Consider Airbnb Rental Arbitrage Route
Thereâs no doubt that Airbnb is expanding its offerings. If you are wondering how to start an Airbnb with no money, consider building a rental business using Airbnb Arbitrage because you donât necessarily have to own property here to earn.
Airbnb Rental Arbitrage is a hosting management model that entails renting a property with the intention of subletting it on vacation rental sites. You may persuade a landlord to lend you a house which you then sublease as a short-let on sites. Rental Arbitrage can be a successful model if your earnings from subleasing are higher than your costs for renting and other hosting-related expenses.
Before opting for the Airbnb Rental Arbitrage route in any area, get familiar with legal rules and regulations, as some locales do not allow subletting. Moreover, you should always obtain consent from the landlord before you attempt to re-rent out your rented accommodation. In many cases, long-term rental lease agreements do not allow tenants to re-rent properties on listing sites. Do not breach the agreement to avoid being kicked out.
Work As A Copywriter For Airbnb
Another non-trivial approach to making money without renting out an Airbnb home is to provide copywriting services. Airbnb hosts are increasingly using copywriting services. You may offer your services on Upwork and Fiverr in the same way you can become an Airbnb photographer.
As an Airbnb copywriter, youll be responsible for creating creative headlines, interesting property descriptions, and potentially even house rules or reviews for visitors.
Become A Property Management
Property management may be a good fit for you, especially if you have a lot of free time.
That way, you can participate in Airbnb without taking the risk of owning a home.
This is a great way to make money on Airbnb without leaving your home.
Many people wish to sell their homes but lack the time or financial means to do so. This is where you will make your entrance.
So, how does it work properly?
You will be hired by the owner of Airbnb to oversee all elements of the property.
After each booking, you will respond to guest messages, check on guests, replenish amenities and turn over the property.
As a Managing Partner, you will usually be rewarded between 10% to 20% of the total booking amount.
So, if a one-night reservation costs $150, youll receive $30.
If a weeks reservation costs $1050, youll get $210, and so on.
A nice profit, but you would need 5 or 6 properties to live off it as your main source of income.
It can bring in between $1,000 and $1,500 per week, which isnt bad.
I believe most people can live comfortably on this salary.
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Starting An Airbnb Business Without Owning Any Property
When youre browsing for side-income or new business ideas, a short-term rental business might not be the first thing that pops into your head if you dont own a house. Wouldnt that be like becoming an Uber driver without having a car to drive people around in?
Well, not exactly. The days of needing to own a house to start and scale an Airbnb business are long gone. There are two business models to use to start making money on Airbnb:
- Rental arbitrage
- Managing other peoples properties.
The first one requires a little bit of investment . If youre starting with no money at all, youll want to choose the second one. But both have their pros and cons.
A Furnished House For Rent
A furnished fare may be the golden ticket you are looking for.
If you want to go out and run your own Airbnb but dont have the financial means to do so, you may like this option.
Often, a furnished rental includes everything youll need to start an Airbnb business.
There is also a fully stocked kitchen and a washing machine, along with additional linens and towels.
Your startup cost will be minimal, with only essentials like shampoo, coffee, and tea coming from your own pocket.
The only difficulty youll face is convincing your landlord to sublet your property as Airbnb.
You should also check your local laws and regulations, as some cities are cracking down on subletting.
Its an interesting way to make money on Airbnb, and its something a lot of people are doing right now.
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I Had Only 3000 To Invest
The deal cost me £238 a month to take over the mortgage and £250 in legal fees. This was in March 2019. I then refurbished the house for £2,000 and spent £1,500 on a credit card for the furniture. The plan was to rent it to a tenant and pay rent and pay back my debt.
I put it on the market and there was no interest I started to panic.
Discouraged, I met up with a friend who was advertising his properties on Airbnb.
I drove straight to Ikea and spent another £1,500 on credit buying the furniture and appliances for a holiday rental. I put it up on Airbnb and it immediately got bookings.
Within four days, I had done £3,500 of bookings.
That got me hooked on Airbnbs. I was still working full time but I began reaching out to investors, using the case study of my first property.
I managed to secure £240,000 from private investors which allowed me to purchase eight properties in 2019 and do minor refurbishments and decorating to make them presentable as holiday rentals.
This method could take months to close and then you needed time to renovate on top of that. There was a major gap between investment and cash flow.
Get Your Property To The Top Of The Airbnb Search
If people cannot find your business on the top searches on Airbnb then it may get lost into the plethora of searches on the internet. Work on the optimization, use professional or real-life photographs, and write a detailed listing description for your property with all the features and the right keywords.
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Host An Airbnb Experience
Hosting an Airbnb Experience is one of the most creative ways of making money without renting out any property.
