Airbnb arbitrage is one of the easiest ways to get into real estate without actually buying a property. It’s no surprise it’s catching on—especially for people who don’t have a big budget or aren’t quite ready to dive into owning and managing real estate long term.
In this guide, we’ll break down what Airbnb arbitrage really is, how it works, and what it takes to pull it off. We’ll cover the pros and cons, the tools you’ll need, and give you some helpful tips to get started. Plus, we’ll highlight some of the best U.S. cities where this strategy is taking off.
What Is Airbnb Arbitrage?
Airbnb arbitrage is when you rent a property from a landlord and then list it on short-term rental platforms like Airbnb, Vrbo, or Booking.com. You’re basically the go-between—paying the rent as a tenant while making money as a host by renting it out to guests.
The best part? You don’t need to own the property. That makes it a great entry point for anyone curious about real estate investing but not quite ready—or able—to buy. It’s a way to dip your toes into the short-term rental game with relatively low upfront costs. You’ll just need some cash to spruce up the place (if needed), furnish it (if it’s not already), and stock it with the basics for guests.
How Airbnb Arbitrage Works
If you’re wondering how people actually make money with Airbnb arbitrage, here’s the basic idea: you rent a property long-term, then list it on Airbnb as a short-term rental. The profit comes from the difference between what you earn from Airbnb guests and what you pay the landlord each month—minus any expenses to keep the place running.
To really make this work, you want to find a location and a property where short-term rental income is way higher than what you’re paying in rent. And while keeping costs low is important, you also don’t want to skimp on creating a great guest experience—it’s all about balance.
Your Airbnb earnings depend on two things: how much you charge per night (your daily rate) and how often the place is booked (your occupancy rate). The sweet spot is charging just the right amount to keep bookings steady without leaving money on the table. That’s where dynamic pricing comes in—basically adjusting your rates based on the season, local events, and how much demand there is at any given time.
When it comes to rent, don’t be afraid to negotiate before signing a lease. Sometimes you can knock a few hundred bucks off, especially if the rental market is slow and landlords are eager to fill units. But in a hot market where rentals get scooped up fast, you’ll probably need to pay close to the listed price.
Is Airbnb Arbitrage Legal?
Airbnb arbitrage is legal in the U.S.—but (and this is a big but) it really depends on where you’re doing it. Different cities and properties have different rules, so you’ll want to do your homework before jumping in.
First, check out the local short-term rental laws in the area you're targeting. Some cities are totally fine with non-owner-occupied rentals, while others have strict limits on things like how many nights per year you can rent or whether the host has to live on-site. Ideally, you want a city that doesn’t require you to actually own the property or be a licensed property manager.
Next, take a good look at the lease if you’re renting a place. You need to make sure subleasing isn’t banned. Many landlords include rules to prevent subletting, just to protect their property. Even if the lease doesn’t mention it directly, it’s always smart to talk it over with the landlord and get their okay before listing the place on Airbnb.
And if you’re eyeing a condo or any property managed by a homeowners association (HOA), double-check the HOA rules. A lot of them don’t allow short-term rentals or subleasing at all, mainly to keep things quiet and orderly for the other residents.
Once you’ve gone through all these checks and everything’s good to go, you’ll be all set to launch your Airbnb arbitrage business the right way.
How to Do Airbnb Arbitrage (Step by Step)
If you're ready to dive into Airbnb arbitrage, here’s a simple, no-fluff walkthrough to get you rolling:
1. Set Your Budget
First things first: figure out how much money you’re working with. That means looking at your savings, monthly income, and expenses to decide how much you can comfortably invest in getting your Airbnb business off the ground.
If your budget is tight, don’t stress—there are lenders out there who specialize in short-term rental loans. Some even cover things like furniture and setup costs, not just property purchases. So, even with limited cash, you’ve got options.
2. Pick the Right Market
As with any real estate play, location is everything. If you’re planning to manage the Airbnb yourself, start by checking your local market. You want a place where short-term rental income beats long-term rental income—that’s key to making a profit.
Live somewhere that doesn’t attract tourists or travelers? No problem. You can look at other cities with steady year-round demand—think business hubs, vacation hotspots, or places with lots of events.
