What is rental arbitrage?

Rental arbitrage is a business model where a person rents out a property that they don't own and then sublets it on a short-term basis, such as through platforms like Airbnb. The rental arbitrage strategy involves finding properties with low rent, negotiating a lease agreement with the landlord for a longer period and then renting them out at a higher rate on short-term rental platforms.

The idea is to create revenue by renting out a property for a higher price than you pay in rent. This can be a lucrative business model, particularly in high-demand locations such as tourist areas where long-term rental rates are a lot lower than short-term rental prices.

However, rental arbitrage can also be risky. It requires a significant investment upfront, including rent or a security deposit and furnishing the rental property. Additionally, many landlords include clauses in their leases that prohibit subletting. Therefore, it's critical to read and understand the lease agreement before signing any contract to avoid any issues.

Overall, rental arbitrage can be an excellent way to generate passive income and maximize profits from a rental property. Still, it requires extensive research, negotiation skills, and a commitment to providing a high-quality rental experience for guests.