@Paul SandhuI totally agree that each market is different and supports different real estate strategies. I own 3 SFRs in San Francisco and use them as regular rentals—semi-affordable housing for 20-somethings. The 11 STRs that I manage are mostly south of SF, where STR laws are much friendlier.
@Benjamin Vail - Yes! The STR model is very flexible. Just like investing, every "arbitrage" property has multiple uses and exit strategies—short-term furnished rental, 30-90 day furnished rental, 6-24 month furnished rental, medium or long-term unfurnished rental, etc. And that doesn't include the various types of partnerships with landlords and financial partners. As long as the rent paid by the "arbitrager" is at or below market, there are many ways to make money with a rented property. As you said, one of the best arrangements is the "revenue split" where the landlord pays for all furniture and the manager gets a cut from them for doing all the booking, guest communications, coordinating cleaners and other management stuff.
How good can it get? One friend of mine set up 20 units, hired and trained a team, and now he travels around the world 9 months out of the year and works 4 hours a week.
How bad can it get? Another friend of mine running an “arbitrage” business was banned from using AirBNB because a guest discovered a hidden camera that a previous guest had put there. AirBNB was his main booking platform! So he “sold” his existing business (leases and furniture) to other arbitragers to cover his expenses, shifted his furniture to several newly rented units and spent several months re-creating his business using HomeAway/VRBO, Facebook, etc. This was a big pain in the *** and he lost thousands of dollars. But he and his partner are up and running again, much better at marketing their properties than before.
What doesn’t kill you makes you stronger!
