A 27-year-old started 'Airbnb arbitrage' after getting laid off during the pandemic. He explains how he got his first rental with $6,400 upfront and scaled to 25 units in less than 2 years. (2023)

• After being laid off in March 2020 Nathan and Taniera Turner started looking into real estate.
• They decided to try 'rental arbitrage,' which is when you rent a property and sublet it on platforms like Airbnb.
• Today, they have 25 Airbnb units in three different states, plus an Airbnb cleaning business.

When the pandemic hit in March 2020, Nathan Turner was among the millions of US workers immediately impacted.

He was working as a route delivery specialist for Aramark, servicing restaurants and hotels, and got laid off towards the end of March. His wife Taniera also lost her job as a banquet server at a Marriott hotel that same month.

They weren't too worried about money, Turner, 27, told Insider. They both had side hustles at the time — Nathan was doing real-estate wholesaling, while Taniera was selling lip gloss — and filed for unemployment benefits. "But we were a little anxious and didn't know what to expect going forward," he said.

While they lost their jobs, they gained back time to figure out their next steps. They didn't feel financial pressure to start working right away, thanks to the pandemic assistance, said Turner: "When the additional unemployment kicked in, that basically equaled out to what we were already making with our jobs previously, if not a little bit more. And we had all the time back, so we could put that same 50 hours that we were working into building businesses."

The couple decided to look into real-estate opportunities.

Turner was already familiar with wholesaling, which he first learned about while listening to podcasts on his delivery routes. Wholesalers connect sellers and sale contracts to prospective buyers for a profit.

"You spend a lot of time out on your own," he said of his previous jobs at Aramark and also delivering for FedEx. "Instead of listening to the radio in between deliveries or going to the next location, I would listen to different podcasts. One talked about how you could make money selling houses with no money or no credit."

Turner got his foot in the door by partnering with an established, Houston-based wholesaler, who he reached out to after seeing one of his marketing campaigns on Facebook. The wholesaler was looking to expand in Louisville, where Turner lived at the time, and Turner offered to help him find potential buyers in the area.

On their first deal, they made $1,000 total and split it 50-50, said Turner. His half of the profit was almost equivalent to one week's paycheck, he added: "After taxes and everything, I might only bring home $600 a week. If I did overtime, I might bring home $700 to $800 a week, but that was after working 50 hours. Doing these deals, it didn't take nearly as much time or labor to produce more money."

Knowing that there was money to be made in real estate, Turner started exploring other potentially lucrative strategies. Airbnb first came on his radar when someone posted about needing a last-minute cleaner in one of the Facebook real-estate groups he was part of.

He and Taniera, who were still unemployed and had free time, decided to take the job.

"We cleaned three units the first day and made $70 per unit, so $210 for the day," said Turner. "And we were only there for three to four hours. We thought, 'That wasn't that hard. What if we started doing 10 units a day?'"

They continued working with the client, who owned six Airbnb units total, and started learning more about the hosting side of the business.

"They were telling us about their journey and how they were able to quit their jobs from doing Airbnb," said Turner. "Hearing about the freedom and the lifestyle that you can live piqued our interest."

At the time, however, purchasing a property and setting up an Airbnb felt unattainable, he said, as it would require a lot of upfront cash for a down payment, closing costs, and furniture to fill the space.

Moving to Houston and using rental arbitrage to set up an Airbnb rental with $6,400

The Turners continued picking up clients and cleaning Airbnb properties in Louisville. As their cleaning business expanded, they decided to relocate to a bigger city with more real-estate opportunities.

They moved to Houston in 2021 and landed a client who had 12 units, but didn't own them. The client was doing what's called "Airbnb rental arbitrage," which is when you rent a property and sublet it on platforms like Airbnb and VRBO. The goal is to make enough in short-term rental income to not only cover rent, but pocket extra cash each month.

