Rental Arbitrage

The first time I was introduced to the concept of rental arbitrage was when I was a graduate student at Georgia Tech in Atlanta.

A new developer had come to town and they were busy converting the old railyard to the north of campus into a shopping and living district. New apartments, townhomes, and businesses were popping up as the entire area was undergoing a revitalization.

At that time my dad and I were commuting into GaTech 1 hour each way on a good day. On a bad day we spent 3-4 hours on the road going to and from work/home.

My idea was to purchase one of these new townhomes, and then rent it out but keep a room for us, on the days that we just did not want to go home.

But, after some investigation it turned out that they had a Condo Association which would only allow 10% of the condo’s to be sublet and all the spots had already been filled. I had gotten to the game too late.

In the past year, the rental market has exploded in Atlanta again. Finding apartments to sublet has become scarce.

The only viable option at the moment in the Atlanta market is to find a home owner that wants to rent their property long term, and then you convert it to a short term rental. This is called rental arbitrage, and if you go down this road you’ll need to make sure that your contract with the homeowner accounts for this possibility.

A recent news article said that > 40% of single family homes in Atlanta are rental properties.

With rental arbitrage the threshold to enter into short term rental investing is very low, because you don’t have to worry about obtaining a mortgage. Instead of paying a mortgage you pay the homeowner a monthly rent.

However, I need you to be aware of the fact that your monthly rent will be going straight towards paying off the home owner's mortgage.

The only reason why you would go this route is if (1) you cannot obtain a mortgage or (2) there are no properties for sale on the market that will accept conventional loans. Cash is King, and right now in Atlanta unless you’re willing to pay cash you probably won’t get the deal.

If you are eager to start your real estate investment business, then be sure to join me for the Launch Your First Airbnb Challenge that will be going LIVE on Facebook on February 7.

To register click on the link. The cost is $7, and that is simply to cover some expenses that I have to host and run and workshop. I hope you’ll consider joining.

https://firsttimehost.com/lyfac

Too da loo

Linda