Airbnb rental arbitrage is a business that focuses on subleasing other people’s properties in order to rent them out on websites like Airbnb, VRBO, or HomeAway. The rental arbitrage aims at renting out houses on the long-term rental market, and then resale them on the short-term market.
This business has existed for ages, and it is applicable to all global industries. The market share of the vacation rental business is dominated by Airbnb. With a market share of around 20 percent of the whole vacation rental, Airbnb is projected to be worth about $93 billion.
Steps to Write an Airbnb Arbitrage Business Plan
Executive Summary
Olive Habor® Airbnb Arbitrage Company, Inc. is a standard and registered Airbnb arbitrage business that will be located in Hempstead Town, New York with an active presence and network across major cities in the United States. We have secured all the necessary permits and licenses required for us to participate in the Airbnb line of business across the United States of America.
Olive Habor® Airbnb Arbitrage Company, Inc. is positioned to service the niche – Airbnb market in the United States. Jordan Winston is the founder of Olive Habor® Airbnb Arbitrage Company, Inc.
Company Profile
a. Our Services
Olive Habor® Airbnb Arbitrage Company, Inc. will rent out a furnished apartment, house, and professionally managed resort-condominium complex on a temporary basis to tourists as an alternative to a hotel. We will also offer our guests services such as; front desk check-in, 24-hour maintenance, in-house housekeeping, and concierge service.
Our services are designed to give people accommodation options, security and the opportunity to enjoy the funs that comes with traveling to different destinations.
b. Nature of the Business
Olive Habor® Airbnb Arbitrage Company, Inc. will be formed as an independent limited liability company (LLC) with the idea of subleasing other people’s properties under the Airbnb real estate business model.
c. The Industry
Olive Habor® Airbnb Arbitrage Company, Inc. will operate in the real estate and vacation rental industry.
d. Mission Statement
Our mission is to make available comfortable, safe, and affordable short let rental properties available to tourists, visitors, and travelers under the Airbnb rental model.
c. Vision Statement
Our vision is to be listed among the top five Airbnb arbitrage companies in the States.
d. Our Tagline (Slogan)
Olive Habor® Airbnb Arbitrage Company, Inc. – Your Sure Plug, When It Comes To Airbnb Properties!
e. Legal Structure of the Business
Olive Habor® Airbnb Arbitrage Company, Inc. will be formed as an LLC. According to this agreement, each member (partnership) is responsible for the profits and losses the company incurs.
f. Our Organizational Structure
- Chief Executive Officer
- Facility Manager
- Marketing Officer
- Accountant
- House Keepers
- Customer Service Executive/Front Desk Officer.
g. Ownership/Shareholder Structure and Board Members
- Jordan Winston (Founder and Chief Executive Officer) 40 Percent Shares
- Godwin Joseph (Co-Founder and Chief Operating Officer) 30 Percent Shares
- Allen Poche (Board Member) 10 Percent Shares
- Felix Arlington (Board Member) 10 Percent Shares
- Carol Jonathan (Board Member and Sectary) 10 Percent Shares.
SWOT Analysis
a. Strength
- Services are reasonably priced
- Ideal location for Airbnb (thriving real estate and vacation rental market)
- Access to finance from business partners
- Robust relations with property owners and properties investment moguls
- Water-tight strategy on how to scale the business quickly
- Good returns on investment for investors and partners.
b. Weakness
- A new business that will be competing with well-established property developers and other Airbnb arbitrage companies
- Inability to retain our experienced and competent employees longer than desired.
c. Opportunities
- Hempstead Town, New York is a thriving market for Airbnb (thriving real estate and vacation rental market)
- Good support structure for Airbnb arbitrage companies all across the United States.
i. How Big is the Industry?
Airbnb arbitrage is one of the largest industries in the United States of America, and it is the market size of the real estate sector, of which it is a component estimated to be $156.2 billion in 2021.
ii. Is the Industry Growing or Declining?
The Airbnb arbitrage industry is fast growing, as a matter of fact, if you are persistent and prepared to put up the effort to get renters and maintain their satisfaction, short-term rental services like Airbnb and others can be very profitable.
iii. What are the Future Trends in the Industry?