Airbnb Experiences is a platform launched by Airbnb in 2016, and in five years, it has helped hosts to generate a steady source of revenue. By joining the program, you can offer a wide range of activities that guests can book during their stays, such as a traditional guided tour, cooking class, or art class. If you have a specific hobby or a program, it can be an excellent alternative to hosting stays.
What are the pros and cons of becoming an Airbnb Experiences host?
Pros:
- You can generate money while you share your hobby or passion.
- With the introduction of Online Experiences, you can offer it from the comfort of your own home.
Cons:
- Depending on the type of Experience you have on offer, you might need to apply for a business license.
- You need to be an expert in the service that you offer.
How much can you make as an Airbnb Experiences host?
You can earn anything from $25 to $150 per guest that signs up for an Experience. In 2020, Airbnb also introduced Online Experiences, and according to Airbnb data, the top-earning Experiences hosts have generated more than $20,000 each after switching to the online platform.
Case Study: How Much Can You Make Managing One Home
Im going to show you examples of homes managed by Eric Moeller, my partner at Legends X, who ran an Airbnb property management company out of San Diego with over 100 units under management.
Together, we coach STR operators on how to make money on Airbnb without owning any property and how to make six figures at home through our coaching program Legends X.
Heres an example of only one property his company manages:
This is a property he manages solely on Airbnb.
He generates over just $9,500 a month on this property renting it out for 19 weeks.
This property is a bit further outside the tourist area.
For every single dollar that comes in through Airbnb at the end of the month, Eric takes 25% and the homeowner takes 75%.
The owner’s responsibilities are to:
- Pay for the mortgage
- Almost everything.
Thats why they get the bigger piece.
But Erics company generates about $2,000 a month on this one home. The owner on average generates about $6,000 a month. Thats slightly higher than what the market rate rents are in that area.
This home, ran remotely by Eric and his team, generates a consistent $2,000 a month.
Below is another condo that is outside the tourist area of San Diego.
Eric and his team also get a commission 25% on this three-bedroom condo. In total, this unit generates about $7,000 a month: $4,700 for the owner and $1,600 for Eric and his team.
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Renting A Furnished House
A furnished rental could be your pot of gold. This option may appeal to you if you want to go the whole nine yards and run your own Airbnb, but lack the funds to do so.
A lot of times a furnished rental will come with everything you could possibly need to set up an Airbnb. Extra linens, towels, a fully stocked kitchen and even a washing machine.
Your start-up costs will be quite minimal with only the basics like shampoo, coffee and tea to provide out of your own pocket.
The only hurdle you will face will be getting the landlord to agree sublet their property as an Airbnb. You will also have to look into your local laws and regulations as some cities are cracking down on sub-lets.
But if you do your homework, there is definitely scope here to make money on Airbnb without the expensive start-up costs.
Its definitely an interesting way to make money on Airbnb that many people are currently doing.
The Result Of Managing Two Airbnb Properties
These two properties generate an average of $3,500 a month. That’s nearly $43,000 a year just on two properties. Youd only need about 5 properties like this to make a six-figure salary at home.
You don’t have to buy properties. You don’t have to invest in mortgages. You don’t have to invest in leases and furniture. Eric found these properties through real estate investors and real estate agents. You dont need to own any property to make money on Airbnb.
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Investigate The Market Elements
Leasing a property in some unacceptable area can be a calamity. You want to do the Airbnb statistical surveying to guarantee that you are putting resources into the ideal locations and high-potential pay areas. It is fundamental that you check with the accompanying:
First and foremost, investigate the Airbnb guidelines to guarantee that the regulations and terms of the specific area wont impede your business.Besides, really look at the exchange measurements or capability of your picked area. Search for the typical benefit end-up and rental outcome around there.Finally, actually, take a look at the irregularity proportion. The higher the proportion, the more gamble your business will be at. For instance, deciding on long-haul rentals in the Christmas season can be an enormous disaster for your business.
The Concept Of Rental Arbitrage
Setting up any business – physical or online – comes with great risks. You can either capitalize on a lucrative market or lose the money you have invested. Similarly, your Airbnb business is either a go big or go home kind of situation.
Previously we mentioned the concept of rental arbitrage that can help you earn even if you do not own property on Airbnb. While most of you will be already familiar with the concept of rental arbitrage, some of you- especially the fresh entrepreneurs might find the term alien. First we need to learn, what is arbitrage? It refers to the simultaneous action of buying and selling of any asset in different markets and take advantage of the price difference.
Rental arbitrage in Airbnb is an investment strategy for people to make it big in the business without owning any property. You simply rent a property owned by another person and then rent it out to another person by listing it on Airbnb. You become the host or co-host who sublets the rental property to Airbnb guests.