This route seemed much more doable. Rather than putting tens of thousands of dollars down to buy a home, the Turners' upfront costs would include: first month's rent, a security deposit, and furniture.

The first step to doing rental arbitrage is finding an apartment or home to rent, and also a landlord willing to let you sublet the place.

"We were looking for ourselves at first and we couldn't find anything," said Turner, but, once again, the Facebook real estate community came in handy. "We were in an Airbnb group and a realtor in the group posted saying that she could help people find properties, so we reached out to her."

The realtor helped them secure their first unit: a two-bed apartment going for $1,200 per-month.

Between first month's rent, a $1,200 security deposit, and furniture, they spent about $6,400 and three weeks putting together their first Airbnb.

It wasn't an instant money-maker, said Turner: "This one was a learning experience for us because we were trying to figure out pricing and how to get your listing out there. The first two months, we really didn't make anything at all."

Part of the issue was their pricing strategy. They figured they could book the unit every weekend, so they calculated how much they would have to charge each weekend night in order to make up the $1,200 in rent that they owed.

"We would just charge the same price throughout the entire week and the weekends, but we weren't really getting any bookings during the week because our prices weren't competitive," explained Turner. "It was a missed opportunity for us. That's when we realized we had to adjust our prices and drop them during the week."

They looked at comparable listings in their area and charged either the same amount or slightly lower than their competition. (Today, rather than changing prices manually, they use a pricing software called Pricelabs that will automatically change your prices for you based on demand and seasonality in your area.)

It took about six months to recoup the money they put into setting up the unit, but over the course of the final six months of the lease, they started profiting between $1,000 and $1,200 per month, said Turner.

Scaling up to 25 units in Houston, Des Moines, and Louisville

While their first Airbnb eventually started profiting, the Turners decided not to renew the lease at the end of the 12 months. At that point, they'd decided to start looking for buildings where they could acquire multiple apartments.

"We figured it would be best for operational purposes to try to only operate in places where we could have multiple units in one building versus being spaced out all over Houston and having cleaners run from side to side," said Turner. Plus, "if you only have one unit, you can't control what's going on with the other units — maybe they're not keeping their outside area as clean as you are — and that can affect the guest experience."

Turner added a triplex to his portfolio in May 2022 and a fourplex two months later. Currently, he has 25 total units in three different markets: 18 in Houston, six in Des Moines, which he considers his top-performing rentals, and one in Louisville. Insider verified his Airbnb ownership by reviewing lease agreements and screenshots from his Airbnb dashboard.

As for how he finds strong Airbnb markets, in addition to using short-term rental data analytics tools like AirDNA and RABBU, "I always look at the bigger companies and see how they're moving," he said. "They have more capital and they're not just going to be throwing money in any market."

While he doesn't want to reveal the specific markets that are on his radar, he said they're in the Midwest and on the East Coast. Generally, he's looking at "mid-major markets," he added. "It's getting hard to compete in huge cities for two reasons: One, so many units are already online for those markets, and two, you're competing with the city, which could be building new hotels every day."

Turner's goal is to expand to 100 units and hit $1 million in annual revenue.

His monthly revenue, including rental income and revenue from the cleaning business, fluctuates but, "it's always within the $50,000 to $60,000 range for the most part," he said. His best month so far was December, when he brought in about $80,000 between Airbnb rentals and cleaning. Insider confirmed these details by looking at his business bank account statements.

If you're looking to get into real estate but don't have a ton of capital, rental arbitrage could be your way in, said Turner: "Realistically, you probably only need about $4,000 to $5,000 to get started, whereas with buying a house you're probably going to need at least $10,000 to $15,000."

The most challenging part is finding the right property to rent — and getting the landlord on board with short-term rentals.

It'll take a lot of legwork in the beginning, said Turner: "You need to be sending out emails to buildings every single day and doing phone calls as much as possible. Just keep calling. If you hit the phones hard every day and are emailing out every single day, I don't see why you wouldn't get a yes in two weeks."