Traditional methods of service delivery have been overtaken by SaaS (software as a service) and cloud computing integrated services. Subscription-based SaaS applications can be advantageous for businesses of all kinds. The solutions are used by businesses to automate operations and get rid of manual input, making them run efficiently.
Therefore, businesses could lower the sophistication and cost of on-premises deployment by combining SaaS solutions. In addition, SaaS systems let consumers examine information using any internet-connected device and from any location.
Multi-vendor technologies are simpler to integrate into existing applications due to the SaaS approach. Property managers could use a SaaS platform to combine their services with cutting-edge payment technologies in order to promote convenient and easy transactions.
iv. Are There Existing Niches in the Industry?
No, there is no existing niche when it comes to the Airbnb arbitrage business. This is because the Airbnb arbitrage line of business is a subset or a niche idea in the real estate industry.
v. Can You Sell a Franchise of your Business in the Future?
Olive Habor® Airbnb Arbitrage Company, Inc. has no plans to sell franchises in the nearest future but will open its doors to accommodate more partners and investors in the subsequent years.
d. Threats
- The arrival of new Airbnb arbitrage companies and vacation rental companies within our market space
- Unfavorable government policy and regulations
- Community resistance
- Liability problems
- Continuously changing consumer demands as it relates to style, and design of properties et al.
i. Who are the Major Competitors?
- June Homes™ Apartment Rentals
- Corporate Housing New York
- Fundhomes
- Octo Property.
ii. Is There a Franchise for Airbnb Arbitrage Business?
Presently, there are no franchise opportunities for the Airbnb arbitrage business.
iii. Are There Policies, Regulations, or Zoning Laws Affecting Airbnb Arbitrage Business?
Yes, there are county or state regulations and zoning laws for Airbnb arbitrage business, and players in this industry are expected to work with the regulations governing such business in the state where their business is domiciled.
Marketing Plan
a. Who is your Target Audience?
i. Age Range
Adults above the age of 18 having the financial means to do business with us are our target audience.
ii. Level of Educational
There are no restrictions on the degree of education of those who are willing to engage with us as landlords or renters.
iii. Income Level
The people we are aiming to conduct business with will have an annual income between $40,000 and above $100,000.
iv. Ethnicity
There are no restrictions on the people we want to work with, rent their properties, or rent our Airbnb rentals to when it comes to their ethnicity.
v. Language
There are no restrictions on the languages individuals can speak, and we are eager to collaborate with them, create homes for them, or lease our Airbnb properties to them.
vi. Geographical Location
Everyone is welcome to associate with us or conduct business with our organization, regardless of their location.
vii. Lifestyle
No investor or client will be restricted from working with us or conducting business with us by Olive Habor® Airbnb Arbitrage Company, Inc. because of their race, culture, or way of life.
b. Advertising and Promotion Strategies
- Host themed events that can captive people’s attention
- Tap into text marketing
- Make use of billboards
- Share your events in local groups and pages
- Make your social media channels resources
- Develop your business directory profiles
- Build relationships with players in the real estate and brokerage industry.
i. Traditional Marketing Strategies
- Marketing through direct mail
- Print media marketing – newspapers and magazines
- Broadcast marketing -television and radio channels
- OOH, marketing – public transit like buses and trains, billboards, street shows, and cabs
- Leverage direct sales, direct mail (postcards, brochures, letters, fliers), tradeshows, print advertising (magazines, newspapers, coupon books), referral (also known as word-of-mouth marketing), radio, and television.
ii. Digital Marketing Strategies
- Social media marketing platforms
- Influencer marketing
- Email marketing
- Content marketing
- Search engine optimization (SEO) marketing.
- Affiliate marketing
- Mobile marketing.
iii. Social Media Marketing Plan
- Start using chatbots
- Create a personalized experience for our customers
- Create an efficient content marketing strategy
- Create a community for our target market and potential target market
- Gear up our profiles with a diverse content strategy
- Use brand advocates
- Create profiles on relevant social media channels
- Run cross-channel campaigns.
c. Pricing Strategy
Olive Habor® Airbnb Arbitrage Company, Inc. will be careful to account for profits, insurance, premiums, licenses, economies of scale, and the total package for each property when developing our pricing plan.
