seeing as you've got 70 units YOU would BE the expert. None of us have 70 units and none of us are doing it with other peoples properties.

SO! the way I figure... you can either become the resident expert... or you can read the 5000 threads that already exist on this topic and disappear. We'd love to have an arbitrage expert so we can stop answering those questions because none of us are interested, and frankly have no knowledge. So please! Read the 5000 threads and start hanging around with us dorks. :) 

@Paul Sandhu
@John Underwood
@Michael Baum

@Ken Latchers

How did I do? :) 

[Account Closed]

What a bunch of losers the people who replied are. Al Williamson is probably the one the other person is referring to.  Yes you can make money. It's no different than managing a property. Why it would be discounted I don't know. 

[Paul Sandhu]

With rental arbitrage you are levered.  That means your monthly fixed costs will be high.  You also have zero equity.  That means you have no say in the legal matters.  It's like 2 coyotes and 1 sheep voting on what to have for dinner, and @Jingru Sui is the sheep.

[Ken Latchers]

The only thing true  the following statement is "I Dont know" or better expressed as:

I don't understand risk

I don't understand a bad idea when I see it.

I don't understand why knowledgeable people are against it.

I don't understand all the disadvantages.

I don't know why I posted this response but it just felt good


Originally posted by @Account Closed:

What a bunch of losers the people who replied are. Al Williamson is probably the one the other person is referring to.  Yes you can make money. It's no different than managing a property. Why it would be discounted I don't know. 

[Jingru Sui]

Originally posted by @Account Closed:

What a bunch of losers the people who replied are. Al Williamson is probably the one the other person is referring to.  Yes you can make money. It's no different than managing a property. Why it would be discounted I don't know. 

 Hey Erik, Thank you so much for your insight!

[Jingru Sui]

Originally posted by @Luke Carl:

@Jingru Sui . Ok here's the deal. This question is asked on this (STR) forum OFTEN. It's the number one question we get. There are a select few of us (all of which replied to you) that are regulars here. Everyone else is a first timer that usually finds the forum by accident (google).

Truth is we're all ANTI arbitrage. We do not have an arbitrage expert hanging out here. Seeing as you've got 70 units YOU would BE the expert. None of us have 70 units and none of us are doing it with other peoples properties.

SO! the way I figure... you can either become the resident expert... or you can read the 5000 threads that already exist on this topic and disappear. We'd love to have an arbitrage expert so we can stop answering those questions because none of us are interested, and frankly have no knowledge. So please! Read the 5000 threads and start hanging around with us dorks. :) 

@Paul Sandhu
@John Underwood
@Michael Baum

@Ken Latchers

How did I do? :) 

Hi Lucas,  I appreciated you share the reason why I got a lot of cold shoulders right away. :) It all make sense. I hang out more on the long term platform more because my side hobby is long term. Short term is a 9-5 job. I'd love to share more on what we do as a company to buy and operate multiple units (below link is all of our units in Atlanta Downtown. We have 15 more in Columbus and about to close 40 more units.). We have never done the rental arbitrage model before so not an expert on that matter.  I understand your frustration on answering same questions again and again and I apologize for not reading previous 5000 posts simply because i got lazy and really just want some help from here. It's a new method we want to try and we just simply want to see if anyone have done it and succeed. That's all. Best of luck.

https://www.airbnb.com/users/3...

[Luke Carl]

deleted

[Jingru Sui]

Originally posted by @Paul Sandhu:

With rental arbitrage you are levered.  That means your monthly fixed costs will be high.  You also have zero equity.  That means you have no say in the legal matters.  It's like 2 coyotes and 1 sheep voting on what to have for dinner, and @Jingru Sui is the sheep.

Thank you. it make a lot of sense. What type of legal matters you are referring to?  

[Paul Sandhu]

If the property owner decides that they don't want @Jingru Sui doing the arbitrage thing with their property, they are free to not renew the lease agreement.  Instead, they will do it themselves or let their nephew, adult child, cousin, brother, retired parents or some other family member do the arbitrage.  He would charge them the same or less as you, but would be keeping the money in the family.

Also, if the municipality decides to outlaw the Airbnb concept, you are stuck in a lease and its payments.

[Jon Kalar]

Hello we own a duplex and are renting it to a company that is STRing it. We started with one side as we got approached from the company that was wanting to do STR. When the other side became available we offered it to the company. It has been a successful so far. Not sure what information you are wanting. For us it was just another way to get a long term and not be in the STR ourselves. We are getting the rent that we advertised at. Let me know if you want more information.

[Jingru Sui]

Originally posted by @Paul Sandhu:

If the property owner decides that they don't want @Jingru Sui doing the arbitrage thing with their property, they are free to not renew the lease agreement.  Instead, they will do it themselves or let their nephew, adult child, cousin, brother, retired parents or some other family member do the arbitrage.  He would charge them the same or less as you, but would be keeping the money in the family.

Also, if the municipality decides to outlaw the Airbnb concept, you are stuck in a lease and its payments. 

I see. I guess that's why company like sounder, stayafred, whyhotel,etc sign longer lease and also try to work their way into city planning/ legislation etc. Thanks for sharing! 

[Jingru Sui]

Originally posted by @Jon Kalar:

Hello we own a duplex and are renting it to a company that is STRing it. We started with one side as we got approached from the company that was wanting to do STR. When the other side became available we offered it to the company. It has been a successful so far. Not sure what information you are wanting. For us it was just another way to get a long term and not be in the STR ourselves. We are getting the rent that we advertised at. Let me know if you want more information.

Hi Jon, Thank you so much for sharing this! I'd love to learn more about it. I'll add you! 

[Paul Sandhu]

Originally posted by @Jingru Sui:

There is a saying "Keep your friends close, and your enemies closer."  That's what those companies are doing.

[Michael Baum]

Hey @Jingru Sui. I wasn’t trying to be rude. I read how you currently do things and the key word I took from it is BUY.

You own the units you are renting. You have control. You decide. You build equity.

With arbitrage you have none of that. What you are is beholden to the landlord. If they decide not to lease it to you again you are out the investment of setup. That is a best case.

Worst case is the municipality decides to ban them a month in. You are stuck with a long term lease at market rates plus all the stuff you bought to set it up. 

Unlike most who come in and ask about this, you have a ton of rentals already. You are making plenty of money so you probably could cover the potential big downside if you get nailed to the wall.

Most who want to do arbitrage have no money and have never done anything in real estate before. They are very vulnerable to losing it all and having to take years to get out of that hole.

So, bottom line is in your rare case, you could take the hit if/when it goes south.

What I would do it take a look at cities that have setup solid regulations already. Those that have fees, policies to limit the number of STRs per neighborhood, charge a specific tax etc. 

By choosing an area like that, that can support a STR model, you mitigate a lot of the risk. The areas have already taken steps to work with rather than ban STRs.

That still doesn’t mean things can change overnight. It will be a risk, but you could probably take the hit if you don’t go big on the first try.

Good luck!

[BJ Everson]

@Jingru Sui Through my profession, I have a stake in a 88-unit apartment building in downtown Cleveland OH where the developer had problems renting out most of the 2 BD units. So he hired Stay Alfred which is a company that does what you're asking (not sure if that's your company). They got 18 units on a 2 year lease, furnishes them and posts them to AirBnB and the like. As part of the ownership, it helped the building reach its full occupancy with tenants we do not need staff to manage. I would look into Stay Alfred's business model if you are looking for some help.