Airbnb Rental Arbitrage: The 2026 Guide to Success

As vacation rentals and home-sharing continue to be popular among tourists and business travelers, real estate investors
are looking for efficient ways to take advantage of this opportunity. But since buying an investment property to rent is more expensive than ever, a growing number have started an Airbnb arbitrage. In this guide, we’ll figure out how you can earn Airbnb income from this strategy in 2026.

Table of Contents

1. What Is Airbnb Rental Arbitrage?
2. Is Airbnb Rental Arbitrage Legal?
3. What Are the Risks of an Airbnb Rental Arbitrage Business?
4. How to Start an Airbnb Arbitrage in 7 Steps           
5. 5 Best Cities for Airbnb Rental Arbitrage

What Is Airbnb Rental Arbitrage?

Airbnb rental arbitrage is a lucrative investment strategy that allows many to start investing in real estate and make money from short term rentals without owning a property.

It’s the practice of leasing a long term rental property from a landlord and subletting it to third-party guests on short rental platforms like Airbnb, Vrbo, Booking.com, etc. 

Essentially, you’re leveraging the properties of other investors and the attractiveness of the Airbnb business to generate income with low initial investment.

Why Choose the Airbnb Rental Arbitrage Strategy

The average home value in the US market stands at $359,241 according to Zillow data (Nov 2025). With prices continuing to climb, ownership remains unaffordable for a lot of real estate investors, especially beginners with limited finances.

Meanwhile, the 15-year and 30-year fixed-rate mortgage rates amount to 5.54% and 6.22%, respectively, based on Freddie Mac data. While these interest rates are down from a year ago, they are considerably higher than the rates we witnessed four or five years ago. This further contributes to the inability of newcomers to join the property investment world, as investors typically pay even higher rates.

Rental arbitrage allows these aspiring Airbnb hosts to start generating profit from a rental business.

How Does Airbnb Arbitrage Work? An Example

To grasp the concept, let’s go through an example.

First, you should search for and rent a property. Let’s say this apartment costs $2,200 a month in Kissimmee, FL. 

Next, you sublet the unit on Airbnb for a daily rate of $200. This would allow you to pay off your rent in 11 days. 

It seems tempting already, right?

Now, suppose you could have guests for 20 days per month; you will earn $4,000. After deducting your rent and let’s say another $300 in business expenses, you still have $1,500 in profit.

As illustrated in our example, for Airbnb arbitrage to be profitable, there must be a nice difference between the rent you owe and your revenue.

Seems simple right? But before you start arbitraging short term rentals, it’s important to go over the legal side of things.

Is Airbnb Rental Arbitrage Legal?

Is your Airbnb arbitrage strategy legal?

Well, it depends on where you plan to rent and sublet your Airbnb property.

Many locations have strict short term rental regulations, so you have to ensure you can do this in your area of choice before moving on. 

Here is a quick list of some of the cities in the US housing market where an Airbnb arbitrage project is either prohibited or restricted:

• Charleston, SC
• Jersey City, NJ
• New York City, NY
• Los Angeles, CA
• San Francisco, CA
• Jacksonville, FL

Once you’ve done your research and found a place where you can apply this vacation rental business model, make sure to review and understand all the requirements. You may have to apply for special permits and pay certain taxes. There are usually zoning laws which tell you where exactly in a market you can or can’t run an Airbnb. It doesn’t just end at legal vs illegal.

On top of STR regulations, subletting an apartment has its own set of rules. And these rules differ from location to location. For the most part, subletting is legal with written consent from the landlord. But be sure to check the local laws.

Not sure what the STR laws and regulations are like in a certain market? Easily check for Airbnb regulations on Mashvisor. 

What Are the Risks of an Airbnb Rental Arbitrage Business?

Yes, engaging in Airbnb arbitration is a great way to invest in real estate without owning a property. But it is a high risk strategy and you need to take into consideration the following factors:

You Have to Pay Rent Regardless

Whether your Airbnb property is booked or not, the original landlord will expect the rent. This financial commitment could mean being in the red during off-peak seasons when you cannot maintain high occupancy rates. That’s why we recommend researching the Airbnb demand in your area and setting aside money to account for vacancies and the unstable income.

You Still Answer to Your Landlord

Aside from paying rent, you need to follow your landlord’s terms and conditions. Any changes to your rental agreement, such as restricting Airbnb sublets or terminating your lease, can directly impact your vacation rental endeavor. Thus, it’s important to maintain a good relationship with your landlord for your arbitrage venture.

You Are Liable for Legal and Regulatory Challenges

Though you don’t own the investment property, you own the business being run on the premises. And therefore, you are the one who will be held accountable for any violations of the law. The legal landscape in the short term rental industry is neither simple nor static, and much less for Airbnb rental arbitrage. 