To make your search easier, try using the Awning Airbnb Market Data. It gives you valuable info like the average daily rate (ADR), occupancy rate, and annual revenue for markets all across the U.S. You can even break it down by property size to see what’s in demand.
3. Double-Check the Local Short-Term Rental Laws
Found a promising city? Great—now make sure you’re allowed to run an Airbnb there. Some places allow non-owner-occupied short-term rentals, others don’t. You’ll also want to see if there are limits on how many nights per year you can rent, or if you need any special permits or licenses.
Getting this right from the start saves a ton of headaches later.
4. Find Long-Term Rentals You Can Turn Into Airbnb Gold
Next, it’s time to start property hunting. Hit up websites like Redfin, Realtor.com, and Rent.com to scout long-term rentals in your chosen area. Look for places in good neighborhoods, close to attractions or transit, and with features guests love—like a cozy layout, modern finishes, or even a view.
The ideal place won’t need a ton of work to be guest-ready. You want to keep upfront costs low and avoid fixing up a place that you don’t even own.
Not sure what kind of income a place might bring in? Use the Awning Airbnb Estimator. Just plug in the city, number of bedrooms, and a few property details (like whether it has a pool or hot tub), and you’ll get instant estimates for nightly rates, occupancy, and revenue. It’s an easy way to spot solid opportunities.
5. Review the Lease and HOA Rules
Once you’ve found a rental that looks like a winner, get a copy of the lease agreement. If the place is part of a homeowners association (HOA), grab their rules too.
Make sure there’s nothing in there that would block you from doing short-term rentals. And even if everything looks fine on paper, talk to the landlord directly about your plans. Being upfront can save you a lot of trouble down the road.
6. Sign the Lease
If the lease and HOA rules give you the green light, it’s time to make it official. Depending on how hot the local rental market is, you might even be able to negotiate a lower monthly rent, which means better profit margins for you.
Once the contract’s signed, you’re all set to launch your Airbnb arbitrage business.
7. Get the Property Guest-Ready
If your rental doesn’t come furnished, it’s time to start setting it up for guests. Airbnb furnishing costs can vary widely—anywhere from around $1,000 for a simple setup to over $50,000 if you’re going all out (which we don’t recommend for a rental you don’t own). The goal here is comfort and functionality, not five-star luxury. Think cozy beds, clean linens, Wi-Fi, and maybe a coffee maker—essentials that make a stay pleasant without breaking the bank.
Want to make this easier on yourself? Look into hiring one of the best Airbnb furnishing companies. These pros know exactly what guests want, they can often hook you up with better furniture deals, and their fees are usually built into the total furnishing budget.
While you’re furnishing the place, don’t forget about the legal side. Many cities require a permit or license to operate a short-term rental. The timeline can range from a quick online form to a full-on city application process, so check your local regulations early.
8. Create Your Airbnb Listing
Listing your property on Airbnb is where things start to feel real—and fun. This is your chance to showcase your space and stand out from the crowd. Start with crisp, professional-looking photos and write a detailed, engaging description. Make sure your listing title is optimized for Airbnb SEO so guests can actually find you when they’re searching.
Use keywords and search-friendly terms in the description to help boost visibility. Highlight the amenities, location perks, and any special touches that set your place apart. You might also consider adding a digital guestbook to share local tips and info with your guests.
Pro tip: Turn on Airbnb’s Smart Pricing and Instant Book features. Smart Pricing adjusts your nightly rate automatically based on demand, while Instant Book lets certain guests reserve without waiting for your approval. Both help your listing rank higher and can improve booking rates.
9. Decide How You’ll Manage the Property
Last but definitely not least, figure out how you’re going to run the day-to-day operations. If the property is nearby and you’re comfortable handling things like guest communication, cleaning schedules, and restocking supplies, then self-managing could work just fine.
But if you're juggling a busy schedule or investing in a market you don’t live in, it’s time to find a trustworthy Airbnb manager. A good manager can take care of everything—from check-ins to guest messaging—so you don’t have to. You can also look into vacation rental management companies if you prefer a hands-off approach.
