@Emily K.- You got this! You absolutely have the STR management experience needed to do rental arbitrage successfully. Both @Robert Gilstrap and @David Bergmann nailed it: rental arbitrage is a legitimate, viable business model. Of course it's hard work. Of course there is risk. But when done right, it adds real value to the arbitrageur and the owner. Feel free to PM me to discuss.
YOU are a credible furnished rental manager with a good track record. I am certain you can find landlords who want the benefit of a good STR manager whose company will be cleaning and maintaining their property after each guest AND adding value to the property also. I find that most arbitrage "naysayers" have not done rental arbitrage and are afraid of the risks, all of which can be mitigated (with simple contracts, sublet & lease termination agreements, STR insurance, etc.)
I have been growing a 25-unit rental arbitrage & furnished rental business for the past 3 years in and around San Francisco since I left a 25-year career in corporate America. I also own a few homes in the area. When I started doing arbitrage, I needed a scalable way to generate good monthly income in real estate (vs. only generating long-term wealth). I learned rental arbitrage from 2 successful long-term local arbitrageurs, @Al Williamson and J. Martin, who organizes the SF Bay Area Real Estate Summit. I invested approximately $15K per unit from my own funds to rent and furnish my first few units until I could use my profits to fund new units. After a very successful 2018 and 2019, my bookings tanked in April and May 2020, and then occupancy bounced back to 90-95% beginning last June. I price units very competitively on AirBnB to keep them fully occupied, and rent some of them for 6-12 months to travel nurses, relocating families, construction workers and other "corporate" renters. Now my business model is a combination of short-term rental arbitrage and long-term rental arbitrage, which brings lower margins but also much less work.
The main value that I provide to landlords is free property management & minor repairs (e.g. I handle all repairs requiring up to $200 and 2 hours of my time). I also have an 800 credit score and send rent auto-payment to my landlords early every month. I replace appliances and coordinate major repairs by sending multiple estimates to the landlord. Finally I add value to properties including fresh paint, new light fixtures, smart locks and even adding a kitchenette of laundry room if the landlord agrees that it will add value to their property to create a "second unit" out of a bedroom suite with a separate entrance.
When I am speaking with landlords, I tell them exactly what I want to do with their property including corporate rentals. And of course I tell them I will provide free property improvements and free property management, which are the big selling points. In 3 years, my "hit rate" when I meet with a new landlord to discuss renting their property is about 40%. Nowadays most of my new units come from the landlords I am already working with since I maintain their property at a much higher level than a typical tenant.
Let us know how your first arbitrage deal goes!
