Fastest way to $10k Per Month In Revenue

Welcome to Modern-Day Millionaire

In today’s Newsletter:

• The fastest way to make $10k income monthly.

• Strategy & business model breakdown.

• Lots of knowledge.

What is Airbnb rental?

So, Airbnb rental arbitrage is like this:

Imagine you rent a cool apartment for a fixed monthly price, let's say $1,000. Instead of living in it, you decide to list it on Airbnb.

You hope to get more money from short-term guests than what you pay in rent.

For example, if you rent it out to Airbnb guests for a total of $1,500 a month, you're making a $500 profit because you're paying only $1,000 in rent.

So, people do this to make extra cash. But there are some things to keep in mind.

It's important to check the rules and agreements with your landlord because not all landlords allow this.

Also, you need to be a good host and make sure your guests have a great experience.

Is Airbnb Legal?

It's legal in some places, but it depends on the rules in your area. So, before you get started, do your homework.

Now, here's a crucial point: If you're renting the property from someone else, like a landlord, you need to make sure they're okay with short-term and vacation rental arbitrage.

Some landlords don't allow it or only permit it on a case-by-case basis.

It's essential to check with your landlord before you start renting your place on Airbnb because if you don't, you could risk being evicted.

How do I convince my landlord to Airbnb?

To tackle a couple of important concerns that landlords often bring up when it comes to short-term rentals like Airbnb. These concerns are totally valid, and it's crucial to address them.

Noise Complaints and Airbnb Parties: One big issue is noise complaints and the possibility of wild parties happening in your rental. This can be a problem because it might bother the other tenants in the building. When that happens, it could lead to more people moving in and out of the property, which is a headache for landlords.

Insurance for Damages: Another worry is who's going to pay for any damages caused by guests. This is where technology can be a real lifesaver. Depending on how cooperative your landlord is, you can include a tech solution as part of your rental agreement. Here are a few tools that can help:

• Autohost: This tool automatically screens for problematic guests.

• NoiseAware: It uses noise sensors and even has a 24/7 call center in case things get too noisy.

• InsuraGuest or Safely: These tools use smart algorithms to calculate risks and offer affordable insurance coverage that goes beyond what Airbnb or Vrbo provide.

The cool thing is that these tools work seamlessly with most major property management systems (PMS). And you'll soon see why having a good PMS is essential for running a successful Airbnb rental arbitrage business.

When you integrate these services into your PMS, you get the advantage of coordinating and automating them on a larger scale. Because let's be honest, if you're doing Airbnb arbitrage, you'll likely have more than one property in no time.

So, in a nutshell, technology can help us address the concerns of noise and damage, making things smoother for both hosts and landlords.

Find the best city for Airbnb arbitrage

The key to success lies in choosing cities with up-and-coming real estate markets.

These markets offer the perfect balance between the potential for short-term rental income and affordable rents. However, these markets can change rapidly, so it's essential to do your homework.

To estimate rental expenses in these areas, you have a couple of resources at your disposal:

1. Zillow and Real Estate Pros: You can start by checking out platforms like Zillow and consulting with local real estate professionals. They can provide valuable insights into the market.

Unfortunately, free short-term rental data can be hard to find, but we'll explain why investing in good data is worthwhile shortly.

On a broader scale, you can rely on short-term rental forecasts. Alternatively, you can turn to powerful tech tools like KeyData Dashboard, Wheelhouse Pro, and AllTheRooms Analytics.

These tools track short-term rental markets and trends, offering precise data-backed estimates of your market's income potential.

If you're thinking of applying for a loan to kickstart your arbitrage business, having reliable metrics is crucial to boost your business plan's credibility.

Another useful tool for your due diligence is AirDNA, a leading provider of short-term rental data. They offer free tools like Rentalizer and MarketMinder, which can help you estimate Airbnb arbitrage markets in the US.

Due diligence is crucial in arbitrage projects, and we recommend investing in some of the tools mentioned earlier.

While free tools provide valuable insights, paid subscriptions can offer even more valuable information, especially if you're considering a significant investment.

Now, let's talk about profitability. In short-term rental arbitrage, you want to make a profit, even if your property isn't rented every day of the month. Most properties don't have 100% occupancy for several reasons:

1. Orphan Days: Some days, like Tuesdays through Thursdays between two reservations, can be challenging to book in most markets.

2. High and Low Seasons: Some markets experience seasonal fluctuations. During the low season, mid-week reservations can be scarce.

3. Maintenance and Cleaning: Depending on the cleaning contractors' availability, you might need to book a day between reservations for cleaning. If your market has short lengths of stay, these cleaning gap days can eat into your profits.

To assess your arbitrage's potential for success, you need to accurately estimate Adjusted Occupancy Rates (AOR).

For example, if you're renting a two-bedroom property for $3,000 per month in a city where similar vacation rentals go for around $150 per day, and they book around 25 nights a month on average, you need to consider your margins carefully.

After factoring in other expenses like tech tools, listing site fees, and marketing, you'll want to ensure you're not operating on razor-thin margins. A month with low occupancy could put you in the red.

Is there any benefit in rental arbitrage?

Basically, instead of buying properties, you rent them from someone else, like a landlord. Then, you list those places on Airbnb and make money when people stay there.

You use someone else's property and turn it into a moneymaker. It's a neat way to get into the short-term rental game without a big investment.

