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Understanding Airbnb Arbitrage as an Alternate to Owning

Updated: Jun 15, 2023

Airbnb has become a really exciting way for owners to earn extra income. However, there are two ways to approach this: owning an Airbnb property or via Airbnb arbitrage. Both options offer the opportunity to make money, however, there are significant differences between the two.

A living room for an Airbnb unit with tasteful artwork, black sofa, different colored throw pillows, an ottoman in lieu of a center table, round side table with modern lamp, card games and magazines, fake plants and big geo-patterned rug
A living room for an Airbnb unit

Owning an Airbnb Property

Owning an Airbnb property involves purchasing a property with the intent to rent it out on Airbnb. In this case, you are the owner of the property, and therefore, responsible for all associated costs, such as maintenance, repairs, insurance, and property taxes.


What is the biggest benefit of owning a property for the purpose of short-term rentals?

The biggest benefit of being the actual owner of an Airbnb property means that you have an asset that can appreciate in value over time. The other benefit is that you have complete control over the property. This means that you can decorate it as you desire, set your own rental rates, and select which guests you want to rent to.


What is the disadvantage of owning a property for the purpose of short-term rentals?

However, owning an Airbnb property also comes with capital needs and financial obligations. Not only will you require capital to purchase the property, but you will also require a reliable source of income to cover the ongoing costs associated with owning a property.


Airbnb Arbitrage

Airbnb arbitrage is a strategy involving renting a property on a long-term lease and then subletting the property on Airbnb for a higher price. This means that you are acting as a liaison between the property owner and the Airbnb guests.

What is the key benefit of Airbnb arbitrage for the purpose of short-term rentals?


The key benefit of Airbnb arbitrage is that it requires significantly less capital, legwork, and ongoing financial commitment than owning an Airbnb property. You may require the costs of furnishing your lease if you are renting unfurnished, but you don’t need to purchase a property, and you are not required to have a reliable source of income to cover ongoing costs. Instead, you only need to pay the monthly rent and any associated utilities.


Additionally, Airbnb arbitrage allows you to be more flexible in terms of location. You can rent a property in a popular tourist destination without having to invest in a property in that area. This can be particularly beneficial if you are interested in testing out different markets before making a commitment to purchasing a property.


What is the disadvantage of Airbnb arbitrage for the purpose of short-term rentals?

Airbnb arbitrage also comes with risks. You are basically taking on the role of a landlord, but you do not have complete control over the property. This means that if something goes wrong with the property, such as a plumbing issue or damage caused by a guest, you will be responsible for resolving the issue. Additionally, if the property owner decides to terminate the lease, you will be forced to find a new property to rent.


The legal status of Airbnb arbitrage can also be a concern. In some strata buildings or municipalities, there may be rules that restrict or prevent short-term rental stays. Finding a suitable location does require some research. You will have to seek out landlords who understand and are comfortable with the idea of their property being sublet on Airbnb and are willing to include clauses in their lease agreements that will allow you to sublet.


My final thoughts

Ultimately, the decision to own an Airbnb property or engage in Airbnb arbitrage depends on your individual financial situation and goals. If you have the capital and are willing to take on the responsibilities of owning a property, owning an Airbnb property can be a lucrative investment. However, if you are looking for a low-cost way to earn extra income and are willing to take on the risks associated with subletting, Airbnb arbitrage may be a better option.


It is also a great option if you want to dip your toes before wading into the pool. When I rented my first arbitrage apartment, I felt strongly that I needed to test the concept and ensure that I was capable of doing it and that it wouldn’t interfere with my everyday business and family life. I wanted to understand the process and prove that I could turn a profit before sinking further money and energy. In less than a month and a half, I leased my second unit.


It’s important to carefully consider the pros and cons of each option before making a decision.


"Additionally, it’s always a good idea to consult with a legal and financial professional to ensure that you are following all applicable laws and regulations."

Contact Stylicious Design Inc today to discuss how you can transform your property into a highly sought-after short-term vacation unit within 14 days! My system has been tested in setting up over 20 successful Airbnb units for both my clients and myself.

Lastly, drop your questions in the comments below about designing or setting up your Airbnb unit and I'll provide you with the personalized guidance you need. Your success story starts now!

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