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Category: Getting Started
By: Nolan Peters
Reply by Michael Thompson:
Arbitrage is still viable but MUCH harder than the YouTube gurus make it look. Here's the reality: **Pros:** - Low startup cost (security deposit + furnishing vs buying a property) - Can scale faster since you're not buying real estate - Easier to exit — just don't renew the lease **Cons:** - Many landlords say no. Expect 50+ rejections before finding one who agrees. - Thin margins. Your rent is $1,500, Airbnb earns $2,500, but after cleaning, supplies, software, and platform fees, you might net $400-600/month. - You're exposed to lease renewal risk. Landlord can raise rent or refuse renewal. - Regulation risk. Many cities are cracking down on arbitrage specifically. - You still need $3K-5K per unit for furnishing. **My verdict:** Arbitrage is a good way to LEARN hosting without buying property. But the path to real wealth is ownership. Use arbitrage as a stepping stone to save for a down payment on your own investment property. Track your numbers carefully with a spreadsheet or tool like DealCheck (https://dealcheck.io) to make sure each unit is actually profitable after ALL expenses.
Reply by Tony Russo:
I did arbitrage on 3 units for 18 months. Made decent money at first, then two things happened: (1) my landlord raised rent 15% at renewal, and (2) my city passed an STR registration requirement that limited me to properties I own. I pivoted to buying property. The upfront cost is higher but the long-term economics are dramatically better — you build equity, you control the asset, and nobody can raise your rent. If you go the arbitrage route, have a 3-month cash reserve per unit and ALWAYS get landlord permission in writing. An oral agreement is worthless.