Remember, smooth operations = better reviews, higher occupancy, and more profit. Don’t let poor management hold your Airbnb arbitrage business back.
Airbnb Arbitrage: Pros and Cons
Just like any way of making money in real estate, Airbnb arbitrage has its fair share of pros and cons. Let’s break it down so you know what to expect.
What’s great about it:
- You don’t need to buy a property. That alone is a huge win. You skip the stress (and the cost) of dealing with mortgages, down payments, and all the paperwork that comes with buying a house.
- No long-term commitment. Since you’re not tied to a mortgage, you’re not locked into a decades-long financial relationship with a piece of property. If things don’t work out or you just want to try something else, you can walk away once the lease is up.
- Plenty of flexibility. Don’t love being a host? Not making the kind of money you expected? You’re not stuck. As long as you give your landlord a heads-up, you can move on without needing to sell a property.
- Low risk, low cost. Compared to buying a home, the startup costs for Airbnb arbitrage are super manageable. And if it doesn’t pan out, it’s a relatively easy exit.
- No monthly mortgage stress. No loan means no mortgage to pay off. That’s one less thing to worry about when managing your cash flow.
- Fast way to get started. You can be up and running in just a few weeks. Once you find the right spot and furnish it, you're good to go.
- Simple way to get into real estate. No agents, no loan approvals, no closing costs. You just need a good lease and a solid plan to turn that rental into a money-maker.
- Good for learning the ropes. If you’re new to real estate, this is a great way to get your feet wet. You’ll learn how hosting works, what guests expect, and whether this business is right for you—without making a huge investment.
What to watch out for:
- Limited control over the space. Since you don’t own the property, you might be restricted when it comes to making upgrades or doing anything beyond basic decorating. Bigger changes usually need the landlord’s okay.
- No long-term equity or value growth. You’re not building wealth through appreciation like you would with a home you own. The only money you’re making is from your Airbnb bookings.
- Potential friction with the landlord. Hosting short-term guests can mean more wear and tear on the place, which might not sit well with the property owner. That’s why it’s so important to be upfront about your plans and agree on how you’ll handle any damage or maintenance issues.
Airbnb Arbitrage Contracts: What You’ll Need
Running an Airbnb arbitrage business means having your paperwork in order—and that starts with two key agreements: one with the property owner, and another with your guests.
The Lease Agreement
Before you can list anything on Airbnb, you’ll need to rent the property from a landlord who’s on board with your plans. That means signing a solid lease agreement that covers all the usual details—monthly rent, responsibilities for upkeep, how rent increases are handled, and so on.
These terms should follow local rental rules, but here’s where it gets important: you must check the local short-term rental laws before you sign anything. Not all cities allow subleasing for short stays, and violating those rules can lead to fines or even eviction.
Also, if the property is part of an HOA, don’t skip this step—confirm with them that short-term rentals are allowed. Many HOAs have strict rules about who can rent and for how long, so it’s best to be safe.
And here’s a crucial detail: make sure there’s a clear clause in the lease that says you’re allowed to sublet the place on a short-term basis. This is what gives you the green light to run an Airbnb business without running into issues down the road.
The Airbnb Rental Agreement
Once you’re hosting, it’s a smart move to have a short-term rental agreement that your guests sign before checking in. This should outline what they can and can’t do during their stay, along with what you’re responsible for as a host. Think of it as a safety net for both sides—it keeps expectations clear and helps protect your space.
With both contracts in place—and full compliance with short-term rental laws—you’re setting yourself up for a smooth Airbnb arbitrage experience.
Airbnb Arbitrage Tools You’ll Actually Use
Starting and running an Airbnb arbitrage business can be a lot—it’s not just setting up a cute space and waiting for guests to roll in. From market research to pricing, furnishing, and even guest communication, there’s a ton to juggle. Thankfully, there are some powerful tools out there to make your life easier and your business more profitable. Here's a breakdown of what can help:
- Awning Airbnb Market Data: Skip the spreadsheets and guesswork. Awning’s market data gives you a clear picture of how a short-term rental is expected to perform in different locations. It's like having months of research and analysis done for you—all in one place.
