Thinking about arbitrage and need some advice

[Allen262]

Hello! My name is Allen 🙂 I currently am working in the service industry and my wife and I are looking to break into the AirBNB arbitrage business. I had a few questions and I didn't know who to ask. 

1. What kind of insurance is recommended if we are using an LLC?

2. I don't have the best credit. Will this be a huge issue in us moving forward or will my progress only be slightly more difficult? 

3.Does anyone have a good possible mentor recommendation or feedback from any mentorships?

Any answers are greatly appreciated and hopefully I'll be enjoying hosting with all of you very soon!  

[Mike-And-Jane0]

@Allen262 I fear you will find it incredibly difficult to find someone willing to rent you a place for you to then rent out as an Airbnb. If you do then make sure your intentions are written clearly into the lease.

You might be better starting as a co-host/cleaner and working your way up from there.

[Laura2592]

@Allen262 I would not take on this risk, particularly with poor credit. 

A lease is still a contract. Let's say you rent 5 apartments and want to Airbnb them all. Guests cancel. They ask for refunds. There is a pandemic still happening and travel plans are fluid. You need start up cash for furnishings and security deposits. If anything goes wrong, you are responsible. Defaulting on a lease will go on your already difficult credit report. Anything to do with a residence (failure to pay a mortgage or a lease) is looked upon particularly harshly as most people will sacrifice a lot to keep a roof over their heads. If you are being evicted for non-payment in several places, you will basically ruin your chance to be financially healthy for several years. Bankruptcy may not be out of the question. 

What people also fail to realize is that with any ABB you have to make the space somewhat decent to attract guests. Nice sheets and towels. Good mattresses. Fast wifi. All of that costs money. And one poor review can really set your space back from getting a lot of bookings. Guests can be mercurial and sometimes dishonest. I would never want my solvency to be riding on one of them and their misunderstanding of the review process.

As a former landlord I would speedily eject anyone who tried arbitrage in my units for many reasons, not the least being liability. So the advice I would give is "don't do it, save your money. Repair your credit. Then consider your options."

[Allen262]

Thank you for your input! I need all the advice I can get. Just curious, do you think there might possibly be a market for staging the homes for superhosts that are opening multiple units? My wife and I are just exploring all our possibilities and airbnb seems to be a growing market (as long as laws don't start changing lol). I have professional moving experience and my wife has a passion for interior decorating. Thanks again for the time you have already given and I'll definitely take what you said into consideration while trying to figure everything out 

[Helen3]

Yes there is a market for co-hosts and others to provide support services for others hosts from staging their homes, setting up their listings to co-hosting a hosts listings.

You would need to be able to show examples of listings you are already successfully hosting if you want people to use your services.

Why not start by offering a room in your home to gain experience? @Allen262

[Kevin1718]

Would be interested in how this worked out for you, did you go ahead with it, did you find it difficult to find properties. I'm considering the same thing myself hence my interest

[Helen3]

I would suggest doing arbitrage in Europe in the middle of a massive recession, where many markets are already oversaturated may not be the best move @Kevin1718 

1. Many landlords who offer long term lets forbid STRs or running a business in their leases

2. You are liable for the full rent and all bills whether you get bookings or not

3. Demand is falling in may locations

4. STR restrictions in Ireland may make this more difficult

5. What would you do if a guest trashes a property and Airbnb don't pay up - how would you cover the costs

What are your thoughts around why you feel arbitrage is a good business investment for you @Kevin1718 

[Kevin1718]

I wasn't suggesting Airbnb arbitrage in Ireland, was thinking of the Caribbean a lot of turnover of property on some of the islands, where the property sits waiting to be sold, if it was Airbnb by a third party the owner could show a solid ROI therefore helping them with the sale. Clear guidelines would have to be set

[Helen3]

Ah you didn't say that in your initial post. @Kevin1718 

If you have done your market research,  think there is a market for it,  have done an evaluation of all the risks then it sounds like you've answered your own question 🙂

Be interested in how you intend to manage things on the ground in the Caribbean when based in Ireland.

[Kevin1718]

Was going to move to Antigua, I can manage one remotely but looking to get up to 10, so need to be on island