Airbnb Arbitrage allows you to utilise the reach of Airbnb’s customer base to rent out properties you don’t own, for a profit. Yes, that’s right. Many people earn thousands every month and do not own one property.
Airbnb was founded in August 2008 by Brian Chesky and Joe Gebbia as a way to easily connect short-term travellers with affordable accommodation. Today it has over 1,500,000 listings in 34,000 cities across 190 countries.
Because of the massive customer base, property developers have quickly latched on too, and benefited from, making more profit from their listings. Airbnb has made quality apartments available at similar prices to local hotels. Often more people can stay in a larger space for less money and have the flexibility of a kitchen and living space to make their short term stay feel more like a home away. If a property owner can rent out an apartment to seven different people for shorter stays over a month instead of one, they can make more money.
WHAT IS AIRBNB ARBITRAGE?
Online entrepreneurs have started to identify opportunities in popular cities by arranging short-term rental contracts (such as six months at a time) on several properties and then listing the properties on Airbnb, making sure they’ve done everything right to maximise their potential. They then sit back, deal with customers and cleaners, take bookings and collect the profit each month.
Now, this may all sound too good to be true. It is not a guarantee that you will make a profit or get any bookings. This is why it is important to learn everything you can about each part of the listing process: what to say in listings, descriptions of properties, email tone and pictures are all factors that can make or break your earning potential in this business.
Many entrepreneurs start with three listings to spread the risk and increase the potential upside. If you work with three properties for six months, you could choose the two best performers and ditch the third, swapping it for an alternative property. This allows you to continually improve both your listing and your income.
Once you have a good formula and some experience you can start expanding. Many entrepreneurs have a team working for them who have responsibility for communicating with customers and organising dates, while the entrepreneurs themselves only work a few hours a week whilst enjoying the growing profits.
HOW MUCH CAN YOU MAKE WITH AIRBNB ARBITRAGE?
Airbnb only charge a 3% transaction fee on the listing, whereas they put a 6-12% charge on top of the listing fee that the buyer pays to Airbnb.
Let’s say you agree to rent three properties in a good holiday location for six months at $800 a month each.
There are 26 weeks in that six month period.
You decide to charge $400 a week or $69 a night.
Let’s assume you run at 75% capacity with mostly weekly rentals and some nightly customers.
How much money will you make?
18 weeks X $400 = $7,200
10 nights X $69 a night = $690
TOTAL = $7,890
TOTAL SALES = $23,670 (3 properties)
Transaction Fee @ 3% = $710.10
Rent – $800 x 6 x 3 = $14,400
Cleaning – $1,200
TOTAL COSTS – $16,310.10
$23,670 – $16,310.10 = $7,359.10
$1,226.50 profit per month.
The figures above are for demonstration purposes only, however, people all over the world are currently doing this and making roughly 30% plus on their investment with the flexibility to work few hours at their choosing.
IDEAS FOR AIRBNB ARBITRAGE
- Start a business purely for profit, find three or so ideal properties, learn as much as you can by doing an online course. Get the business model working for a few properties. Expand slowly and methodically. Grow to around 15 properties which will pay a nice regular profit. Hire someone to do the administration and go enjoy yourself!
- If you are travelling or moving between different locations, rent a large place locally for a good price then list any spare rooms on Airbnb to supplement your costs. Many people who are doing this are able to go one better than covering costs, they are making a profit. Yes, free accommodation and money. Don’t believe us? Check out this article.
- If you are a constant traveler or like to move around every few months, identify several apartments in each of your favourite locations, rent them long term, schedule out the times you will be there. Rent them the rest of the time. If you do this with 4-6 properties you could essentially remove all your accommodation expenses for travelling, make money and have the flexibility to move to any of your locations whenever you would like.
WHAT TO DO NEXT?
- Make a plan based on our research and suggestions
- If you have not used Airbnb, book a short trip now so you can learn from the customer perspective
- Learn from successful people who are already doing this by taking this online course – https://www.udemy.com/airbnb-profit-blueprint/
- Work at it until you are successful, this is a proven business model that can replace and exceed your full-time income and give you the flexibility to work less, whenever and wherever you want.
Other people have already proven how successful Airbnb arbitrage can be. Follow in their footsteps and build a large and sustainable semi-passive income stream.