Quick Answer: Rental Arbitrage Startup Costs
Total startup costs: $5,000-$15,000 for a 2-bedroom unit
Cost breakdown:
- First month’s rent: $1,500-$2,500
- Security deposit: $1,500-$2,500
- Furnishings: $4,500-$7,500
- Operating capital: $2,000-$3,000
- Permits/licenses: $50-$500
- Insurance: $100-$200 (first month)
- Photography: $200-$500
- Total: $9,850-$16,700 (varies by market and property)
This is 90% less than property ownership ($50,000-$150,000+ for down payment and closing costs).
This cost guide is part of our complete rental arbitrage guide. For related topics, see our rental arbitrage calculator and rental arbitrage vs. buying property.
Introduction
Understanding startup costs is essential before investing in your first rental arbitrage property. Accurate cost planning prevents budget overruns and ensures you have sufficient capital to launch successfully.
This comprehensive 2026 startup costs guide breaks down every expense category, from first month’s rent to furnishing, permits, insurance, and operating capital. You’ll learn exactly what to budget for, how to save money, and financing options available.
Key takeaway: According to 10XBNB’s 2026 Student Success Survey, operators who accurately budgeted startup costs had 34% higher success rates. The average startup cost is $10,000 for a 2-bedroom unit, with a range of $5,000-$15,000 depending on market and property.
Total Startup Cost Range
Typical 2-Bedroom Unit
Low-End Market:
- Total: $5,000-$8,000
- Lower rent, basic furnishings
- Minimal permits/licenses
- Cost-saving strategies
Mid-Range Market:
- Total: $8,000-$12,000
- Average rent, quality furnishings
- Standard permits/licenses
- Professional setup
High-End Market:
- Total: $12,000-$15,000
- Higher rent, premium furnishings
- Additional permits/licenses
- Luxury touches
Average:
- Total: $10,000 (based on 10XBNB data)
- Most operators fall in this range
- Balanced approach
- Professional setup
First Month’s Rent and Security Deposit
First Month’s Rent
Typical Range:
- 1-bedroom: $1,200-$1,800/month
- 2-bedroom: $1,500-$2,500/month
- 3-bedroom: $2,000-$3,500/month
Factors Affecting Rent:
- Market location
- Property size and condition
- Neighborhood desirability
- Amenities and features
- Negotiation
Payment Timing:
- Due at lease signing
- Typically first month’s rent upfront
- Some landlords require prorated rent if mid-month
Security Deposit
Typical Range:
- Equal to 1 month’s rent
- Sometimes 1.5-2 months for higher-risk tenants
- Refundable at lease end (if no damage)
Typical Amounts:
- 1-bedroom: $1,200-$1,800
- 2-bedroom: $1,500-$2,500
- 3-bedroom: $2,000-$3,500
Security Deposit Tips:
- Document property condition at move-in
- Take photos/videos
- Get written condition report
- Maintain property to avoid deductions
Total (Rent + Deposit):
- 2-bedroom: $3,000-$5,000 (first month + security deposit)
Furnishing Costs (Detailed Breakdown)
Total Furnishing Budget
2-Bedroom Unit: $4,500-$7,500
This is the largest startup cost category. Professional staging increases ADR by 12-18% and bookings by 34%, making it a worthwhile investment.
Bedroom Furnishings (Master + Guest)
Mattresses (Quality):
- Queen mattress: $400-$600 each
- King mattress: $500-$800 each
- Total (2 bedrooms): $800-$1,200
Why quality matters: Guests prioritize sleep. Quality mattresses lead to better reviews and repeat bookings.
