If you’ve ever wondered if there is a way how to be an Airbnb host without owning property, the answer is yes, it is possible!
Imagine being able to replace your full-time job with your own real estate business that makes thousands of dollars a month in profit, and all without owning a single property. This means no loans or mortgages, no special licenses or degrees, and no specialized knowledge.
It may sound like a fantasy, but for thousands of people, it has become a reality through the use of Airbnb and a bit of old fashion work.
And if this interests you, keep reading because I will even reveal how to take the “work” out of the equation and show you exactly how to be an Airbnb host without owning property.
When Airbnb was first introduced in August 2008, it was meant to allow people who owned a home to make extra income by renting out spare bedrooms or even the house for short-term stays at a better price than a hotel room.
The site quickly took off and made many early adopters with homes a lot of money.
Fast forward to just a few years ago, and some smart people started to figure out a way to make great money on the platform, but without owning their own home or any real estate at all.
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Airbnb Rental Arbitrage
Often compared to subletting, rental arbitrage is different.
With subletting, a contract typically lasts a month or longer, whereas with rental arbitrage, you’re renting your place for a day or week.
The best part of this strategy is it has a very low start-up cost, a high potential for your ROI (Return On Investment), and it can be done part-time while getting started.
You should also be able to do all the initial work yourself, even without having any special skills.
What Are The Pros of Starting an Airbnb Business with Rental Arbitrage?
1. Low Startup Cost
The biggest positive to doing rental arbitrage is the low cost of the start-up.
Depending on where you live and what type of properties you’re looking to control, costs can be a little at two or three thousand, although most veterans state you should have at least ten thousand to get started.
But even at 10k, having an instant revenue stream with a positive ROI from the start is something most people can only dream of.
This also means you shouldn’t need to get a loan or any type of financing. This is great for those with credit challenges holding them back.
2. You Don’t Need to Hire Out
Another benefit is that you can do all the work yourself.
While you’re getting your new business off the ground, you should be bootstrapping and doing everything yourself, from listing your property to cleaning and maintenance.
Not only does this save you money initially, but when it comes time to expand and start outsourcing many of the daily tasks, you’ll know your employees are doing their jobs correctly because you’ve done it yourself.
3. Growth Can Happen Quickly
You’re able to scale as quickly as possible. Once you get that first house or apartment up and make a profit, you can invest those profits straight into another rental and have your second “business” going in as little as a few months.
It’s easier to rent than own. And not just the costs. Think about bookkeeping, taxes, HOA fees, mortgages, insurance, etc. As a renter, you just pay the rent and possibly the utilities. That’s it.
Once you get to a certain level of income, you can outsource practically any part of the business.
There are companies now that cater to these types of businesses, from companies that deal with your advertising and customer service to cleaning companies specifically created to help people with Airbnbs.
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What Are The Cons?
1. You Give Up Control
There are always risks in any business, and this one is no different. Who knows, there could be another pandemic the day you list your first property, or your city might make it illegal to do short-term rentals.
But any business has risks, so while they should be considered, they should not be the reason to call it quits before even getting started.
And keep in mind people need places to live and sleep. So even if you had to cut your prices for some reason, you should always be able to at least cover your costs.
2. You Need Good People Skills
You’ll also need to deal with many people, possibly from all over the world. If you’re not a “people person,” this might not be your best start-up.
3. You Have No Control Over the Airbnb Platform
You’re dependent on platforms you do not control.
You must abide by their rules or risk losing your listings. You also have limited control on where these platforms place your listing and their viability.
4. Property Damage Can Happen
Property damage is always a risk, and you’d be liable, which is another reason to start slow and do things yourself.
It doesn’t happen often, but it does happen.
The more you do yourself, the less money you are spending until you grow your income and can easily afford to pay for help.
The Cheapest Start for How to be an Airbnb Host without Owning Property
The cheapest way to get started is just to rent out the place you’re already living in. You’re already paying rent, so it should be a profit from the first reservation.
If you only have a one-bedroom, see if you can sleep at a friend’s house or crash somewhere that’s less than the cost of your reservation.
The more creative you can get, the more money you’ll make.
How to Learn The Airbnb Business of Rental Arbitrage?
There is a lot of free information all over the internet, and some of the YouTube videos, like the one I share below, are great for people starting out. I highly suggest you watch as many as possible while taking notes.
Of course, there are digital courses you can buy that explain everything in great detail and can sometimes be very helpful. But I would avoid paying for anything until you are making enough money to invest in your education.
One more hands-on option is to start a specific Airbnb Property Management firm.