As mentioned earlier, you’ll have to familiarize yourself with the local laws, including permissions and limitations. Failing to comply with local short term rental regulations can lead to fines, legal action, and even suspension of your Airbnb rental.

How to Start an Airbnb Rental Arbitrage in 7 Steps

1. Do Your Real Estate Market Research

Airbnb is evolving and arbitrage is changing with it. You can’t just sublet whatever apartment you’re in now in the hopes that this will work out for you. You need to start by researching markets.

Your target area is one where:

• Short term rentals are allowed and reasonably regulated
• Airbnb demand is high (high nightly rates and good occupancy rates)
• Average Airbnb monthly revenue is greater than the rent

You can try Mashvisor’s Market Finder tool or take a look at our list below of the best cities for Airbnb rental arbitrage in 2026 to help get you started with this step.

2. Get Your Finances in Order

With a market in mind, you can now start researching initial startup costs as well as ongoing costs. These may include:

• First and last month’s rent 
• Security deposit
• Permit or license application fees
• Taxes
• Insurance
• Legal fees
• Repair budget
• Furnishings and decoration
• Airbnb amenities
• Wi-Fi
• Entertainment subscriptions (e.g., Netflix, Amazon Prime, Disney+)
• Professional cleaning service
• Utilities
• Toiletries and kitchenware
• Marketing 
• Vacancies

Look at averages in the market where applicable and get everything in order.

3. Find a Profitable Long Term Rental Property 

Now it’s time to short-list some properties in the market of your choice. You can find top performing Airbnb rental properties and quickly compare the expected traditional rent you’d pay right here on Mashvisor. Beyond those numbers, you need to do a complete return on investment analysis.

Here’s a quick rundown of how to calculate return on investment for Airbnb Arbitrage:

Step 1: Calculate your total annual income. Start by adding up the total income you expect to earn in one year. This usually involves the daily rate multiplied by the number of days that you expect to be booked. 

Where do you get all this info for your rental or the ones you’re considering? You need to look at Airbnb comps. If you don’t know how much your comps earn, you can use an Airbnb calculator to help you. 

Step 2: Subtract your total annual expenses. These include rent, utilities, cleaning services, property management fees, and any other operational costs. Instead of just getting the average monthly expense and then multiplying it by 12, it’s wise to account for the occasional vacancies. You can expect to pay less in utilities and cleaning services in the off-peak season when your property won’t be fully booked. 

Step 3: Calculate your net annual profit. Subtract your total annual expenses from your total annual income to determine your net annual profit. This represents your potential earnings before taxes.

Step 4: Get the ROI. To find the ROI percentage, use the formula:

ROI = (Net Annual Profit / Total Initial Investment) x 100

Your total initial investment includes your starting costs such as the furnishings, security deposit, first and last month’s rent, and other upfront expenses required to get your rental property ready for Airbnb guests.

Mashvisor’s Rental Calculator: Assisting Airbnb Hosts

To help you get your finances in order and do the math for you, Mashvisor offers its Rental Calculator. This tool is specifically designed to assist investors in evaluating anticipated profits. 

Our calculator will assess the relevant Airbnb data and provide a rental arbitrage host with analytics that will make the decision-making process faster and more profitable. Some useful features include thorough market research, neighborhood analysis, calculating cash on cash return, revenue, cash flow, and others.

Step 5: Evaluate your potential Airbnb investment. An ROI of at least 8% indicates a healthy investment. But you might also want to see how it compares with other short term rentals in your area to determine if your projection is as good as or better than their performance.

4. Check the Lease and Talk to the Landlord

Go through the lease. It will either outright prohibit subletting, allow it, or make no mention. Whatever the lease says will help you plan your script for talking to the landlord about Airbnb rental arbitration. 

This is the tricky part. Convince your landlord too well and they may be interested in running an Airbnb out of their rental themselves. So here are a few talking points to help you:

• You need a nice rental property if you’re going the Airbnb rental arbitrage route. This means you will be caring for the real estate property like it’s your own. You can’t risk having it look run down and unclean or you’ll get bad reviews. Your landlord will be thrilled to hear this.
• You running a successful Airbnb means that the landlord will be paid rent on time and consistently.
• Remind the landlord that being an Airbnb host is not hands-off. It requires a lot of work and attention to the property and guests. Your landlord would be better off getting the rent than worrying about the work that goes into the short term rental business.
• Almost any concern the landlord may have about having an Airbnb in the rental property can be eased. Noise complaints? Promise to use noise sensors. Damage? You’ll have short-term rental insurance. You have to reassure the landlord that you won’t impact their business negatively in any way.

After you convince the landlord, make sure to get it all in writing. Have a lawyer draft up a contract.

5. Prepare Your Property for Airbnb Guests

If you’re wondering how to make money with Airbnb rental arbitrage in 2026, a big part is standing out from the competition. You should spice up the interior design to be even more attractive for guests.