Bed Frames:
- Queen bed frame: $200-$300 each
- King bed frame: $250-$400 each
- Total (2 bedrooms): $400-$600
Dressers/Nightstands:
- Dresser: $150-$250 each
- Nightstand: $50-$100 each
- Total (2 bedrooms): $300-$500
Linens (Professional-Grade):
- Sheet sets (hotel-quality): $50-$100 each
- Comforters/duvets: $80-$150 each
- Pillows: $20-$40 each
- Total (2 bedrooms): $200-$300
Bedroom Total: $1,700-$2,600
Living Room Furnishings
Sofa (Durable, Neutral):
- Sectional: $800-$1,200
- Standard sofa: $600-$1,000
- Typical: $600-$1,000
Coffee Table:
- $150-$250
TV Stand/Entertainment Center:
- $200-$300
Accent Chairs:
- $200-$400 (1-2 chairs)
Decor and Artwork:
- Wall art: $100-$200
- Decorative items: $100-$150
- Total: $200-$300
Living Room Total: $1,350-$2,250
Kitchen Furnishings
Cookware Set:
- Basic set: $100-$150
- Quality set: $150-$250
- Typical: $150-$250
Dishes and Glassware:
- Dinnerware set (8-12 settings): $80-$120
- Glassware: $40-$60
- Total: $100-$150
Small Appliances:
- Coffee maker: $50-$100
- Toaster: $30-$50
- Microwave: $80-$150
- Total: $200-$300
Utensils and Tools:
- Cutlery: $30-$50
- Cooking utensils: $30-$50
- Total: $50-$100
Kitchen Total: $500-$800
Bathroom Furnishings
Towels (Professional-Grade):
- Bath towels (8-12): $60-$100
- Hand towels: $20-$30
- Washcloths: $20-$30
- Total: $100-$150
Shower Curtain and Accessories:
- Shower curtain: $30-$50
- Rod and rings: $20-$30
- Bath mat: $20-$30
- Total: $50-$100
Storage Solutions:
- Over-toilet storage: $30-$50
- Under-sink organizer: $20-$30
- Total: $50-$100
Bathroom Total: $200-$350
Electronics
Smart TV:
- 43-50 inch: $250-$400
- 55+ inch: $400-$600
- Typical: $300-$500
Wi-Fi Router:
- Basic: $50-$80
- High-speed: $80-$150
- Typical: $50-$100
Charging Stations:
- USB charging stations: $30-$50
- Phone chargers: $20-$30
- Total: $50-$100
Electronics Total: $400-$700
Miscellaneous Furnishings
Lighting:
- Table lamps: $50-$80 each (2-3)
- Floor lamps: $60-$100 each (1-2)
- Total: $200-$300
Storage Solutions:
- Closet organizers: $50-$100
- Storage bins: $50-$100
- Shelving: $50-$100
- Total: $150-$250
Cleaning Supplies (Initial):
- Vacuum cleaner: $80-$150
- Cleaning products: $30-$50
- Total: $100-$150
Miscellaneous Total: $450-$700
Furnishing Cost Summary
Total Furnishing Costs: $4,500-$7,500
Breakdown:
- Bedrooms: $1,700-$2,600
- Living room: $1,350-$2,250
- Kitchen: $500-$800
- Bathroom: $200-$350
- Electronics: $400-$700
- Miscellaneous: $450-$700
Cost-Saving Tips:
- Buy furniture in bulk (multiple properties)
- Shop sales and clearance
- Consider used furniture (if in good condition)
- Focus on essentials first, add luxury later
- Negotiate with furniture stores
Electronics and Appliances
Essential Electronics
Smart TV:
- Cost: $300-$500
- Essential for guest satisfaction
- 43-50 inch recommended
- Smart features (streaming apps)
Wi-Fi Router:
- Cost: $50-$100
- High-speed internet essential
- Reliable connection critical
- Consider mesh systems for larger units
Charging Stations:
- Cost: $50-$100
- USB charging ports
- Phone chargers
- Guest convenience
Kitchen Appliances
Most properties come with:
- Refrigerator (included)
- Stove/oven (included)
- Dishwasher (if applicable)
You may need to provide:
- Microwave: $80-$150
- Coffee maker: $50-$100
- Toaster: $30-$50
- Blender: $30-$50
Total Appliances: $200-$300
Linens, Towels, and Housewares
Linens
Professional-Grade Linens:
- Sheet sets (hotel-quality): $50-$100 each
- Comforters/duvets: $80-$150 each
- Pillows: $20-$40 each
- Total per bedroom: $150-$290
- Total (2 bedrooms): $300-$580
Why professional-grade:
- Better guest experience
- Higher review scores
- Longer-lasting
- Professional appearance
Towels
Professional-Grade Towels:
- Bath towels (8-12): $60-$100
- Hand towels: $20-$30
- Washcloths: $20-$30
- Total: $100-$150
Housewares
Kitchen Housewares:
- Dishes and glassware: $100-$150
- Cookware: $150-$250
- Utensils: $50-$100
- Total: $300-$500
Bathroom Housewares:
- Shower curtain and accessories: $50-$100
- Storage solutions: $50-$100
- Total: $100-$200
Total Housewares: $400-$700
Photography and Listing Setup
Professional Photography
Cost: $200-$500
Why professional photography matters:
- 40% more bookings
- Higher ADR (better photos = premium pricing)
- Faster time to first booking
- Higher review scores
What’s included:
- 20-30 high-quality photos
- Wide-angle shots
- Exterior photos (if applicable)
- Edited and optimized images
Photography Tips:
- Hire professional photographer
- Stage property before photos
- Use natural lighting
- Show all rooms and features
- Highlight unique selling points
Listing Setup
Platform Fees (Initial):
- Airbnb: Free to list
- Vrbo: Free to list
- Booking.com: Free to list
Listing Optimization:
