05/28/2025
Thinking About Renting Your Property for Airbnb Arbitrage? Here’s What You Should Know
At AriStay, we’ve had several conversations lately about rental arbitrage—that is, renting your property to someone who then turns around and lists it on Airbnb. A few of our clients have even chosen to go this route, opting for the perceived stability of fixed monthly rent over the ups and downs of short-term rental income.
We completely understand the motivation. Predictable income is attractive, especially for property owners who don’t want to deal with the hassle or risk of fluctuating bookings. But it’s important to take a step back and consider the full picture—because while the income might be fixed, the risk is not. In fact, your exposure can be unlimited.
Here are the major risks you should be aware of before allowing someone to operate your property as an Airbnb:
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1. Legal and Regulatory Risk
Short-term rentals are heavily regulated in many cities. If your tenant violates local laws or HOA rules—you, as the property owner, could be held liable. Even if you’re not the one managing the guests, the city or neighborhood may come after you with fines, penalties, or even lawsuits.
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2. Insurance Gaps and Liability
Most standard homeowner or landlord insurance policies don’t cover short-term rentals. If a guest is injured or your home is damaged, your insurance could deny the claim. Unless your tenant carries proper short-term rental insurance (and many don’t), you’re financially exposed.
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3. Loss of Control
Once your property is leased to someone else, you no longer control who comes in and out. Guests may change every few days, and you have no say in their behavior. Your name stays on the deed, but your control over what happens inside the house disappears.
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4. Neighborhood and Reputation Risks
Frequent guest turnover can lead to noise complaints, parking issues, and unhappy neighbors. This can damage your standing in the community—and in some cases, repeated complaints can lead to legal action or your property being flagged by local authorities.
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5. Tenant Default or Business Failure
Just because someone plans to run a profitable Airbnb doesn’t mean they will. If their business fails or slows down, they might stop paying rent altogether. In many jurisdictions, removing a non-paying tenant—even one misusing the property—can take months and cost thousands.
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6. Damage and Wear Beyond Normal Use
Short-term guests generally don’t treat a home with the same level of care as long-term tenants or owners. Excessive wear, broken furniture, missing items, and even major property damage are all possible—and if your tenant doesn’t handle it properly, you may end up footing the bill.
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Final Thoughts
We believe rental arbitrage can work for some people, but it comes with serious risks that many owners don’t fully realize. Fixed rent may sound comforting, but you’re effectively handing someone else the keys to your asset—without any of the upside of short-term rental profits, and all of the downside if something goes wrong.
