Investors can now start earning passive income from real estate without necessarily owning the properties
By ZADOCK MALIKA
Rental arbitrage, which is the act of renting out an already rented property, is a hot model right now. It involves leasing a rental property especially to travellers usually for a longer term. Every so often, one would list his/her property on various online portals, and re-rent it out on either a short-term or long-term basis.
The model has been adopted across many countries – a typical three-bed house on an online booking platform like Airbnb might go for Sh15,000 a night, but the adoption of rental arbitrage, or subletting if you like, would allow investors to make much more than Sh100,000 in a month. Assuming you are renting the same property out for say, 10 or 15 days in a month, you can make decent gross revenues.
To get good profits, it is important to do some research, pick the right properties, find motivated landlords and manage it well. Find out the average monthly rent in a particular market, versus the average short-term rental rate per night to see if it is viable.
One of the notable ways to ensure uptake is the right location, which will allow customers to check in conveniently. How you will go about pricing and marketing also determines how far you will go. And finally, the landlord too should be agreeable to this model.
This model can benefit both companies and individual investors. Individuals can either be property owners or not. As a property owner, you enjoy higher returns as you do not need to pay the monthly rent. However, individuals who do not own properties, can also benefit from passive income by renting someone else’s property.
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