How to Set Up a Short-Term Rental Without Owning Property

Short-term rentals have become a lucrative business opportunity for entrepreneurs looking to generate income through platforms like Airbnb, Vrbo, and Booking.com.

However, one of the biggest misconceptions is that you need to own property to get started. The truth is, that many successful hosts operate short-term rental businesses without owning a single property.

This is possible through strategies like rental arbitrage and co-hosting, which allow you to leverage other people’s properties for profit. In this guide, we’ll break down how you can start a short-term rental business without owning property, the best methods to use, and how to maximize profitability.

1. Understanding the Short-Term Rental Model

A short-term rental is a fully furnished property rented out for short stays, typically ranging from a few days to a few weeks. These rentals cater to travelers, business professionals, and vacationers looking for a home-like experience.

Platforms to List Your Rental

To get started, you can list your rental on popular short-term rental platforms such as:

Airbnb – The most popular short-term rental platform.
Vrbo – Best for vacation rentals.
Booking.com – Offers global exposure.
Expedia – Attracts high-end travelers.
Direct Booking Website – Helps bypass platform fees.

Rental Arbitrage vs. Co-Hosting

There are two primary ways to run a short-term rental business without owning property:

Rental Arbitrage – Leasing a property and subletting it on short-term rental platforms.
Co-Hosting – Managing short-term rentals for property owners in exchange for a percentage of the earnings.

Let’s explore both options in detail.

2. Rental Arbitrage: Leasing to Sublet on Airbnb

Rental arbitrage involves renting a property on a long-term lease and then listing it for short-term stays. The goal is to earn more from short-term bookings than what you pay in rent and expenses.

How to Find Landlord-Friendly Properties

Not all landlords allow subletting, so you must:

Look for properties in areas with high short-term rental demand.
Focus on apartments, condos, or single-family homes in tourist-friendly locations.
Check local short-term rental regulations to ensure legality.

Pitching the Idea to Landlords

Many landlords may be hesitant to allow rental arbitrage. To convince them:

Highlight the benefits: Explain how it guarantees consistent rent payments and better property maintenance.
Offer higher rent: In some cases, offering a slightly higher rent can make it more appealing.
Provide a business proposal: Show them how you’ll manage the property professionally.

Key Lease Clauses to Include

To protect yourself legally, your lease should have:

Written permission to sublet on short-term rental platforms.
An agreement on maintenance responsibilities.
Insurance coverage to protect against damages.

3. Co-Hosting: Managing Listings for Owners

Co-hosting is an alternative to rental arbitrage that doesn’t require leasing a property. Instead, you manage an owner’s short-term rental and earn a percentage of the revenue.

How to Find Property Owners in Need of Management

You can find property owners who need co-hosting services by:

Checking Airbnb for underperforming listings.
Networking in real estate investment groups.
Reaching out to vacation rental property owners.

Revenue-Sharing Models for Co-Hosting

Co-hosting agreements typically involve revenue-sharing. Common models include:

20-40% of rental income – This depends on the level of involvement in management.
Flat fee per booking – Useful for larger properties.

Essential Tools for Co-Hosting

To streamline operations, use:

Property management software (e.g., Guesty, Hostaway).
Automated messaging tools (e.g., Hospitable).
Dynamic pricing tools (e.g., PriceLabs, Wheelhouse).

4. Choosing the Right Market and Property

Choosing the right location and property is crucial for success in the short-term rental business.

Researching High-Demand Locations

Look for areas with:

Strong tourism and business travel demand.
Limited hotel options but high short-term rental demand.
Favorable short-term rental regulations.

Property Features That Attract Bookings

A profitable short-term rental property should have:

A prime location near attractions.
Modern amenities like Wi-Fi, smart locks, and well-equipped kitchens.
Comfortable furnishings and a unique aesthetic.

Local Regulations and Restrictions

Always check local regulations, including:

Short-term rental licensing requirements.
Zoning laws and HOA restrictions.
Occupancy and tax regulations.

5. Setting Up and Furnishing Your Rental

Creating an Appealing Interior on a Budget

Use affordable yet stylish furniture (IKEA, Wayfair, or local markets).
Add decorative elements such as artwork and lighting to enhance ambience.
Invest in quality bedding and towels for a hotel-like experience.

Must-Have Amenities for Short-Term Rentals

High-speed Wi-Fi – Essential for business travellers.
Self-check-in options – Smart locks or keyless entry.
Basic toiletries and kitchen supplies – Improve guest experience.

Photography and Listing Optimization

Hire a professional photographer for high-quality images.
Write a compelling listing description highlighting key features.
Use keywords that attract guests in search results.

6. Managing and Automating Your Rental Business

To run an efficient rental business, automation is key.

Using Property Management Software

Tools like Guesty, Hospitable, and Hostaway help automate:

Booking management.
Guest messaging.
Pricing adjustments.

Cleaning and Maintenance Strategies

Partner with professional cleaning services for quick turnovers.
Schedule regular maintenance checks.
Use apps like Turno to manage cleaning schedules.

Automating Check-Ins and Check-Outs

Install smart locks for self-check-in.
Provide digital guidebooks for guests.
Set automated reminders for check-out instructions.

7. Marketing and Growing Your Rental Business

Optimizing Your Airbnb Listing

Use professional photos and an engaging title.
Offer discounts for first-time guests.
Encourage positive reviews to boost rankings.

Leveraging Social Media and Direct Bookings

Create an Instagram or Facebook page for your rental.
Build a direct booking website to save on platform fees.
Use SEO to attract organic traffic.

Getting Positive Reviews

Provide excellent customer service.
Personalize the guest experience with welcome notes or gifts.
Address negative feedback professionally.

8. Handling Legal & Financial Aspects

Understanding Tax Obligations

Pay local occupancy taxes (varies by location).
Track earnings for income tax reporting.
Consider forming an LLC for liability protection.

Getting the Right Business Structure and Licenses

Check if you need a short-term rental business license.
Register your business as an LLC or sole proprietorship.
Obtain liability insurance to protect against damages.

Short-Term Rental Insurance

Airbnb’s Host Guarantee provides basic protection but is not enough.
Consider commercial short-term rental insurance.

Conclusion

Starting a short-term rental business without owning property is entirely possible through rental arbitrage or co-hosting. With the right approach, you can build a profitable venture by leveraging other people’s properties.

Now that you have a step-by-step guide, it’s time to take action. Start researching properties, reach out to landlords, and begin setting up your first short-term rental business today.