In all our pricing strategy will reflect;
- Cost-based pricing
- Value-based pricing
- Competition-based pricing.
Sales and Distribution Plan
a. Sales Channels
Utilizing partners and third parties, such as referral partners, affiliate partners, strategic alliances in the real estate and brokerage industries, tourism, and freelancers to help direct clients to us, is a key component of our channel sales strategy.
- Airbnb website
- Alternative rental websites
- Travel Oregon site
- Zillow
- Facebook.
b. Inventory Strategy
Olive Habor® Airbnb Arbitrage Company, Inc. will operate in an inventory strategy based on a day-to-day approach to follow for ordering, maintaining, and processing products in our warehouse because we will need the necessary toiletries, bedding, and other supplies on a regular basis.
We will approach the development of our strategy with the same level of care and diligence as we would if we were formulating an overarching corporate strategy.
We will make sure to deal with “Just-in-time (JIT) inventory,” says Olive Habor® Airbnb Arbitrage Company, Inc. (JIT involves holding as little stock as possible, negating the costs and risks involved with keeping a large amount of stock on hand.)
c. Payment Options for Customers
- Payment via bank transfer
- Payment with cash
- Payment via credit cards/Point of Sale Machines (POS)
- Payment via online bank transfer
- Payment via check
- Payment via mobile money transfer.
d. Return Policy, Incentives, and Guarantees
Guests have the liberty to cancel their reservation a maximum of five days before their arrival. They will obtain a complete refund, and the landlord would not charge them for the reservation. In the event of a late cancellation, guests would be billed for one night and would be reimbursed 50 percent of the leftover nights.
If somehow the guest cancels the reservation after arriving at the lodging, they would be billed for the length of time stayed, one extra night, and they will be reimbursed 50 percent of the rest nights not used.
e. Customer Support Strategy
We will solicit input from customers as part of our customer service approach. With their wants, experiences, and pain, we will be better to serve all of our clients and investors, and also provide them with exceptional Airbnb properties, returns on investment (ROI), and customer service. To accomplish this, we will work using a powerful CRM program.
Regularly, as part of our customer support plan, we will seek to improve our customer service team, and also leverage multi-channel servicing.
Operational Plan
Capacity, location, layout, quality, and method planning are all included in our operating plan. The plan will have a marketing, sales, and operations component, and overall, we want to increase our revenue by 25% in the second year.
Attracting investors (landlords who are interested in Airbnb arbitrage business model) would be part of the plan’s operations section and would allow the company to expand its assets and service offerings and support revenue development.
a. What Happens During a Typical Day at an Airbnb arbitrage Business?
- The office is open for the day
- Documentation and other administrative works are conducted throughout the day
- Airbnb apartments are rented out
- Housekeep
- Marketers go out in the field to market our Airbnb properties and services
- If there is an ongoing property furnishing and makeover project, the required team and machinery are sent to the field to carry out the project
- The team and machinery return to base (office) after the day’s job
- The report for the day is written and submitted to the required authority
- The office is closed for the day.
b. Production Process
There is no production process when it comes to the Airbnb arbitrage business.
c. Service Procedure
No, there is no defined service procedure for an Airbnb arbitrage business.
d. The Supply Chain
Key figures in the real estate and brokerage industries will be relied upon by Olive Habor® Airbnb Arbitrage Company, Inc. to refer business deals to us. In addition, we have been able to forge business ties with wholesale suppliers of building materials and other items.
e. Sources of Income
Basically, Olive Habor® Airbnb Arbitrage Company, Inc. makes money from renting out a furnished apartment, house, and professionally managed resort-condominium complex on a temporary basis to tourists as an alternative to a hotel.
Financial Plan
a. What Amount is Needed to Start your Airbnb arbitrage Business?