It would also be good to add Airbnb amenities like a washer and dryer, TV, crib, dishwasher, coffee maker, and free parking. The majority of guests consider these must-haves.

6. List Your Property

Next comes creating your Airbnb listing and marketing it.

You’ll need to research the best platforms like Airbnb that fit your requirements. If you’re going to try a multi-channel distribution strategy, you will need a property management system tool – like the Mashvisor channel manager – to boost your Airbnb SEO ranking and prevent double bookings.

7. Keep Optimizing the Listing

If you want your Airbnb to reach a wider audience, you must ensure it pops up in search results frequently. This means that you’ll need to take some time to optimize your Airbnb listing. 

Make sure you take high-quality photos and show off the Airbnb amenities that guests are looking for in your Airbnb market. Improve the listing title and the listing description to highlight the best features of your arbitrage property to boost your performance in the Airbnb SEO algorithm. Maintain timely guest communication.

Apply an Airbnb dynamic pricing strategy to further enhance your ranking and to attract more bookings. Having competitive nightly rates is a must. The Mashvisor Airbnb pricing tool can help you automate your vacation rental arbitrage pricing strategy to maximize revenue and ROI without sacrificing occupancy.

5 Best Cities for Airbnb Rental Arbitrage

To help get you started with Airbnb rental arbitrage in 2026, we took a look at Mashvisor’s latest market data report (November 2025) and found the top 5 cities that offer the highest short term rental premium. This is a key metric in choosing the right location.

The STR premium is calculated by taking the difference between the average vacation rental income and long term rental income and dividing it by a month’s rent in a real estate market. A market with a STR premium above 100% is ideal as it means that you will be making twice as much with this strategy vs. a long term rental strategy. However, anything above 50% makes for a good place to start your search for an Airbnb investment property.

When ranking the top locations for the arbitrage property business model, we’ve applied the following criteria:

• At least 100 active listings on the short-term rental market
• A minimum of 100 active listings in the long term rental market
• An average Airbnb occupancy rate of 50% and above

That said, here are the 5 best cities for applying the Airbnb rental arbitrage model in 2026:

1. Fort Walton Beach, FL
   STR Premium: 110%

• Monthly Long Term Rent: $2,024
• Monthly Short Term Rental Income: $4,244
• Nights to Cover Monthly Rent: 9
• Short Term Average Daily Rate: $245
• Short Term Occupancy Rate: 54%

2. Satellite Beach, FL
   STR Premium: 88%
   

• Monthly Long Term Rent: $2,240
• Monthly Short Term Rental Income: $4,214
• Nights to Cover Monthly Rent: 7
• Short Term Average Daily Rate: $330
• Short Term Occupancy Rate: 57%

3. St. Augustine, FL
   STR Premium: 77%

• Monthly Long Term Rent: $2,448
• Monthly Short Term Rental Income: $4,338
• Nights to Cover Monthly Rent: 12
• Short Term Average Daily Rate: $209
• Short Term Occupancy Rate: 61%

4. Wilton Manors, FL

   STR Premium: 76%

• Monthly Long Term Rent: $3,567
• Monthly Short Term Rental Income: $6,293
• Nights to Cover Monthly Rent: 16
• Short Term Average Daily Rate: $235
• Short Term Occupancy Rate: 74%

5. Frisco, TX

   STR Premium: 69%

• Monthly Long Term Rent: $2,627
• Monthly Short Term Rental Income: $4,432
• Nights to Cover Monthly Rent: 14
• Short Term Average Daily Rate: $196
• Short Term Occupancy Rate: 53%

These 5 best places to start your Airbnb arbitrage strategy are generally characterized by high Airbnb revenue and low long term rental rates. They have strong average Airbnb daily rates and above-average Airbnb occupancy rates which are important features for the top markets for a rental arbitrage property business. You can also see approximately how many nights of renting it will take to recover the long term rent in each market. 

Nevertheless, you should keep in mind that our calculations are based on city averages, while your individual Airbnb arbitrage premium will depend on the exact property you rent and sublease, your management of the costs as well as the occupancy rate, and whether you go for a vacation rental or corporate housing arbitrage.

Once you’ve got an idea where you’d like to kick off your Airbnb arbitrage strategy, finding the ideal property that meets your needs and requirements is an effortless process with the help of specially designed investment tools. One of them happens to be Mashvisor’s Property Finder. Make the most of this real estate investment tool and access up-to-date and accurate information within minutes.

Summing Up

An Airbnb arbitrage business is an excellent way to start your real estate career without buying a property. The process is quite simple as it avoids the troubles of purchasing and owning an investment property long term. Nevertheless, there is some active work related to finding the right property, convincing landlords, preparing the rental, and marketing it.

To ensure your success with Airbnb rental arbitrage, Mashvisor is here to assist you throughout your journey. 

To learn how Mashvisor can help you find the next profitable Airbnb arbitrage opportunity, sign up for a 7-day free trial now.