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.

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. (1)

Courtesy of Nathan Turner

"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.

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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.

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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.

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. (2)

Courtesy of Nathan and Taniera Turner

"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.

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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."


Is Airbnb arbitrage passive income? ›

There are several benefits to pursuing an arbitrage strategy as an Airbnb host. First and foremost, it's a great way to earn passive income.

What is the arbitrage method for Airbnb? ›

Airbnb arbitrage refers to renting a property from a landlord and subleasing it on a short-term basis, on a platform like Airbnb, Vrbo, or Booking.com. In this way, you are both a tenant and an Airbnb host who acts like a middleman between the landlord (the property owner) and the Airbnb guests.

Is Airbnb arbitrage illegal? ›

Airbnb rental arbitrage is legal, depending on the short-term rental regulations where you live. So do your research first. Short-term rental laws are evolving in most large cities across the world.

What is the problem with Airbnb arbitrage? ›

Financial Risk - There is always a risk of not being able to cover your costs or make a profit from renting out an Airbnb property. You could end up losing money if you don't properly research the market, set competitive prices, or manage your expenses correctly.

Is Airbnb arbitrage worth it? ›

You can truly earn significant profit through rental arbitrage. On average, you can make 2 or 3 times the amount you pay for rent in a rental arbitrage. Let us say you are paying $3,000 and you earn $9,000 monthly, you still have $6,000 to spare.

Does Airbnb income count as income? ›

The rule is simple: you don't have to report rental income if you stay within the 14-day rule. However, because of reporting laws, companies like Airbnb, HomeAway and VRBO may report to the IRS all income you receive from short-term rentals, even if you rent for less than two weeks.

Is rental arbitrage passive income? ›

Rental arbitrage requires a significant investment of time and money, but it can provide a steady stream of passive income and a potential for high returns.

What are arbitrage rules? ›

The arbitrage rules prohibit the investment of the proceeds of an advance refunding issue at a yield more than . 001 percent (one-thousandth of a percentage point) higher than the yield on the refunding issue, pending application to pay off the prior issue.

How much money do you need for Airbnb arbitrage? ›

You'll be able to pay for your rent and have $500 – $1,000 to cover expenses and still be able to grow your business. If you manage more than one property or rent them out more often than just on weekends, your income will be much higher.

How do I get my landlord to agree to Airbnb arbitrage? ›

How to Convince Landlords?
  1. Introduce yourself: Make a Great First Impression! If you have existing listings on Airbnb, you can let the landlord know how you got started and how much profit you're making monthly or annually. ...
  2. Let the Landlord know about Airbnb's Benefits. ...
  3. Write a Rental Arbitrage Email Template.
Jul 8, 2022

How do I talk to my landlord about Airbnb arbitrage? ›

Tell your landlord about yourself and why you want to host on Airbnb. If you can't do this in person, send them a message. Show your landlord that you care about your home, your building, and your neighbors. Give them a tour of your space and share some photos of your home if you don't host already.

Is rental arbitrage successful? ›

The Return On Investment (ROI) of a rental arbitrage property can be very lucrative in the right markets. Like any business, the ROI will vary depending on location, start-up costs, operating expenses, and various other factors.

Why Airbnb losing customers? ›

Instead, market analysts say many U.S. Airbnbs are sitting empty because so many wealthier people and investors listed short-term rentals on the site, in the wake of a pandemic-fueled boom. The number of available short-term rental listings in the U.S. skyrocketed to 1.38 million in September.

Can arbitrage make me rich? ›

Arbitrage is the practice of taking advantage of a price difference between two or more assets or markets, and profiting until the price difference disappears. Recognizing arbitrage opportunities is one of the easiest ways to make money.

How risky is arbitrage? ›

Criticism of Risk Arbitrage

If the deal does not happen for whatever reason, the usual result would be a drop—potentially sharp—in the stock price of the target and a rise in the stock price of the would-be acquirer. An investor who is long the target's shares and short the acquirer's shares will suffer losses.

What are the downsides of rental arbitrage? ›

While this strategy can be profitable, there is always the risk that the market could change. For example, if property values in the area rise, you may no longer be able to make a profit on your rental property. Additionally, if the demand for rental units decreases, you may find yourself with vacant property.

