The Insider’s Playbook to Airbnb Rental Arbitrage in Las Vegas

Investment Without Ownership: What is Airbnb Rental Arbitrage?

Airbnb rental arbitrage is a way of investing in an Airbnb short-term rental business without owning or purchasing a property from which to operate your vacation rental. Instead, you rent a property and re-rent it on Airbnb. You pay the rent using the income from your Airbnb business and pocket the remaining profit.

Rental arbitrage is a low-risk Airbnb business strategy that allows you to start with a smaller capital and scale faster.

Exploring Las Vegas: A Destination for Travelers of All Stripes

Las Vegas is a popular tourist destination known worldwide. In fact, a quarter of Brits named Las Vegas one of the top 3 US cities they’d most like to visit.

In 2023, the desert oasis attracted 40.8 million visitors, a 5.2% increase from 2022. Even in 2020, at the height of the pandemic, the city received 19 million visitors.

Las Vegas attracts more than just guests looking to party or gamble. Nearly six million or 15% of visitors traveled to attend a convention in the city. The desert city offers enough attractions and activities to entertain many types of guests. Travelers fly in from all over the world just to catch an iconic Vegas show, whether it’s Cirque du Soleil, a classic Vegas magic show or an artist in residence like Celine Dion or Jennifer Lopez. There are tours of iconic movie shooting locations, vibe dining experiences and adventure activities like ziplining across buildings to racing in the desert. Las Vegas is also well known for attracting bachelor and bachelorette and wedding parties. Even budget-minded travelers can find plenty of free things to do, like the fountain show at the lake in front of the Bellagio, the active volcano at The Mirage or the Fremont Street Experience.

Market Insights: Airbnb Rental Arbitrage Potential in Las Vegas

According to AirDNA data for short-term rentals in Las Vegas in April 2024:

• Average Daily Rate (ADR) is $190.7

• Average annual revenue is $15,600

• Revenue per Available Rental is $94.5

Most short-term rental listings in Las Vegas are available for only up to 90 nights (81%) while only 7% of listings are available for longer than 9 months of the year. Sixty-nine percent of rentals are entire homes and 55% of listings are 1-bedroom rentals.

Strict (44%) and moderate (31.9%) cancellation policies are favored by short-term rentals in Las Vegas. Nearly half (48.7%) are long-term rentals of 30 or more nights.

Meanwhile the average rent (April 2024) is $1,258 per month, 17% lower than the national average and making Las Vegas more affordable than many U.S. cities. You can expect to pay around $970 per month for a studio, $1,258 for a one-bedroom apartment and about $1,518 for a two-bedroom apartment. Rent for a three-bedroom rental will cost you $1,822 or more.

Short-Term Rental Laws, Regulations and Taxes: Airbnb Rules in Las Vegas

The City of Las Vegas defines a short-term rental or vacation rental as the leasing of a residential dwelling unit for periods of 30 consecutive days or less.

All short-term rentals located in Las Vegas including Airbnbs are subject to a number of laws, regulations and taxes at the city, county and state levels.

All vacation rentals must be owner-occupied when being rented out, have not more than three bedrooms and be not less than 660ft from another short term rental. They must also meet all regulations on licensing, noise and parking. No waivers of conditions are allowed.

Short-term rentals in Vegas are prohibited in apartment buildings.

Zoning

Airbnb vacation rentals are allowed in most residential neighborhoods as long as they are not less than 660ft from another short-term rental. They are however prohibited in Summerlin (including Sun City Summerlin), Symphony Park, Town Center, Grand Canyon Village, Skye Canyon, Las Vegas Medical District, Cliff’s Edge and Providence Square.

Licensing

Short-term rentals in Las Vegas need a business license from the city to operate legally.

You submit for a Conditional Use Verification and Business License at the Planning Desk at Las Vegas City Hall or online. As part of the licensing process, a home inspection by a member of the Code Enforcement section will also have to be conducted. The inspector will verify the number of bedrooms, building permits for all changes/additions to the original structure and applicable building and fire safety codes. The license application also requires proof of liability insurance coverage of at least $500,000 and an affidavit attesting to compliance with all relevant regulations.

Each unit must be licensed individually if the short-term rental property has multiple dwelling units. Permits must be renewed annually.

If the Airbnb vacation rental is to be managed by a person who is not the licensee or principal of the licensee, they must have a valid license to manage property from the State of Nevada and the City.

Occupancy limits

Maximum occupancy is restricted to two people per bedroom, excluding children under the age of 12, or as established by the Uniform Housing Code.

Noise

Outside music or excessive noise that can be heard 50ft from the property line is a violation of the Las Vegas Municipal Code.

Parking

All Airbnb guests' vehicles must be parked in the driveway and can’t block neighboring properties’ driveways or community mailboxes.

Trash

Refuse can’t be left out or stored in public view except in trash collection containers for collection.

Guest registration

Short-term rental hosts in Las Vegas must register all guests who stay at their properties and continue to maintain the records. Guests must provide their name, place of residence and date and time of their stay.

HOA permission

If the vacation rental property is located in a gated subdivision or a controlled-access building that is governed by an owner’s association, you will also have to present a letter from the association acknowledging and granting permission to use the unit as a short-term rental as part of your license application.

Signage

All short-term rentals in Las Vegas are required to display a placard (8” x 11” at minimum) in plain view of the general public that lists maximum occupancy allowed and 24 hour contact info in legible font.

Other rules

• The city can suspend a permit or impose fines or - penalties if a short-term rental owner or manager violates the ordinance. Fines for a single violation against an individual renting out a property can’t be less than $1,000 or more than $10,000.

• Weddings, birthday parties, bachelor/bachelorette parties and other types of special events are not permitted to be held at short-term rentals in Las Vegas.

• The short-term rental operator must provide a local phone number that is contactable 24/7 and have a person respond to a complaint within two hours.

Taxes

The City of Las Vegas imposes a Transient Occupancy Tax of between 13% and 13.38%, depending on the location of the short-term rental. Airbnb collects and submits the tax on behalf of its hosts.

Closing Insights: The Prospects of Airbnb Rental Arbitrage in Las Vegas

In Las Vegas, the burgeoning potential of Airbnb revenue and more affordable rents allows rental arbitrage to be an appealing investment route for those interested without the hefty initial investment of property ownership. With its vibrant tourist influx and diverse attractions, Las Vegas promises substantial visitor numbers and a diversity of tourist demographics, from business and luxury travelers to concert and sports tourism. Success in the Airbnb rental arbitrage market in Las Vegas demands a strategic approach that includes navigating the landscape of local regulations.