Is "residential arbitrage" a thing ?

[NIcholas Arbuckle]

A buddy of mine who owns a few investment properties said to me recently he's had heaps of people enquiring with him about "corporate lease contracts" on his long-term rental listed on Zillow. This made us wonder if "rental arbitrage" is a commonly practised strategy. 

How it works is someone approaches an LTR listing to lease the property off the owner with a clause that permits the leaseholder to "sub-let" 

The leaseholder then actively manages the property by listing it on AirBnB / VRBO, thus "Arbitraging" the rate difference between his LTR lease contract and the premium price a STR offers.

Now obviously, there is risk assumed here (primarily if you cant make enough STR income to cover the lease cost) but there is huge potential to double the investment quite easily should you manage to get a steady flow of STR interest. 

The reason I'm considering this is, I'm keen to invest in property but lack the capital required. I see the process of "rental arbitrage" as a means for me to get more hands-on property management experience while saving the money I make from the Arbitrage process inorder to eventually provide me with a means to get a down payment on my first rental property. 

So, is this a thing? Do people do this? If anyone out there does do this, I would like to use you as a sounding board for due diligence. 

1. If you are doing this already (whether you are someone who acquires these types of leases and actively manages other people's properties on a STR basis, OR if your are a LTR owner who actively leases out your property with the right to sublet), Why do you do this & what has your experience been? 

2. What are the main pain points? Are there any unforeseen issues or threats I haven't considered? 

3. Is there any legal, regulatory or compliance red tape that needs to be addressed? Does the ability to engage in a lease contract for subletting only apply to certain states? Does it vary from state to state? 

4. Is there an existing platform (like AirBnB) that offers this as a service? Like a direct market place for lease contracts to sublet? 

Any information would be very much appreciated :)