Don’t tell my landlord: My Secret Airbnb Makes Over $4000 A Month
Adventures in Airbnb Arbitrage.
I have a secret Airbnb that I don’t own. I rent it for just under $2000 per month, and it makes over $4000 a month. Airbnb is tightly regulated in our town, but I discovered a loophole in the rules, which is entirely legal. Here’s how I did it.
Over the summer, my wife and I decided to rent an additional one-bedroom apartment near the beach in our hometown. She is an artist whose studio space was being repurposed, and she needed to find a new one quickly.
Studio space was difficult to come by on short notice, so instead, we found a fantastic one-bedroom apartment with great natural lighting, amazing views, and it was a quick walk to the beach.
Our town’s average one-bedroom apartment rents for over $2300 a month — we managed to find one for just under $2K. It was an opportunity we couldn’t pass up.
The apartment would serve as a quiet workspace away from our two rowdy kids. Also, since we usually have visitors staying with us in the summer, our guests could stay at the beach instead of at our house. We could always sublet or assign the lease if it didn’t work out.
Signing the lease was easy. There were very few stipulations or addendums, and the landlord/owner seemed eager to rent to us. The most challenging part was negotiating with him to allow my corporation to sign the lease.
We gathered a few belongings out of storage, made a few strategic purchases on Facebook Marketplace, and decorated the recently-renovated suite for under $1000.
The first few months were great. My wife and I alternated working there during the day, and when friends came to visit, we let them stay for a couple of nights.
Towards the summer’s end, the beach house’s excitement had worn off, and my wife found a new studio space. We decided to experiment with listing the place on Airbnb.
Our city has strict regulations regarding Airbnb. Many condos and apartments do not allow short-term rentals — officially defined as 28 days or less. The properties that allow owners to list their homes on Airbnb require a city-issued Short-Term Rental Business License to operate. If you are not the owner of the unit you’re renting, you must get permission from the owner to obtain the business license.
However, there is one exception: Rentals over 28 days are exempt from this rule.
Unless the building expressly disallows Airbnb, VRBO, or other short-term rentals, you can rent your space for more than 30 days without a city-issued business license.
This oversight became the grey area where we could operate our Airbnb business.
Unlike many rental contracts in the city, our lease agreement did not prohibit us from short-term rentals or conducting business within our suite. Since our corporation could sign the lease, our Airbnb was now in business.
We had our first booking for September within 30 minutes of listing on the Airbnb app. Thirty-four days, for just over $4500. After fees and a “new listing discount,” we made just over $2000 net profit in the first month.
In October, we removed the discount and re-listed it for $6500 for October. That one took a little longer to book since we are outside the high season, but we made just over $4000 net profit last month.
So far, our secret Airbnb has been fantastic. The only major issue was a noise complaint, which we handled quickly. We also had to replace a couple of light bulbs during their stay.
Our Airbnb experience has been easy and profitable. We have made over $6,000 in two and a half months, and we will be able to write off a good portion (possibly all) of our rent and utilities as business expenses this year.
I’m not giving financial advice or saying anyone should do this. Everyone reading this needs to understand that these tactics are extremely “grey hat,” local bylaw dependent, and should not be undertaken by anybody with something to lose financially.
In our circumstance, we are well protected from liability since our Airbnb provides insurance coverage, and our holding company was able to sign the lease. We are not violating any municipal laws or our lease agreement. We know the rules, and we figured the worst that could happen would be the landlord choosing to evict us (our company) or not renew our lease next year.
Recently, we tried leasing additional two and three-bedroom apartments to rent out monthly on Airbnb. However, all the lease agreements we reviewed have expressly prohibited us from operating an Airbnb. Unless we find another unicorn, like the one we currently rent, Airbnb arbitrage might be dead for us.
Currently, an exciting prospect that I’m exploring is Airbnb co-hosting.
Co-hosting involves becoming the property manager for someone else’s short-term rental. You manage the cleanings, all communications, check-ins, check-outs, inspections, and repairs. In return, you receive a fee of 20 to 35% of the booking price.
No need to sign a lease agreement, purchase furniture, or require 30-day minimum stays. The property owner and Airbnb Air Coverage share all the risk instead.
Reaching out to those owners using the Airbnb app is relatively easy. I’ll also target Instagram and Facebook ads to Airbnb hosts in my city and send them to a landing page for a quote.
Property management is familiar to me, and co-hosting may be a great business opportunity worth testing.
I’ll post an update soon.