To launch our Airbnb arbitrage business in the United States, an estimate of $3.5 million is required. Note that this sum covers all of our staff’s salary for the first month of operation.
b. What are the Costs Involved?
- Business registration fees – $750
- Expenses for obtaining licenses and permits – $7,300
- Business consultant fee – $2,500
- Insurance – $5,400
- Rent/lease for our office facility- $200,000
- Other start-up expenses include stationery ($500), and phone and utility deposits ($2,800)
- Start-up inventory – $15,000
- Office equipment (cash register, security, ventilation, signage) – $4,750
- Website – $600
- Opening party – $3,000
- Miscellaneous – $2,000.
c. Do You Need to Build a Facility?
Olive Habor® Airbnb Arbitrage Company, Inc. will not build a new facility for our Airbnb arbitrage business, but rather we will work with landlords who are interested in making money from the Airbnb arbitrage business model.
d. What are the Ongoing Expenses for Running an Airbnb arbitrage Business?
- Cost of bedding, toiletries, and supplies
- Utility bills (internet, phone bills, signage and sewage et al)
- Repairs and maintenance
- Occupancy cost
- Salaries of employees.
e. What is the Average Salary of your Staff?
- Chief Executive Officer – $85,000
- Facility Manager – $72,000
- Business Developer/Sales and Marketing – $42,000
- Accountant – $40,000
- Customer Service Executive/Front Desk Officer – $30,000
- House Keepers – $25,000 Per year.
f. How Do You Get Funding to Start an Airbnb Arbitrage Business?
- Raising money from personal savings
- Raising money from investors and business partners
- Sell shares to interested investors
- Applying for a loan from your ban
- Seek funds from family members and friends.
Financial Projection
a. How Much Should You Charge for your Service?
At Olive Habor® Airbnb Arbitrage Company, Inc. our charge would be based on the location and type of property we want to put out for short-let.
b. Sales Forecast?
- First Fiscal Year: $1.2 million
- Second Fiscal Year: $1.8 million
- Third Fiscal Year: $2.5 million.
c. Estimated Profit You Will Make a Year?
The profit margin we hope to make at Olive Habor® Airbnb Arbitrage Company, Inc. will be between 16 and 20 percent on development costs. This refers to our profit as a percentage of our total cost.
d. Profit Margin of an Airbnb arbitrage Business Service
Profit margins in this sector frequently fluctuate, particularly because enterprises in the business sector are interested in sustaining their space and growing their society. At the end of each month, there are several factors and fixed expenditures for an operation. Even as the company grows, it will face associated costs and considerations that will reduce the potential profit.
Growth Plan
a. How do you intend to grow and expand, by opening more retail outlets/offices or selling a franchise?
Within the first five years of starting the company, Olive Habor® Airbnb Arbitrage Company, Inc. will expand its Airbnb arbitrage business by first creating more offices in major American cities, and then by enlisting more partners (landlords who are interested in the Airbnb arbitrage business model).
b. Where do you intend to expand to and why? (Geographical locations)
- Savannah, Georgia
- Charleston, South Carolina
- New Orleans, LA
- Nashville, Tennessee
- Jacksonville, Florida
- San Diego, California
- Tampa, Florida
- Miami, Florida
- Las Vegas, Nevada
- Austin, Texas.
The reason we intend to expand to this geographic location is that available statistics show that the cities listed above have the highest and most thriving real estate market in the United States. As a matter of fact, the median listing price of a home in Savannah, Georgia as of January 2022 was $274.5K, which was unchanged from the previous year.
The average listing home cost $165 per square foot. The average cost of a home sold was $259,000. There are more buyers than there are homes available in Savannah, Georgia, signaling a seller’s market.
Exit Plan
Olive Habor® Airbnb Arbitrage Company, Inc. desire to merge with a global real estate firm so that, after the founders retire, the operation of the business can be in the capable hands of a reputable party.
The objective of merging two or more Airbnb arbitrage firms on a global scale is to attempt to achieve synergy, where the new company’s management team and board of trustees are well-organized and the total is bigger than the sum of its parts (the former two distinct entities).