Hey Reader,
Rental arbitrage is an attractive strategy for real estate investors looking to generate cash flow without owning property. By leasing a long-term rental and subletting it as a short-term rental, tenants can maximize income potential—turning a traditional lease into a lucrative business opportunity.
How Investors Can Benefit from Rental Arbitrage
Investors can use rental arbitrage in two key ways:
- As Landlords – By renting to tenants who engage in short-term rentals, landlords can secure reliable lease payments while indirectly benefiting from the high demand for vacation and corporate housing.
- As Subletters – Entrepreneurs can rent properties in prime short-term rental markets, list them on platforms like Airbnb or Vrbo, and generate profits that exceed the fixed long-term rent cost.
Using RentScore.ai to Find Profitable Properties
Since rental arbitrage relies on securing a long-term lease at a lower price than the short-term rental market can generate, investors need to target the right locations. RentScore.ai helps investors identify high-cash-flow properties by providing insights into long-term rental viability.
Here’s how investors can use RentScore.ai:
- Find High-Rentability Areas: RentScore.ai evaluates rental demand, vacancy rates, and rentability scores to pinpoint properties that are easy to lease long-term.
- Determine Long-Term Rental Profitability: Investors can assess potential cash flow from traditional rentals, ensuring they cover base rent before considering arbitrage opportunities.
- Screen Tenants for Rental Arbitrage Potential: Landlords can use RentScore.ai to attract tenants who plan to sublet, ensuring properties remain profitable and occupied.
Rental Arbitrage in Action: The Numbers
Let's break down a simple rental arbitrage example in Austin, TX:
- Long-Term Rent: $2,000/month
- Average Short-Term Nightly Rate: $150/night
- Occupancy Rate: 70% (21 nights per month)
- Short-Term Rental Revenue: 21 x $150 = $3,150/month
- Profit (After Rent): $3,150 - $2,000 = $1,150/month (before utilities, cleaning, and management costs)
Even with additional expenses (approximately $400/month), the investor can generate around $750/month in net profit per property.
Best Cities for Rental Arbitrage
Successful rental arbitrage depends on high demand for short-term rentals. Top cities where rental arbitrage thrives include:
- Orlando, FL – Strong tourist demand due to Disney World and convention centers.
- Nashville, TN – Popular for music events and weekend tourism.
- San Diego, CA – Consistent year-round demand from travelers and business professionals.
- Denver, CO – A hub for both tourism and corporate stays.
- Phoenix, AZ – High demand during winter months from snowbirds and tourists.
Maximize Your Investment with RentScore
While RentScore.ai does not calculate short-term rental profitability, it provides the best data for selecting long-term rental properties. Investors and landlords can use the platform to:
- Find high-demand rental areas for long-term leases.
- Identify properties that support rental arbitrage.
- Attract qualified tenants who leverage arbitrage responsibly.
By leveraging RentScore.ai’s rental intelligence, investors can make data-driven decisions, secure high-rentability properties, and strategically position themselves for rental arbitrage success.
Are you ready to start? Visit RentScore today to discover properties that align with your investment strategy!
The RentScore Team
Your Partner in Real Estate Success