You can do all the leg work the owner would do like guest management, price adjusting their ads, house cleaning, and so on. You could charge a flat hourly fee or take a cut of the listing.
This way, you’re learning the business and getting paid for it. A real win-win for all parties involved.
Don’t Start an Airbnb Business Without Doing Your Research First
As with any business start-up, you need to research and see if the numbers work before you dive in.
Join and get familiar with the major platforms, see what others are charging in your neighborhood and how often they rent their properties. Then use these numbers to see what type of numbers you should be expecting if you were a successful host.
Once you have an idea of what to expect, you can look into available rentals in the same neighborhood and see if you can snag one that will allow you to make the same type of money while giving you a hefty profit on the arbitrage.
Just be sure to see what amenities and extras the other hosts offer their guests, as you’ll need to offer something equal to or higher in perceived value in order to get the same number or more bookings.
You might be able to get a one-bedroom without a pool cheaper than with one. But if all of your competition has pools, you’d need to adjust your rates accordingly, which will also skew the numbers.
How to Use Your Research
These numbers guide you on what you should think when evaluating this type of business for yourself.
Of course, depending on where you live, these numbers can be radically different. But the math is still pretty much the same.
For example, let’s say you can rent a property from John Doe for $1,000 a month. You get the property which is a small one-bedroom house. You do your research on Airbnb and see that the same properties are renting for, on average, $125 a night.
So to start with that, we’d need to rent the property for a minimum of 8 days to break even. At least as far as covering the rent is concerned.
Then there are utilities, maintenance, laundry, and other odds and ends you’d need to run the business.
So let’s add another $400 to the rent bringing us to $1,400 a month income needed to break even.
That gives us eleven and a half days of rentals a month to break even. This is our “must make” to stay out of the red number.
Now let’s look at the average occupancy rate of hotels, which is around 65% total occupancy.
This fluctuates; this number is for hotels specifically, but it will give us a place to start.
At 65% occupancy, that should translate to 21.6 days of bookings, which multiplied by $125, gives us a total of $2708.33.
Subtracting our total costs of $1,400 from the projected $2708.33 income leaves us with a $1308.33 profit.
Not bad at all!
And that’s all positive cash flow now that can be quickly reinvested into more properties.
If you want more specific numbers, look at all your future competitors and track when they are booked and at what price in a spreadsheet. This is smart to do as the more you understand your direct competitors, the better you’ll be to compete with them.
Also, keep in mind there is also a small Airbnb fee that you need to calculate into your expenses when you create your business budget.
Now let’s do a worst-case scenario.
You only book at 50% occupancy. At 15 days of occupancy, our total income would be $1,875.
Minus our $1,400 in expenses and that still leaves us a profit of $475.
And that is for one property only and with very low occupancy.
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Popular Questions on How to be an Airbnb Host without Owning Property
There are a lot of questions about this method of earning money using the Airbnb platform, as well as more general questions.
Following is the answer to some of the most common questions.
Can you become financially independent on Airbnb properties without owning property?
You can become financially independent hosting properties with Airbnb.
However, everyone’s situation is different, and what one needs to be financially independent is different than someone else.
The best strategy is to do your research, create a business plan, and run the numbers through a budget to see how much you need to make to create a financially free future.
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How do you find rental arbitrage properties?
The following list provides places to find rental arbitrage opportunities for how to be an Airbnb Host without owning property:
- Realtors in your area
- Networking events
- Word of mouth
- Drive around your area and look for rental signs in yards
- Real estate websites
- Online search in places such as Facebook Marketplace, Craigslist, Zillow, etc.
How do I start an Airbnb business with no money?
You can start your Airbnb business with little or no upfront costs by doing one (or more) of the following:
- Use a vacant property you already own
- Become a property manager
- Rent out a room in your home
- Rent out your home and stay with a friend
- Rent a property with the plan to re-rent on Airbnb (called rental arbitrage)
- Utilize the Airbnb virtual experience opportunity
What percentage does Airbnb take?
The typical fee is 3% of the booking total calculated as a flat service fee for the host.
How to be an Airbnb Host without Owning Property Final Thoughts
Rental arbitrage is a great way to get started making money with Airbnb without owning any property yourself.
It’s a real and completely legal way of doing business. And if you’re a people person with just a few basic skills, you should be able to be successful as long as you do your homework.
Remember, all new businesses have risks and their own set of pros and cons. As long as you understand what is necessary and you’re willing to do the work, there is no reason you can’t make a lot of money with rental arbitrage.
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