7 Reasons NOT to do Airbnb Arbitrage
7 Reasons NOT to do Airbnb Arbitrage
You’ve probably heard about Airbnb Arbitrage businesses (also know as Rent-to-Rent deals)
For many years this business model has been promoted as a ‘get-rich-quick’ easy business scheme online. Normally by people who haven’t ever actually made much money doing it themselves.
What you don’t hear so often are stories from all the people who tried Airbnb Arbitrage and lost a tonne of money – many even went completely bankrupt!
Can you make money doing an Airbnb Arbitrage Business?
Yes, you can make money doing Airbnb Arbitrage (and we show you exactly how to do it in our Airbnb Accelerator Program).
But here’s a couple things most people don’t tell you:
- Airbnb Arbitrage is by far the most risky model for an Airbnb Business.
- There are much easier, more profitable and far less risky Airbnb Business Options.
- EG: Co-hosting or Airbnb Management (Yes, we teach both of these in our Airbnb Accelerator Program too!)
- Most people who buy ‘Airbnb Arbitrage Courses’ or try to do it themselves never make a single dollar or get a property to manage.
- And of the few that DO get a property, they often lose their money because the numbers don’t work out or they’re not skilled enough at maximising Airbnb Revenue.Â
- Even if you can have some success with Airbnb Arbitrage it’s often temporary. Markets can change, Laws can change, Your landlord can cancel your lease etc. Most of these risks don’t have much effect on other Airbnb Business models, but in Arbitrage even 1 or 2 bad months can destroy your whole business (and then some).
Here are 7 of the main reasons NOT to do Airbnb Arbitrage:
Reason # 1 – You need to invest a lot of money up front.
In order to get started with Airbnb arbitrage you need to pay for a bond, at least 1-2 months lease and ALL the furnishings for the house or apartment. This normally ranges from a minimum of 15k to 50k+
Reason #2 – It’s VERY RISKY!
Airbnb Arbitrage is fine while your property is fully booked, but if the market changes and your bookings dry up for even 1 or 2 months, you suddenly find yourself losing a lot of money, fast! Plus you’re still locked in to your lease contract and utilities expenses for the home.
Reason #3 – It can be very difficult to get properties.
It’s quite difficult to get good properties to rent out in general at the moment in many places around the world. This means it’s even harder to find a property with a landlord that will allow you to do Airbnb arbitrage in their property. You will likely need to approach dozens or hundreds of landlords before you will find one that will let you use their property.
Reason #4 – You’re locked into a long lease + furniture + utilities.
If you decide that you don’t want to continue doing the business or the property isn’t performing then you will often find you’re stuck because you signed lease and utility contracts, plus you have an entire house full of furniture you’ve invested in to manage.
Reason #5 – You can lose the property when your lease ends.
Leases don’t last forever, so there is always the possibility that your landlord will simply decide not to renew your lease when it ends. This could be for many reasons like they want to switch to long term rental to a single tenant, or maybe they want to sell the property. Maybe they even just steal your idea and turn it into a short-term rental themselves!
Reason #6 – It’s difficult to scale the business.
It generally takes quite a bit of time to find properties and you also need to invest a lot of money up front each time you do in bonds, leases, furniture and utilities. This makes this model difficult to scale to multiple properties and caps your potential earnings and also the speed at which you can scale your business.
Reason #7 – It takes a long time to start making profit.
With Airbnb Arbitrage you invest a tonne of time and money upfront in Bond, Lease, Furnishing and utilities. This means even if the property performs really well it can still take 6 months or more before you actually make any profit. And if it doesn’t perform well you may actually lose money, which is a real risk! This becomes an even bigger issue if you only have a 1-year lease on the property as your lease may end just when you’re starting to get things together and make some profit.
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