How do people find Airbnbs to Rental Arbitrage?

[Thomas Patton]

I’ve been researching this and this has been my approach so far. I’m sure I’m missing some things, but I think this is a pretty good starting point. Anything I'm missing?

1. Look at AirDNAs top list of cities to rental arbitrage based on rent and income.

2. Find a city with positive trends that's within driving distance (I'd like to be close to the property in case anything goes wrong).

3. Choose a neighborhood that has year round travel demand. This is probably more business focused because travelers are less price sensitive, stay for longer, and the travel patterns are more predictable.

4. Check on city regulations to make sure I know what's required to short-term rent your home on Airbnb.

5. Look at the Airbnbs in the area and get a realistic estimate for what the property can produce. I've been doing this on AirDNA but also just by looking at comps on Airbnb and checking their ADR/Occupancy.

6. Look at craigslist and see what properties are available to rent. Ideally, I'd like properties in multi-family buildings that are updated and would photograph well.

7. Estimate startup costs, take a haircut off of my ADR projections, and shoot for a 50% occupancy rate. Build a model and see if I can break earn a 25% margin with any of the properties available.

8. Aggregate list of 10 potential properties and then cold sell into all of them. Since it's my first property, I plan on giving them 3 months of rent up front and potentially paying them a 5% over asking (assuming I can still be at or near my profit margin target of 25%).

9. Reach out to homeowners on craigslist/apartments.com. Tell them my plan for it being an Airbnb from the get go so that I don't waste their time showing the property.

10. Sign a one year lease. Ask for a lease signing one month out so that I can get the proper permits and set up the property.

[John Underwood]

We are collectively not big on doing Arbitrage. It is a job not RE investing.