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Updated over 4 years ago, 03/09/2020
Anyone doing the rental arbitrage model?
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?
@Curt Smith I’d love to go to a local meet up. I’m in Atlanta. Do you have suggestions? Link to the meet up?
@Jake Tovey glad to hear your experience work out for you. Would like to know more about how you find the first property this way?
@Ben Zimmerman thanks for your input Ben!
@Jingru Sui - do you have an Instagram? If you do, try looking up Alexia Wright. Huge success story. Owns multiple leased rentals and make a very nice return off the rentals. Hope this helps.
@Jingru Sui I too am interested in this model. I actually live in Atlanta and would love to connect. Obviously it’s a non-traditional way to increase cashflow but it seems it’s more art than it is science.
@Jingru Sui hi there, I have a few properties that I successfully arbitrage and I love it. I can set them up quickly, don’t have tons of money tied up, and it generates monthly cashflow. There is plenty of information online on how to connect with landlords on this topic but my advice is always being transparent and listen to their needs, then work towards common ground. Good luck.
Yes, if you ignore a lot of risks, potential issues and other important factors. That is a difference between understanding business and just focusing on the simple things.
"over the course of the year they average roughly 2x what they could otherwise rent it out as a LTR. This means if you are doing arbitrage, then you have twice as much income coming in, as you do expenses going out by paying your lease."
I can't read all the comments but a few saying you're stuck in a lease. Solved with a section in the lease if it is outlawed the lease auto terminates...
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Originally posted by @Account Closed:
I can't read all the comments but a few saying you're stuck in a lease. Solved with a section in the lease if it is outlawed the lease auto terminates...
The owner of the property typically supplies the lease not the tenant. I would never allow someone to write in this stipulation on my lease and I seriously doubt any seasoned landlords would either.
Originally posted by @Sofia Sharkey:
@Jingru Sui hi there, I have a few properties that I successfully arbitrage and I love it. I can set them up quickly, don’t have tons of money tied up, and it generates monthly cashflow. There is plenty of information online on how to connect with landlords on this topic but my advice is always being transparent and listen to their needs, then work towards common ground. Good luck.
Hi Sofia, Thanks for the suggestion! How do you find these landlords? by searching property for lease? Do you furnishing the property or landlord does?
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
How did I do? :)
My guess would be she is just an employee for a larger company that owns 70 units. She completes the tasks her boss gave her and goes home at night. There is no risk. No purchasing of property. No legal. I would also guess people are clicking on some internet marketers video out there claiming they can make 1000s of dollars with no knowledge or risk. All you need to do it to be able to sign a 1 year lease!! Its way more complicated than that. As someone in the business over 10 years, I was overwhelmed by the moving parts in a STR Abitrage scheme. This isn't something you can learn overnight thanks to a $49 ebook.
The short term rental abitrage folks should get to know the no money no experience bandit sign "Wholesalers" looking to make 10k checks next week. They are both looking for the same unicorn.
Making money in real estate take either money, or massive effort over long periods of time. Which one are you doing?
Originally posted by @William C.:
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
How did I do? :)
My guess would be she is just an employee for a larger company that owns 70 units. She completes the tasks her boss gave her and goes home at night. There is no risk. No purchasing of property. No legal. I would also guess people are clicking on some internet marketers video out there claiming they can make 1000s of dollars with no knowledge or risk. All you need to do it to be able to sign a 1 year lease!! Its way more complicated than that. As someone in the business over 10 years, I was overwhelmed by the moving parts in a STR Abitrage scheme. This isn't something you can learn overnight thanks to a $49 ebook.
The short term rental abitrage folks should get to know the no money no experience bandit sign "Wholesalers" looking to make 10k checks next week. They are both looking for the same unicorn.
Making money in real estate take either money, or massive effort over long periods of time. Which one are you doing?
Well... No one really said we didn't spend massive effort or money....Everyone who actually doing this everyday knows it's daily struggle. Just because someone might have the money to buy doesn't means it's the ONLY right way to invest. Just different ways of making through life. I believe whoever made up their mind and make educated choices along the way and work really really hard can make it doing long term hold, Short term hold, wholesale, rent arbitrage etc.
@Jingru Sui instead of a master lease I basically created my own rental lease that includes written consent to sublease, home modifications, and a few things that were relevant to my objective. Master lease is long and redundant and a little overboard for me. I am currently grossing double the amount it cost me to rent the house. My market analysis made sure it made sense for short term and long term through arbitrage. Instead of it costing me money while I furnish it for short term, the long term renters pay monthly for rooms and there is no “holding” cost for me.
Originally posted by @Jingru Sui:
Originally posted by @William C.:
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
How did I do? :)
My guess would be she is just an employee for a larger company that owns 70 units. She completes the tasks her boss gave her and goes home at night. There is no risk. No purchasing of property. No legal. I would also guess people are clicking on some internet marketers video out there claiming they can make 1000s of dollars with no knowledge or risk. All you need to do it to be able to sign a 1 year lease!! Its way more complicated than that. As someone in the business over 10 years, I was overwhelmed by the moving parts in a STR Abitrage scheme. This isn't something you can learn overnight thanks to a $49 ebook.
The short term rental abitrage folks should get to know the no money no experience bandit sign "Wholesalers" looking to make 10k checks next week. They are both looking for the same unicorn.
Making money in real estate take either money, or massive effort over long periods of time. Which one are you doing?
Well... No one really said we didn't spend massive effort or money....Everyone who actually doing this everyday knows it's daily struggle. Just because someone might have the money to buy doesn't means it's the ONLY right way to invest. Just different ways of making through life. I believe whoever made up their mind and make educated choices along the way and work really really hard can make it doing long term hold, Short term hold, wholesale, rent arbitrage etc.
I think you missed my point. What I was trying to say was, my guess is based on your OP, and the few follow up posts you have made, you are not the owner of the 70 STR's. It seems to me you work to a company or a person with many STR's, you know the business, and you were coming here for more information on STR arbitrage. Otherwise you'd just continue to buy properties like you did the 70 times prior..... I could be wrong. If you are the owner of those 70 properties, then you would in fact be the EXPERT as mentioned before by someone who knows what they are talking about.
With that said, I was comparing the "newbies" that come here through a google search, looking to get rich quick. The STR arbitrage, and no money no experience add no value "wholesalers" fall into the same bucket. People think you can get in to real estate will little money out of pocket, I don't think they understand when you are not investing money, than you are investing your time and knowledge. If your new, you have little knowledge. So you have time. Spend it doing. Talk to a landlord. Rent a property. Arbitrage it. You won't find the get rich quick guide here.
@Jingru Sui Just putting it out there that you can negotiate longer leases and secure them with a mortgage (or deed of trust depending on the state). When doing rental arbitrage (or master leasing), you should be the one drafting the lease, not the landlord. All of these concerns that others brought up here, like landlord not renewing with you, should not be a concern because you should only be doing business with the right landlord, not every landlord out there.
Just like every other strategy out there, you have to find the right seller/person for the right deal.