- Awning Airbnb Estimator: This tool lets you plug in any U.S. property and get an estimate of its potential daily rate, occupancy rate, and annual income. It's great for figuring out if a rental is actually worth your time before you commit.
- Awning Vacation Rental Furnishing Services: Not into decorating or don’t have time to furnish a place from scratch? Awning has you covered. Their furnishing service starts at around $15,000 and takes care of turning your rental into a guest-ready space.
- Awning Vacation Rental Insurance: Stuff happens. Guests break things. Pipes leak. Awning offers short-term rental insurance that protects you from both property damage and liability, giving you one less thing to stress about.
- Smart Pricing: Airbnb’s built-in Smart Pricing tool helps you stay competitive by adjusting your nightly rates automatically based on demand in your area. It’s a simple way to maximize revenue without constantly checking the calendar.
- Airbnb Automation Tools: If you’re managing the property yourself, automation is your new best friend. These tools help with everything from listing and pricing to guest messaging, reviews, revenue tracking, and taxes. It’s like having a co-host that never sleeps.
- Awning Vacation Rental Property Management: Don’t want to deal with day-to-day operations? Awning can take over the whole thing. They offer full-service Airbnb management for just 15% of your revenue—a low fee considering they handle everything and are known for top-tier service.
Tips to Succeed with Airbnb Arbitrage
Starting an Airbnb arbitrage business is exciting—but like any business, success comes down to smart planning and consistent execution. Whether you're just getting started or looking to fine-tune your process, here are some practical tips to help you launch smoothly and run your rental like a pro:
- Set a budget—and actually stick to it. It’s easy to overspend when you’re getting everything set up, so plan your expenses ahead of time.
- Do your homework on the rental market. Know the demand, seasonality, average nightly rates, and what your competition is doing in the area.
- Learn the local laws and stay compliant. This includes short-term rental rules, lease agreements, zoning regulations, and taxes. Ignoring these can get you shut down fast.
- Search for rental properties from multiple sources. Don’t rely on just one platform—cast a wide net to find the best deals and opportunities.
- Run the numbers before signing anything. Factor in rent, utilities, furnishing, cleaning, insurance, and Airbnb’s cut. Make sure your profit margin makes sense.
- Negotiate the rent. You might be surprised—many landlords are open to a lower monthly rate, especially if you're offering a longer lease or guaranteed payments.
- Always get a written lease. Verbal agreements won’t cut it. Make sure everything is clear and agreed upon in writing.
- Have your guests sign an agreement too. It helps set expectations and protects you in case anything goes wrong.
- Get extra insurance. Regular renter’s insurance may not cover short-term stays. Look into policies designed for vacation rental hosts.
- Furnish with comfort and style in mind—without overspending. Aim for a warm, inviting space that looks great in photos but doesn’t blow your budget.
- Use dynamic pricing. Tools like PriceLabs or Wheelhouse help adjust your rates based on demand so you’re not leaving money on the table.
- Optimize your Airbnb listing for search. Great photos, keyword-rich descriptions, and accurate details help you show up in more searches.
- Focus on guest experience and reviews. Good reviews build trust and boost visibility. Go the extra mile to make each stay memorable.
- List on other sites like Vrbo and Booking.com. Don’t rely on Airbnb alone—diversify to increase your booking potential.
- Automate wherever you can. Use tools to handle bookings, messaging, cleaning schedules, and more—it’ll save time and stress.
- Watch your expenses. Every dollar counts. Look for ways to cut costs without hurting the guest experience.
- Think about hiring a professional manager. If you’re juggling multiple units or a full-time job, a good manager can be worth the investment.
10 Best Airbnb Arbitrage Markets
To assist you in launching your short-term rental arbitrage business, we've compiled a list of the top 10 Airbnb arbitrage markets. The Average Daily Rate (ADR), Occupancy Rate, and Annual Revenue data are sourced from AirDNA and Mashvisor.