Are you wondering how you can save money when you have to pay the rent to the landlord? Well, it is simple math. Let us imagine, you rent an apartment or a condo for $2000, and then you list it on Airbnb for $4500. You can collect a profit of $2500 per month.
The amount of profit generated is directly proportional to the efficacy of your operational strategies. You need to make certain Airbnb business-related things work. Such as:
Is Rental Arbitrage Legal?
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What Is Thecadre Horizon Fund
The Cadre Horizon Fund provides access to a diversified1 portfolio of commercial real estate in high-performing U.S. markets designed to seize short-term opportunities for long-term growth. The Fundâs investment strategy pairs attractive risk-adjusted returns with downside protectionâan approach tailored specifically for todayâs volatile marketplace.
Cadre seeks to leverage the same diversification strategy that is delivering outsized success in our flagship fund . To date, our high-tech/high-touch market selection process, institutional-quality due diligence, and seasoned asset management have resulted in a phenomenal 27.6%2realized net IRR.
Become An Airbnb Affiliate
What is an affiliate and how do you make money on Airbnb with it?
An affiliate is a person who advertises a product owned by someone else. Take TripAdvisor for example. Their website advertises hotels from all around the world and gets a commission from every room that gets booked.
Therefore, to be an Airbnb affiliate you would advertise users listing to potential guests and if they get booked, you get a cut.
Becoming an affiliate for Airbnb is not for everyone though. In fact , you need to have a website with over 1 million hits per month for them to even consider you as an affiliate.
On top of that, your website has to be relevant to the field of hospitality and must have an audience intent on booking accommodation. They certainly drive a very hard bargain here.
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How Much Does It Cost To Start An Airbnb Business
The average cost to start an Airbnb business is $6,000.
We came up with this average startup cost by reviewing these three sources , the following startup costs can be expected.
- Minimum startup cost for an Airbnb Business = $3,900
- Maximum startup cost for an Airbnb Business = $30,000
- Average startup costs for an Airbnb Business = $6,000
The cost to start an Airbnb business will likely vary in different areas, but there are some costs to keep in mind while preparing to start the business. Below, is a broader list of the categories of expenses to think about when beginning an Airbnb business.
- Purchase Cost: $0 and up
- Insurance: $500 and up
- Utilities and Various Subscriptions: $40 – $70
- Home Outfitting: $200 and up
- Consumable Goods: $50 and up
- Services : $100 and up
Benefits Of Commercial Real Estate
Attractive Returns With Reduced Volatility
Stable Income
- Property value can increase, which is captured at sale
- Property owners can collect payment from rent
Hedge Against Inflation
FootnotesRisk of Loss:Liquidity Not Guaranteed:Not a Public Exchange:
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Find And Join A Vacation Rental Franchise
A franchise is a business model in which a franchisor creates and establishes a brand and business system, then works with franchisees to create different locations for the business.
For a vacation rental franchise, this can work one of two ways: either the franchisor offers the rental branding and business processes and allows franchisees to join by adding their owned properties to the franchise rental system, or a franchisor owns the rental properties and allows franchisees to join and operate a specific rental property.
In both scenarios, the franchisee must typically pay an initial fee to join and also payout royalties from the profits they make off the rental property.
Franchises offer both advantages and disadvantages, which we cover below:
Organize An Airbnb Experience
Hosting an Airbnb Experience is one of the unique ways to earn money without renting out your home.
Airbnb Experiences is a program established by Airbnb in 2016 and had since assisted hosts in generating a consistent stream of money. By becoming a member of the program, you will provide a variety of activities for visitors to book during their stays, such as a traditional guided tour, cooking lesson, or art class. It might be a great option for hosting stays if you have a special passion or program.
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Take Advantage Of A Vacant Property You Own
Having a vacant property that you could use for Airbnb rental gives you a massive advantage. However, before fixing up your vacant property for short-term rental, youâll need to research the demand in your area and double-check that you can run your Airbnb legally.
Afterwards, refine the space and make it appealing to your potential Airbnb guests. Your vacant space may be perfect for you but may not be ideal for guests. So some redecorating may not be enough kick start with a clean slate and take the space to the next level by furnishing with spare furniture owned by friends and family. Also, take high-quality photos, use the Airbnb host checklist, and get your listing up on the Airbnb platform.
Note that listing requires you to consider the type of guest that will appreciate your space the most. Hence, be transparent with what youâre offering and manage guestsâ expectations appropriately. Itâs also essential that you know how Airbnb works for owners so you can optimise your vacant space properly.
Knowing how to optimise your property while providing a top guest experience can be a challenge thatâs why many people turn to management companies such as Houst.
