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Why Rental Lease Works For Both The Owner, Lessee

Outlook Money

|

July 2025

Rental arbitrage frees house owners from the inconvenience of maintaining a house while getting some income. Lessees with less capital can convert it into a sustainable business. Mind the risks though

- Shivangini Gupta

Why Rental Lease Works For Both The Owner, Lessee

Imagine you have a flat in a posh area that has the potential to earn substantial rent. But you haven't put it on rent because you don’t want to take the trouble of dealing with agents, tenants and the associated tasks of maintenance.

So, the house is gathering dust due to lack of upkeep, and giving you no rental income either. But you can change that with a little effort.

Enter rental arbitrage, where you lease out a property to a lessee, which could be a company, operator or individual, who will handle the tenant and the property, and will pay you too. More and more owners are warming up to the idea of handing off their properties to professional short-term rental operators. At the same time, it’s also an emerging entrepreneurial venture for the lessees.

Let’s understand how it works and whether it’s worth it.

What Is Rental Arbitrage?

Think of rental arbitrage as a gray zone between ownership and operation that’s turning empty flats into income streams, and casual landlords into passive investors.

imageUnder this arrangement, you can lease your house to such a company or operator, which will furnish it, and list it on portals for short-term subletting and pay you a fee.

The Upside: The operator will handle the furniture, the WiFi, the listings, guests, presentation of the property, photographs, the reviews, and the plumbing and lights, too.

Rental arbitrage comes with full monthly rent, or the amount agreed upon by the owner and the operator, but you need to vet the operator carefully. The model offers peace of mind and predictable cash flow.

imageWhat's The Downside?

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