Starting an Airbnb Business without Owning Property

 When you’re browsing for side-income or new business ideas, a short-term rental business won't be the primary thing that pops into your head how to start an Airbnb business without owning a house. Wouldn’t that be like becoming an Uber driver without having a car to drive people around in?

Well, not exactly. The times of wanting to own a house to start and scale an Airbnb business are long gone. There are two business models to use to start out making money on Airbnb:

  • Rental arbitrage
  • Managing other people’s properties.

The first one requires a touch little bit of investment (renting a property). If you’re starting with no money in the least, you’ll want to settle on the other. But both have their pros and cons.

What is rental arbitrage?

Rental arbitrage is that the process of removing a long-term lease (renting a property from a landlord) then taking that property and listing it on short-term rental websites like Airbnb and VRBO. There are a couple of caveats to the present approach:

  • You need enough to hire out the property (security deposit, first month + last month, any maintenance or repairs that require to be done, that extra layer of paint)
  • The landlord must get on board together with your business idea
  • Rental arbitrage must be legal within the jurisdiction.

So it requires an initial investment, albeit only a fraction of the value of shopping for a house. If you've got some savings, this will be an excellent choice, given it’s the more profitable of the 2 business models.

The Airbnb Help Center provides all the knowledge you’ll need about the legality of rental arbitrage in your area. If it’s indirectly on there, they’ll usually link you to the relevant hall website. Check beforehand before you sign a rental agreement.

The rental arbitrage model has high-profit potential: you'll be renting an apartment or house for $2000/month and renting it out on Airbnb for $150/night. In but half the month, you’ve paid off the worth of rent and therefore the rest is profit. If you get enough savings, you'll scale this to more properties and therefore the opportunities are endless.

But this model doesn’t work for everybody, because you would possibly not have any savings or money to take a position during a rental. That’s where the property management model comes in.

Property Management Model

This model is that the quickest to scale and therefore the cheapest to start. As an Airbnb property manager, you simply got to invest in one thing – your knowledge about managing properties. In terms of other costs (rent, maintenance, etc.), you don’t need anything.

You just got to market yourself to people that own properties and who want to rent them out on Airbnb but don’t know the primary thing about it or don’t have the time to try to do it themselves.

As an Airbnb property manager, you'll onboard a replacement client in less than two days if you would like to. And two days later, you'll combat a second one! That’s how scalable this model is. However, where in rental arbitrage you’re taking home 1.5x-3x the quantity of the rent you were paying (for one $2,000 monthly apartment, you'll bring home $2000 in profit), the property management model features a much smaller margin of profit.

That’s because you’re sharing the cut with the owner. While the quantity you're taking is wholly up to you and therefore the landlord, typical sharing schemes are from 20/80 (you taking the 20%) to 50/50.

But it’s easy for you to scale and combat more properties quickly.

All you would like is to seek out landlords. Designs a business and marketing plan and choose how you’re getting to reach bent these people and market your services.

Conclusion

The choice depends on your current situation. You’ll start an Airbnb business today whether you've got savings or not. Which model you select depends on what proportion of money you have already got and the way fasts you’re trying to scale the business?

The only thing you would like is to find out about the holiday rental industry.

 

More details: how to start an Airbnb business without owning a property

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