Let’s take a look at the maths behind Airbnb rental arbitrage income:

Understanding the drawbacks of rental arbitrage.

Starting Costs to Consider:

1. Application fee

2. Deposit (This might include the first month's rent, last month's rent, security, and more)

3. Insurance policies

4. Legal fees

5. Maintenance and property updates

6. Furnishings for all rooms

7. Decorations

8. Wi-Fi connection setup and new account fees

9. Entertainment subscriptions

10. Cleaning service fees

11. Monthly utility expenses

12. Toiletries and kitchenware

Before you commit to a long-term lease, make sure you factor in all these costs. If you're new to vacation rental management, it's a good idea to run different scenarios.

Ask yourself, what if your occupancy rates are 10% lower than expected for the first six months? Or, what if your cleaning, furnishing, and utility expenses turn out to be 10-20% more expensive than you thought?

Action Plan | Steps to Set Business

You understand what Airbnb arbitrage means, and you've set your expectations realistically.

You also know there are some risks involved. Now, let's talk about how to begin if you've never tried it before.

We'll keep it simple and straightforward.

Step 1: Find a Place Where Rental Arbitrage Is Allowed

First things first, you need to make sure that doing rental arbitrage is legal in your city or town.

It's not that rental arbitrage itself is illegal, but sometimes renting out properties on Airbnb can be against the rules in certain areas.

So, before you start searching for rental arbitrage opportunities, do your homework.

Understand the local laws and regulations related to short-term rentals. Once you're sure you're in the clear, you can move on to the next step.

Step 2: Find the Right Rental Property

To start, you need to know your numbers:

1. - Understand the long-term rental rates in your area.

2. - Know the average short-term nightly rates.

3. - Identify any pricing differences in specific areas.

4. - Be aware of seasonal variations.

5. - Check the average short-term occupancy rates.

6. - Consider the average duration of short-term stays.

Once you've got a solid grip on these numbers, you can start looking for opportunities.

Look for properties with low long-term rental costs but the potential for high nightly rates on Airbnb. Keep in mind that you might need to spend some money on furnishings and decor to get the property up to standard.

Step 3: Negotiate with the Landlord

You've found a property with potential, and the numbers add up. Now it's time to talk to the landlord.

It might seem like an uneven situation at first, but remember, you're bringing an opportunity to the table.

You're offering a reliable, guaranteed income each month. Negotiation here requires skill and tact. Make it a win-win situation and highlight the benefits for the landlord.

Step 4: Consider a Longer Term Lease

Surprisingly, a longer-term lease can be beneficial. It allows you to spread out costs for things like furnishing and maintenance over a more extended period, minimizing their impact.

Step 5: Draft a Lease Addendum

A lease addendum is a legal document that can modify or add specific terms to your lease agreement.

It's where you can include conditions like limits on future rent increases, responsibilities for maintenance, and property usage terms. This is a legal document, so consider seeking professional help to draft one.

Step 6: Calculate Furnishing Costs

Prepare for the costs required to get your property ready for Airbnb rental.

Don't underestimate these costs, but they don't have to break the bank. You can find affordable options if you know where to look.

Step 7: List Your Property on Airbnb

Once you've prepared your property, it's time to list it on Airbnb. Take your time with this step, creating a complete listing with professional-quality photos.

Step 8: Optimize Your Prices

To get the best nightly rates, pay close attention to your pricing. Consider implementing an Airbnb pricing strategy that adjusts with market demand.

You can use dynamic pricing tools like Wheelhouse to automate this process.

Step 9: Cleaning Service

If you're not doing the cleaning yourself, you'll need to hire a cleaning service. Finding a reliable and flexible cleaner can be a challenge, but it's worth the effort.

Step 10: Automate Everything

Whether you're a small host or a big one, automation can save you time. You can automate guest communication, cleaning reminders, guest reviews, answers to FAQs, and nightly pricing.

Tools like Hospitable and Wheelhouse can help you do this efficiently.

That's it – the ten steps to make rental arbitrage work for you.

Build a Direct Booking Site

When guests book through Airbnb, they often pay hefty guest fees, sometimes as much as 20% of the total cost.

But here's the thing: those fees don't go to you; they go straight into Airbnb's pockets.

However, when you set up a direct booking site, you can avoid these fees altogether. That means all the extra money goes straight to you.

Now, you might be thinking, "I'm not tech-savvy, how can I do this?" Well, it's easier than you think.

Just sign up for a tool like Hospitable, and their platform will handle everything for you. It's as simple as that.

Market on More Channels

Sure, Airbnb is a popular platform, but it's not the only game in town. There are other short-term rental platforms like Booking.com, VRBO, Home Away, and many more.

To maximize your bookings and get the best rates, you should advertise your property on multiple platforms.

However, doing this manually can be a nightmare.

That's where channel manager software like Lodgify comes in. It makes the whole process easy.

Your listing will be on multiple platforms, and you'll have a unified inbox for all your guest messages. Plus, you'll have real-time availability on your calendar.

So, in a nutshell, building a direct booking site and marketing on multiple channels can significantly increase your rental income without any fancy tech skills or complicated processes.

Conclusion: Yes, it's a bit riskier than traditional real estate investing, but it's a way for investors to potentially make a significant profit with very little upfront money. So, if you've got the right mindset and determination, Airbnb arbitrage might be the opportunity you've been waiting for.