Rental Arbitrage-House of Cards
Anybody have any insight on those that rent an apartment or entire floor. Then, rerent the apartment on one of the short term rental platforms? (AIRBNB, VRBO)
Curious to see what there palms would be. Some of the larger players (Sonder, WhyHotel, and Stay Alfred) were able to raise large amounts of cash, fhese guys should be able to weather the storm and stay afloat. But some of the smaller players using the rental Arbitrage model may feel some pain. Considering many of the major cities where this model works may be shut down for business and leisure.
It may be too soon to feel any real pain, but the house of cards will eventually fall.
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I can't imagine these larger STR are dependent on their operating income to pay rent. These guys have raised 10'if not 100's of millions of $.
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Rental arbitrage seems messy and labor intensive on residential. I’ve seen it work well on commercial. Sign a 30 year lease with no rent bumps and the ability to sublease in a rapidly gentrifying neighborhood. It’s hard to find a landlord that dumb but I’ve found some of these family type owners are a lot less defensive when it comes to signing a lease than selling. They won’t sell at market pricing but they’ll sign a lease with terrible terms because they’re too cheap to hire a leasing broker.
And when I say family type owner, I’m not talking family office money. I’m talking about the guy who inherited ~1-2 buildings and has no idea what the fuck he is doing.
https://twitter.com/RobCross247/status/1241325290565111808
In the link above, you can find all the STR's that turned into traditional rentals in Dublin. Over supply of rentals in a short period of time can kill market rates. Hopefully that doesn't occur in the US.
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