What is rental arbitrage?

Say a two-bedroom flat rents for $2,000 a month. Run nightly at $200 with 70% occupancy, it grosses roughly $4,200. Out of that come rent, platform fees, cleaning per turnover, utilities, internet, consumables and insurance. What survives is the spread — often somewhere between $600 and $1,400 a month per unit in a healthy deal.

The number that kills most deals is not the nightly rate, it is occupancy. A unit that looks profitable at 80% often loses money at 55%. That is why break-even occupancy matters more than the headline revenue figure.

A landlord who consents in writing to subletting or short-term use. Verbal permission is not permission.

Furniture, linens, photography and a starting float — typically several thousand in the currency of your market for a one or two bedroom.

Short-term rental liability insurance, which is not the same as ordinary contents cover.

Clarity on local rules: permits, night caps, building or strata by-laws.

You carry the rent whether or not the unit books. Seasonality can wipe out three months of margin.

Platforms change ranking and fee structures without notice, and a single bad review early can flatten occupancy.

A regulator or building can restrict short lets mid-lease, leaving you paying rent on a unit you can no longer operate the way you planned.

Put the lease terms into a calculator and look at three numbers: net monthly profit, margin on revenue, and break-even occupancy. If break-even sits above roughly 60%, the deal has very little room for a soft month.

Spread's deal analyzer does this for free, in USD, GBP or AUD, with no account required.