All Forum Posts by: NIcholas Arbuckle

there are multiple reasons i'm not interested - one is that, if i ever buy a property that is a candidate to be a great STR, i'll run it as an STR myself. my current properties are all situated to be LTRs. two is that, i don't want anyone else 'renting' my properties out.

it sounds like you're thinking of arbitrage as a real estate related way to generate income on top of your W2. i guess that's right - but arbitrage is a lot of work. so it would just be like having a second job.

kudos to you for your financial discipline so far. all i can say is, keep going, keep learning, keep saving, keep being patient.

and start learning about seller finance if you haven't already. it's a way to potentially acquire properties without a large down payment. and i think it's going to be more attractive for more sellers based on the current market environment. PM me if you want to learn more.

Appreciate all of your feedback and opinions Nicholas, this is invaluable info :). I might be dropping you a DM soon in relation to more info, so will send you a connection request now. Thank you very much for offering up your time and experience :)

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Quote from @Nate Moncrief:

@NIcholas Arbuckle in my area, most apartments or homes will state in the lease that they do not allow subletting or short-term rentals. This is also the case in HOA's or Condo Associations where it is often times written into the Rules and Regulations or CC&R's.

Probably not worth it to risk getting caught in those instances.

That being said, there are plenty of people who do this whether they have permission or not, and there are some landlords who will allow it. Most of the time, you'll likely get a no for an answer though because the landlord is carrying all of the risk while you have very little (if any) skin in the game.

Even if the landlord would allow it, you'd still need to get a permit for STR in some areas. IMO, any investment strategy that relies on bending or breaking the rules in order to be successful is likely not a good one.

Thanks Nate, thats very handy info. So when you say that the "LEASE, states no subletting is allowed" is this a state regulation/law or just personal preference from the LTR owner? I have no intention of doing anything underhand and would only do it if it was agreed and written into the lease contract. But what I'm trying to understand if this is a state-by-state "regulation" thing or just something that needs to be negotiated with the owner of the property.

HOAs / condo's I assume, is written into the agreement with the HOA board that NO apartments can be sublet for STR purposes, which is understandable and makes sense.

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Quote from @Brad Smith:

While searching for this topic on Rental Arbitrage I ended up in this forum and saw the interesting exchange of arguments from both sides. I have been contemplating giving my property to someone who wants to do an STR/MTR arbitrage. :) It's a 5-bedroom large house recently renovated in Atlanta, GA but currently unfurnished. I'm new to this forum so not sure if one can message me but if anyone is interested in exploring this, please feel free to hit me up.

Going by the comments, I may need extra assurance of downside protection if anything goes wrong in the future. Any insurance or legal documents that can safeguard from some of the common concerns members have shared in this forum?

In terms of insurance, I believe this company may be of value for you to look into :) https://www.proper.insure/rental-arbitrage-insurance/

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Fort Lauderdale, Florida

Quote from @Sarah Kensinger:

Quote from @NIcholas Arbuckle:

Quote from @Sarah Kensinger:

Quote from @NIcholas Arbuckle:

Quote from @Sarah Kensinger:

Yes, I sure would! And I wouldn't mark up my monthly rent either just because the renter is doing rental arbitrage. Talk about the "rich" taking advantage of the "little guy"! It's not hard to make up an agreement and hold a person to the line so they can get their chance in real estate. For some who were never taught how to be smart with money, it's hard to find the means to purchase a home. And we all know it's impossible to save fast enough and get ahead of an inflation, you have to work smarter not harder. So, if I was an owner that only had LTR and someone approached me I would probably do it, unless I had an "off" feeling about the person.

Follow-up question to this response Sarah. Just to understand your perspective more, are you an owner of an LTR who would be prepared to offer a lease on the proviso that STR subletting can occur? Or are you a current LTR / STR arbitrager? Thanks for your time :)

Hey sure! No, we don't own LTR since we are passionate about STR and prefer to chase that first. We'll probably get into LTR later, if my husband's interest doesn't go away. If we did have a LTR, we would be willing to give a STR host a try with arbitrage, so long as the person was a good fit and agreed to our requirements.

We don't arbitrage at this time, but the matter was up for consideration a number of months ago. After extensive research and talking with people, we decided to continue with only co-hosting and then use our funds with a partner to purchase commercial property.

Awesome, thanks for your reply. Im in the early stages of research so everyone's viewpoints here is super helpful.