1. Miami, FL: Best Airbnb Arbitrage Market for Urban Beach Experiences
- Average Daily Rate: $281
- Occupancy Rate: 52%
- Annual Revenue: $24,339
Miami's vibrant culture, beautiful beaches, and year-round warm weather make it a prime destination for tourists. The city's diverse neighborhoods offer various opportunities for short-term rentals, catering to both leisure and business travelers.
2. Nashville, TN: Best Airbnb Arbitrage Market for Music Enthusiasts
- Average Daily Rate: $351
- Occupancy Rate: 54%
- Annual Revenue: $44,424
Known as "Music City," Nashville attracts visitors with its rich musical heritage, lively entertainment scene, and numerous festivals. The city's growing tourism industry supports a robust short-term rental market.
3. Flagstaff, AZ: Best Airbnb Arbitrage Market for Outdoor Adventurers
- Average Daily Rate: $273
- Occupancy Rate: 56%
- Annual Revenue: $33,155
Flagstaff serves as a gateway to the Grand Canyon and offers a variety of outdoor activities, including hiking, skiing, and stargazing. Its proximity to natural attractions ensures a steady stream of visitors seeking adventure.
4. Joshua Tree, CA: Best Airbnb Arbitrage Market for Desert Retreats
- Average Daily Rate: $328
- Occupancy Rate: 52%
- Annual Revenue: $44,560
Joshua Tree's unique desert landscapes and national park draw tourists year-round. The area's artistic community and serene environment make it a popular spot for short-term rentals.
5. Gulf Shores, AL: Best Airbnb Arbitrage Market for Coastal Getaways
- Average Daily Rate: $388
- Occupancy Rate: 58%
- Annual Revenue: $51,558
With its white sandy beaches and family-friendly attractions, Gulf Shores is a favored destination for vacationers. The area's appeal supports a thriving market for short-term rentals.
6. Artesia, CA: Best Airbnb Arbitrage Market for Suburban Comforts
- Average Daily Rate: $123
- Occupancy Rate: 61%
- Annual Revenue: $13,110
Located in Los Angeles County, Artesia offers a suburban feel with easy access to the amenities of a major city. Its diverse community and local attractions make it appealing to a variety of travelers.
7. Waianae, HI: Best Airbnb Arbitrage Market for Hawaiian Escapes
- Average Daily Rate: $355
- Occupancy Rate: 70%
- Annual Revenue: $53,461
Waianae's stunning beaches and laid-back atmosphere attract visitors seeking an authentic Hawaiian experience. The area's natural beauty and cultural sites contribute to its strong short-term rental market.
8. West New York, NJ: Best Airbnb Arbitrage Market for Proximity to NYC
- Average Daily Rate: $183
- Occupancy Rate: 64%
- Annual Revenue: $21,681
Situated just across the Hudson River from Manhattan, West New York offers convenient access to New York City's attractions without the high accommodation costs. This strategic location makes it popular among tourists and business travelers alike.
9. Bellingham, WA: Best Airbnb Arbitrage Market for Pacific Northwest Charm
- Average Daily Rate: $220
- Occupancy Rate: 61%
- Annual Revenue: $24,897
Bellingham's coastal scenery, outdoor recreation opportunities, and vibrant arts scene draw visitors year-round. Its proximity to both Seattle and Vancouver adds to its appeal as a travel destination.
10. Prairie Village, KS: Best Airbnb Arbitrage Market for Suburban Serenity
- Average Daily Rate: $214
- Occupancy Rate: 67%
- Annual Revenue: $33,546
As a suburb of Kansas City, Prairie Village offers a peaceful environment with easy access to urban amenities. Its charming neighborhoods and local events attract visitors seeking a relaxed stay.
When considering Airbnb arbitrage, it's essential to research local regulations and market dynamics to ensure a successful investment.
Key Takeaway
Airbnb arbitrage is quickly becoming a go-to strategy for people who want to earn from real estate—without actually buying any. The key is finding a spot where short-term rental income beats what you’d make from a regular long-term lease—and, of course, where Airbnb is allowed.
Once you’ve got the right market and a willing landlord, you’re in business. Just make sure to use smart tools to help with research, pricing, and property management so you can run things smoothly and maximize your profits.
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