Signing the lease is the most expensive decision in rental arbitrage, and it is the one most first-timers make before checking the things that decide whether the model works at all.
Rental arbitrage means renting a property on a long-term lease and, with permission, letting it out to short-term guests on platforms like Airbnb. You owe the rent every month whether or not the bookings arrive. That is why the paperwork and the maths come before the furniture, the photos or the listing.
Get the landlord's consent in writing
Many standard leases forbid subletting or restrict the property to private residential use, and letting to paying guests can breach either. Ask for a lease clause or a signed addendum that specifically permits short-term letting. A verbal “it should be fine” is not protection when a guest complaint or a neighbour's dispute reaches the landlord six months later.
Check the building and the rules around it
Landlords do not always know what their own building allows. If the unit is in a sectional-title complex or an estate, the body corporate or HOA conduct rules may limit or ban short-term letting, require guests to be registered, or restrict access and parking. Also ask about any municipal requirements that apply to the property, and check whether your insurance and the landlord's cover paying guests, because a standard home policy may not.
Six questions to ask before you sign
- Does the lease clearly allow short-term letting?Get it in writing, in the lease or a signed addendum.
- Do the building rules allow it?Ask for the body corporate or HOA rules, and whether there is a registration process or an extra levy.
- Can I install a smart lock or key safe?Self check-in matters for guests, but many buildings and landlords need to approve any change to doors or access.
- Who pays for what?Clarify levies, utilities, repairs and internet installation before you commit.
- What are the lease length and the exit terms?Check the notice period and any break clause, in case the numbers do not work as planned.
- What deposit is required?Some landlords ask for a higher deposit for short-term use. Factor it into your upfront budget.
Run the numbers first
Your rent is fixed and your income is not. Before signing, estimate the likely nightly rate and occupancy by looking at comparable listings in the same building and neighbourhood. Then subtract rent, utilities, Wi-Fi, cleaning, platform fees and any management fee. Test a cautious scenario as well as the optimistic one. We walk through a worked example in our article on whether R10,000 a month is enough for rental arbitrage.
Remember the upfront cost too. Furnishing and setting up a one-bedroom Airbnb properly starts at around R63,500 with Luxenest, and you will also pay a deposit and the first month's rent before the first guest arrives.
Choose a unit that suits the model
Look for a secure, modern building with good access and parking, a layout that is easy to furnish, and steady guest demand nearby, from business travel to leisure. Areas such as Sandton and Rosebank are worth including in your comparison. A slightly higher rent in a stronger location often beats a cheaper unit that sits empty.
Tax and admin basics
Income from short-term letting is taxable, so keep clear records of income and expenses from day one and speak to a tax practitioner. This article is general information, not legal or tax advice. Have an attorney review your lease before you sign.
Not sure if a property works?
Send us the property, the rent and the building. We will assess the location, the likely rate and occupancy, and the running costs, so you know the numbers before you commit to a lease.
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