Just to confirm, you don't own an LTR and you don't arbitrage, but you do "co-host". Sorry, as a novice, what does this mean exactly? You are renting out a portion of your personal residence (so not a separate investment property, but your personally owned/lived-in property) or does this term have another meaning?

Ok, I just looked it up, so a co-host is basically a PM to an AirBnB STR owner? So the concept is similar to the arbitrage model, but less risk is assumed by the owner as the owner is still in full control, there is no subletting, its pretty much the STR equivalent of an LTR PM?

Thanks again in advance for your insight and viewpoints :)

So, co-hosting is pretty similar to a STR PM but with a couple of differences. It's nothing like arbitrage since yes the owner has full control of the property, there is no yearly lease, and the owner is responsible to furnish the home. We do have an agreement just like Evolve or Vacasa, and then the owner would pay us a percentage of the monthly stays.
Hope this helps! There is a wealth of info out there, but feel free to DM if I can assist you more or point you in the right direction.

Legend Sarah, I appreciate your help, I might DM you in the future to be a sounding board for an idea I have and a product were looking to develop.

1 Vote

Fort Lauderdale, Florida

Quote from @Riley Magnuson:

Hi all,

I have a rental house where I have been contacted by multiple corporate housing companies that would like to sign a ~24 month lease on my house and flip around and rent MTR and STR. Some of the companies is connecting me to investors where others it is the owners of the companies looking to get involved themselves. I have found varying opinions both on these forums and elsewhere on these arbitrage strategies. I am hoping to find those who have experienced or tried leasing to these corporate housing companies. The most prominent company is "Corporate Housing Specialists" and was created in 2022. In these situations i would create a lease and add a few addendums that make sense, and the business would be required to get insurance. I will continue to do due diligence so to not enter a scam but does anyone have personal experience or opinion to share on whether to explore this further or not?

Interesting, Im also looking into this as a buddy of mine has been contacted about the same thing via his Zillow listings.

Do you have links to websites for these people who have contacted you? Would be interested in doing some due diligence on these companies and whos operating them.

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Minneapolis, Minnesota

Quote from @Sarah Kensinger:

Quote from @NIcholas Arbuckle:

Quote from @Sarah Kensinger:

Awesome, thanks for your reply. Im in the early stages of research so everyone's viewpoints here is super helpful.

Thanks again in advance for your insight and viewpoints :)

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Fort Lauderdale, Florida

Quote from @Sarah Kensinger:

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Fort Lauderdale, Florida

Quote from @Nicholas L.:

there are tons of threads on BP about this. just do a quick search.

i would never let anyone sublet my LTRs for any reason or purpose.

if you lack capital... just work a W2 until you get enough capital. there's nothing magical or better about arbitrage.

Thanks for your reply Nicholas; appreciate it. Ill do some more research on here re other posts as you have suggested. But while I have you, would you mind if I asked a few more follow up questions?

I do have a W2, but to be fair, with cost of living the way it is, my family are literally living month to month. I am very budget conscious and recently did a rectification of all expenses, changed power/phone providers to better / more cost-effective contracts e.t.c So I'm doing all I can to be more efficient with my spending vs income. However based on the money saved my calculations have me looking at a 10 to 15 year time horizon before I would have enough for a deposit on a second home, hence why I'm looking at arbitrage as an option.

So, regarding your answer "I would never let anyone sublet my LTR's, might I enquire why that is? I think the answer could be obvious but so as to not influence your response id be keen to hear your reasons directly and if there would be any scenario in which these concerns could be alleviated.

Thanks for your time. :)

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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 :)

1 Vote

All Forum Posts by: NIcholas Arbuckle

NIcholas Arbuckle has started 1 posts and replied 9 times.

Post: Is "residential arbitrage" a thing ?

Post: Is "residential arbitrage" a thing ?

Post: Landlords: Your Take on Rental Arbitrage in Short-Term Rentals?

Post: Landlords: Your Take on Rental Arbitrage in Short-Term Rentals?

Post: Corporate housing companies (MTR/STR Arbitrage)

Post: Landlords: Your Take on Rental Arbitrage in Short-Term Rentals?

Post: Landlords: Your Take on Rental Arbitrage in Short-Term Rentals?

Post: Is "residential arbitrage" a thing ?

Post: Is "residential arbitrage" a thing ?