Business Idea #12 - Rental Arbitrage

With some start-up capital, this can be a great money making endeavor.

January 09, 2025

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RENTAL ARBITRAGE BUSINESS

How to Start and Run a Rental Arbitrage Business (Without Owning Property)

Rental arbitrage is one of the fastest-growing strategies in the short-term rental space—and for good reason. It allows entrepreneurs to make money by renting properties long-term and subletting them on platforms like Airbnb or Vrbo without owning any real estate.

If you're looking for a cash-flow business with low startup costs and high potential returns, rental arbitrage might be your golden ticket. Here's a complete guide on how to start and successfully run a rental arbitrage business.

What is Rental Arbitrage?

Rental arbitrage is the practice of leasing a property (typically on a 12-month lease) and then legally renting it out short-term for a higher nightly rate. The difference between your monthly rent and the income from short-term guests is your profit—after expenses, of course.

For example:

  • You rent an apartment for $2,000/month

  • You furnish and list it on Airbnb

  • It earns $4,000/month from bookings

  • Your profit (before other expenses) is $2,000/month

Step 1: Learn the Legal Side First

Before doing anything, check the local laws. Not every city allows short-term rentals, and rules vary widely.

  • Research short-term rental regulations in your target city

  • Determine if a business license, permit, or registration is required

  • Some cities require the host to be the property owner—rental arbitrage would be illegal in those cases

Pro tip: Start in cities with landlord-friendly and Airbnb-friendly policies to avoid headaches.

Step 2: Find the Right Property

Look for properties that:

  • Are in high-demand areas (near downtowns, hospitals, tourist attractions)

  • Allow short-term rentals (check with HOAs or building management)

  • Have flexible landlords willing to let you sublet for short-term guests

What to say to landlords:
Be honest. Explain your business model professionally. Offer higher rent, longer lease terms, or maintenance guarantees to give them peace of mind. Many property owners will say yes if you position it as a win-win.

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Our team has over 30 years of experience in starting and running successful businesses. If you have a start-up idea you would like some feedback on, send us a note at [email protected]. Tell us about it and we’ll let you know what we think.

Keep reading. You are bound to find something you want to do.
Michelle, Sophia & Seth. The Green Owl team.

Business ideas anyone can implement.