Do I have to report my Airbnb income to the IRS? ›

Regardless of whether you receive a Form 1099-K, the rental income you earned from Airbnb is reportable on Form 1040, unless the non-taxable rental exception applies (discussed below).

How does the IRS know if I have rental income? ›

Ways the IRS can find out about rental income include routing tax audits, real estate paperwork and public records, and information from a whistleblower. Investors who don't report rental income may be subject to accuracy-related penalties, civil fraud penalties, and possible criminal charges.

Do banks look at Airbnb income? ›

Will lenders consider projected income from other online platforms? Yes. Fannie Mae Guidelines allow lenders to make conventional loan offers that take projected income from short-term rental platforms including but not limited to well-known travel sites like Airbnb and Vrbo.

How to earn 6 figures in 6 months on Airbnb without owning properties? ›

Top 10 Ways to Start Making Money on Airbnb without Owning a Property
  1. Take the Airbnb Rental Arbitrage Route. ...
  2. Become a Short-term Rental Property Manager. ...
  3. Become a Co-host to an Airbnb host. ...
  4. Join a Vacation Rental Franchise. ...
  5. Become an Airbnb Consultant. ...
  6. Start an Airbnb Cleaning Service. ...
  7. Host an Airbnb Experience.
Jan 13, 2023

Is rental arbitrage the same as subleasing? ›

Is Rental Arbitrage The Same As Subletting? Rental arbitrage is usually considered a specific type of subletting. Subletting usually involves a lease being turned over to one individual for an extended period. Rental arbitrage, however, typically describes renting to many different short-term renters.

Is rental income passive or active IRS? ›

Rental Activities. A rental activity is a passive activity even if you materially participated in that activity, unless you materially participated as a real estate professional. See Real Estate Professional under Activities That Aren't Passive Activities, later.

Do you pay taxes on arbitrage? ›

Since arbitrage funds are categorised as equity funds, they are taxed accordingly. This gives arbitrage funds the benefit of zero taxes on the LTCG (long-term capital gains). If you hold the investments for more than one year, the returns are considered to be LTCG, and are tax free.

What are the three conditions for arbitrage? ›

Trading conditions for arbitrage
  • The same asset has different prices on different markets. Markets may value an asset differently, which causes two unequal prices. ...
  • Two assets with the same cash flow have different trade prices. ...
  • An asset with a known future price holds a different price today.
Jun 24, 2022

Is financial arbitrage illegal? ›

Arbitrage trading is not only legal in the United States, but is encouraged, as it contributes to market efficiency. Furthermore, arbitrageurs also serve a useful purpose by acting as intermediaries, providing liquidity in different markets.

What is the 50% rule on Airbnb? ›

The Airbnb Strict cancellation policy allows guests to receive a full refund if they cancel within 48 hours of booking and at least 14 days before a listing's check-in time. In the event of a cancellation within 48 hours, the guest is only entitled to 50% refund, regardless of how far out the check-in date is.

What is a good Airbnb income? ›

North America is the highest earning region – the average Airbnb host in North America makes $41,026 in host earnings on Airbnb in 2021. Asia-Pacific is the 2nd highest earning region, with an average host earnings of $14,629 in 2021. In Europe the average host made $13,567 in Airbnb earnings in 2021.

How do I start an Airbnb with no money? ›

5 Ways to Start an Airbnb With No Money
  1. Using Your Own Vacant Property. Do you have a vacant property that you want to rent out on Airbnb? ...
  2. Take Initiative on Open Rentals in your Area. ...
  3. Become an Affiliate. ...
  4. Offer Airbnb Experiences.

How do you get approved for Airbnb? ›

Four basic Airbnb hosting requirements must be followed to remain on the platform and be successful.
  1. Maintain a Basic Minimum Rating From Reviews. ...
  2. Be Responsive. ...
  3. Maintain a High Acceptance Rate. ...
  4. Avoid Cancellation.

