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Rental arbitrage

What is rental arbitrage and how does this fit into our business model?
Firstly, rental arbitrage is one of the most important concepts to understand with the Globees model. It’s the process of contracting someone else’s property for the purpose of renting it out, as opposed to purchasing multiple properties for the same purpose, a process that is not only costly, but very time intensive.
Here is an example that will highlight the key differences between what Globees will offer, compared to other competitors like AirBnB:
Let's say that you own a property in Marseille that was purchased for seasonal rentals, but that you live in Paris or elsewhere in Europe. You offer your rental property for 1000 Euros per week. The average annual occupancy rate of a property in a tourist city like Marseille, according to research is 62 - 72%.
  • So, over a 1-year period, you can expect an upper occupancy rate of roughly 67% or 34 to 35 weeks rental in that 12-month timeframe.
  • With this, AirBnB commissions are between 15 to 20%, but usually 19%.
  • The concierge fees that cover admin, bookings etc. are an additional 20%.
  • On top of this, as you live a fair distance from your rental property, you will likely outsource entry and property cleaning to another company, something that you will have to source yourself.
So, over the 34-week period at 1000 euros / week, you’ll receive 34k€ for 1 year. Now, deduct 19% commission and the 20% for concierge / service fees, you’ll receive around 20k€. (Before tax).
The Globees rental arbitrage model will offer an entirely different, more property owner centric model. We will offer the customer a cash payment of one year (12 months) rental revenue upon signing the contract with us. Generally speaking, this will be 10-15% under the market price (so roughly 18k will be offered), this will be so Globees can also finance the home staging of the property and create that unique Globees brand experience.
To be onboarded to the Globees charter, we will ask the owner for 1 additional month to carry out the necessary home staging, which will be outside the negotiated one-year contract, so that the full 52 weeks of rental is available.
Rental arbitrage and the Globees model will offer the following benefits:
  • The upper-level occupancy rate guarantees an income for property owners upon signing with Globees, where the AirBnB model is limited by marketing, reviews, quality of the service provided and how many weeks the property is actually booked for!
  • The signed contract with Globees will ensure that the customer service, booking, enquiries, cleaning and staging of arbitraged properties is all handled in house by us and consumers will have access to 24 hours a day, 7 days a week customer care service.
  • After the point of signing the contract with Globees, the owner of the property will not have to handle any of the above. A lot of property owners who use other services underestimate how time consuming managing a rental property can be.
  • Ultimately, Globees will offer a unique and eco-friendly experience every time you stay at one of our properties, whether it’s owned or arbitraged.