What is Rental Arbitrage in Real Estate?

What is Rental Arbitrage in Real Estate?

Rental arbitrage is a strategy where an individual leases a property and then re-rents it out at a higher price to earn a profit. This approach does not require owning the property; instead, the arbitrager capitalizes on the difference between the lease cost and the income generated from subletting. This method is often used with short-term rental platforms like Airbnb, where the potential for higher rental income on a nightly basis can exceed the monthly lease costs. It's crucial for those engaging in rental arbitrage to have clear agreements with property owners and to comply with local laws and regulations regarding subletting and short-term rentals.

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