How do I turn my apartment into Airbnb? ›

How to Airbnb your apartment
  1. Fill them in. The first step setting up an Airbnb account is to tell them what city you live in and if you're renting out the entire place, a private room or a shared room. ...
  2. Log in. ...
  3. Provide details. ...
  4. Name your listing. ...
  5. Paint a picture. ...
  6. Choose booking settings. ...
  7. Create your calendar. ...
  8. Pick your pricing.
Jul 27, 2020

How do I pitch an apartment on Airbnb? ›

Let your landlord know more about who you are, how you care for your home, house, and your neighbors, and why you want to host on Airbnb. If you can not meet them in person, write them a message. If the landlords say no, do not be afraid to ask “why “and try to address their concerns.

How do I set up an Airbnb flat? ›

Here's what you need to do to begin hosting.
  1. Assess if your space is a good fit.
  2. Get your space ready for guests.
  3. List your space.
  4. Decide how you'll host.
  5. Set your price and get paid.
  6. Where to find support and resources.
Nov 16, 2022

How do I fight against Airbnb? ›

How Do I Stop Neighbors From Using Their House as an Airbnb or Other Type of Vacation Rental?
  1. Step One: Try Addressing the Vacation Rental Issue Informally With Your Neighbor. ...
  2. Step Two: Check the Local Law or Community Rules on Short-Term Rentals. ...
  3. Step Three: Alert the Zoning Department to Violations.

How do you deal with bad Airbnb? ›

If there is a problem with your Airbnb stay, the best option is to contact your host immediately. Airbnb recommends starting a request within 72 hours of noticing the issue to ensure that you're eligible for a full refund (if necessary). In many cases, the host can address the problem quickly without involving Airbnb.

How do I agree to house rules on Airbnb? ›

Adding house rules to your Airbnb listing is easy.
  1. Go to 'Your listings' on the Airbnb website.
  2. Choose the listing you want to edit and click 'Manage listing'
  3. Click the 'Booking settings' option.
  4. Find the line that says 'House rules' and click 'Edit'
  5. Go through the 5 preset rules and select the ones you'd like to apply.
Jan 19, 2023

Is Airbnb arbitrage profitable in 2023? ›

Airbnb arbitrage can be extremely profitable if you do your research and find the right strategy. You can earn thousands of dollars in monthly profit depending on your market and how many expenses you have. The average Airbnb listing rents for about $150 per night, which equals $4,500 per month.

Can you lose with arbitrage? ›

Having one side of your bet voided, put simply, destroys the arb. You then have a 50/50 chance of winning and losing, so it isn't all bad - however - as a professional arber your goal should be to constantly seek to remove any risk factor.

Who benefits from arbitrage? ›

Arbitrage helps in making the financial markets more efficient and robust. Now for example, if there were no arbitrageurs in the markets then stocks would have kept trading at different prices in different markets. This would put a handful of traders at an unfair advantage.

How profitable is Airbnb rental arbitrage? ›

Rental arbitrage has great potential and by selecting the right business strategy you can earn two or three times more than you actually spend on your property. For example, if your monthly rent is $1,500 you could rent out your property for $250 per night on weekends only.

Is retail arbitrage passive income? ›

You can use Retail arbitrage to build up a passive income.

How do I make passive income with Airbnb? ›

Top 10 Ways to Start Making Money on Airbnb without Owning a Property
  1. Take the Airbnb Rental Arbitrage Route. ...
  2. Become a Short-term Rental Property Manager. ...
  3. Become a Co-host to an Airbnb host. ...
  4. Join a Vacation Rental Franchise. ...
  5. Become an Airbnb Consultant. ...
  6. Start an Airbnb Cleaning Service. ...
  7. Host an Airbnb Experience.
Jan 13, 2023

Is Airbnb rental considered active or passive income? ›

The IRS considers a rental activity to be passive if real estate is used by tenants and rental income (or expected rental income) is received mainly for the use of the property. In other words, owning a rental property and collecting rental income is considered passive and not active in most cases.

Is passive rental income qualified business income? ›

Qualified business income, or QBI, is the net income generated by any qualified trade or business under Internal Revenue Code (IRC) § 162. Rental properties are usually treated as passive activities, and passive activities are excluded from the definition of a qualified trade or business.

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