When most people think of real estate investment, they normally assume a few things. One, they say they need a lot of capital to start with, and two, that they need a lot to make money. This isn’t true because of tenant arbitration.
When most individuals think about investing in real estate, they usually assume a few things. One, they think to get started they need a lot of capital, and two; they think they need to own a lot of property to make money. Thanks to rental arbitration, that’s not true.
Now, do you have to think of how to be an Airbnb host without owning property?
Owning property is not a bad thing, but under the model of arbitrage, it is not necessary. You can work with a landlord to rent out their property on Airbnb through this technique, and make a lot of money doing so.
Be an Airbnb Host without owning Property
For effective lease arbitrage, learning how to deal with landlords is key. We’re not going to be sly at all! And how are you going to get tenants to cooperate with you? First: Remind them of their benefits.
They will be confident in ensuring that they are having a long-term, business-to-business client with a financial opportunity to keep their property in tip-top condition year-round when a landlord rents their property to someone playing rental arbitrage.
You rent the property at the full market rate during arbitrage, or maybe even a little higher to sweeten the bargain, as long as it fits the business strategy. The equity of the property owner is rising and every single month they get a little bit of cash flow.
Investors are concerned that Airbnb visitors are going to wreck their homes. Someone can do something harmful now and then, which is just part of the rental industry, and it’s usually a very small percentage of the visitors. For typical tenants, too, that’s a possibility.
Plus, there are intervention courses through Airbnb that you can take and get reimbursed, not to mention a $1 million free liability guarantee for listed assets.
When someone leases the property from a landlord following the arbitrage model, it is in their best interest to maintain the property pristine. For the landlord, this ensures that all year long, the house will be in top-selling shape.
How Airbnb Hosts Can Sweeten the Deal for Rental Owners
If that’s not enough to persuade the landlord, strive to make the offer more appealing with these tactics.
- Give an extra third-party insurance layer.
It appeals to their desire for more certainty for security-conscious landlords that are security-conscious. For a third-party insurance package, you can purchase several businesses that you can layer on top of the $1 million policy you currently have. It provides plenty of protection against just about every imaginable case. And remember: As long as the numbers make sense financially, this is a smart tactic as it works to get the deal finished.
- Bid profit-sharing
This is where a part of the net profit of each contract you make with the landlord is given. This stems from a notion known as an economic alignment of private equity. The underlying principle is that when a group has a financial opportunity to excel in a market, they are more likely to help the business succeed.
To build up your portfolio and establish a track record, you may need to give away a significant portion of the benefit of the first few deals. You may think that this is not fair, but to reassure the landlord, this may be just what you need to do. You have more negotiating power if you have many deals under your belt, and you will take a bigger share of the gains.
- Try to rent many properties at once from them
Expand as they build their portfolio for them. A lot of single-family-home owners over long stretches are searching for equity build-up in each of their homes. If you can show them that the model succeeds, so you can offer to grow to reach their targets alongside them. You and the landlord become joint venture partners with this approach, each helping the other meet their investment objectives.
Becoming an Airbnb host is much simpler than you can think. Most people presume that you need a property to own, but you now know that’s not the case.
Now, I’ve helped you figure out how to make money on Airbnb without owning a property.
It is a little more complicated and needs a bit of a sales pitch. But if you’re willing to work hard and put your head down, you can quit your 9-to-5 job and make Airbnb a business.
ABOUT THE AUTHOR: Tiffany Simms