- Professional descriptions
- Keyword optimization
- Pricing strategy
- Calendar setup
- House rules
Time Investment:
- 4-6 hours for initial setup
- Ongoing optimization
Permits, Licenses, and Registration
Short-Term Rental Registration
Cost: $50-$500+ annually
Requirements vary by city:
- Annual registration fees
- Property inspection requirements
- Safety code compliance
- Renewal process
Where to apply:
- City planning department
- Business license office
- STR registration office
Business License
Cost: $50-$200 annually
Requirements:
- General business registration
- Tax identification number
- Annual renewal
- Compliance with business codes
Where to apply:
- City business license office
- County business license office
- State business registration
Tax Registration
Cost: Free (registration only)
Requirements:
- Sales tax collection
- Occupancy tax (lodging tax)
- Income tax reporting
- Quarterly/annual filings
Where to apply:
- State tax department
- City tax office
- County tax office
Total Permits/Licenses
Typical Range: $50-$500
Varies by:
- City regulations
- Permit requirements
- Business license fees
- Tax registration
Insurance Costs
Business Insurance
Cost: $100-$200/month
Coverage includes:
- General liability ($1M+ recommended)
- Property damage
- Business interruption
- Guest injury protection
Why business insurance:
- Protects your business
- Required by many landlords
- Covers guest incidents
- Professional protection
Property Insurance
Cost: Varies (if required)
Some landlords require:
- Additional property insurance
- Landlord as additional insured
- Specific coverage limits
Check with landlord:
- Insurance requirements
- Coverage limits
- Additional insured status
Total Insurance (First Month)
Typical: $100-$200
Ongoing: $100-$200/month
Operating Capital Reserve
Why Operating Capital Matters
Operating capital covers:
- First month’s expenses (before revenue)
- Unexpected costs
- Slow booking periods
- Emergency repairs
Recommended: $2,000-$3,000
Operating Capital Breakdown
First Month Expenses:
- Utilities: $150-$300
- Cleaning (if bookings occur): $200-$400
- Platform fees: $100-$200
- Maintenance: $100-$200
- Total: $550-$1,100
Emergency Reserve:
- Unexpected repairs: $500-$1,000
- Slow booking periods: $500-$1,000
- Total: $1,000-$2,000
Total Operating Capital: $2,000-$3,000
Hidden Costs to Budget For
Costs Often Overlooked
Application Fees:
- Rental application: $25-$50
- Background check: $25-$50
- Credit check: $10-$25
- Total: $60-$125
Moving Costs:
- Furniture delivery: $100-$300
- Moving supplies: $50-$100
- Total: $150-$400
Initial Setup:
- Key duplication: $20-$50
- Locks/security: $50-$150
- Utilities setup: $50-$100
- Total: $120-$300
Marketing:
- Professional photography: $200-$500
- Listing optimization: Time investment
- Total: $200-$500
Total Hidden Costs: $530-$1,325
Cost-Saving Strategies
Furnishing Savings
Buy in Bulk:
- Multiple properties
- Volume discounts
- Wholesale pricing
Shop Sales:
- Furniture sales
- Clearance items
- Seasonal discounts
Consider Used:
- Quality used furniture
- Estate sales
- Online marketplaces
- If in good condition
Focus on Essentials:
- Start with essentials
- Add luxury later
- Prioritize high-impact items
Permit/License Savings
Research Requirements:
- Verify what’s actually required
- Avoid unnecessary permits
- Bundle registrations
DIY Where Possible:
- Self-registration
- Online applications
- Avoid consultant fees
Operating Capital Savings
Start Conservative:
- Lower initial reserve
- Build as you go
- Monitor cash flow
Optimize Expenses:
- Negotiate utilities
- Find cost-effective cleaning
- Minimize platform fees
Financing Options
Personal Savings
Advantages:
- No interest
- No debt
- Full control
- Simple
Disadvantages:
- Requires capital
- Opportunity cost
- Risk exposure
Personal Loans
Advantages:
- Fast approval
- Flexible terms
- No collateral
Disadvantages:
- Interest payments
- Credit requirements
- Personal liability
Business Loans
Advantages:
- Business separation
- Potential tax benefits
- Professional financing
Disadvantages:
- Business credit required
- More complex
- Higher requirements
Credit Cards
Advantages:
- Fast access
- Rewards points
- Flexible payments
Disadvantages:
- High interest rates
- Personal liability
- Credit impact
Partner/Investor
Advantages:
- Shared capital
- Shared risk
- Additional expertise
Disadvantages:
- Shared profits
- Less control
- Partnership complexity
Complete Cost Breakdown Example
Example: 2-Bedroom Unit in Nashville, TN
First Month’s Rent:
- $1,900
Security Deposit:
- $1,900
Furnishings:
- Bedrooms: $2,200
- Living room: $1,800
- Kitchen: $650
- Bathroom: $275
- Electronics: $450
- Miscellaneous: $600
- Total: $5,975
Permits/Licenses:
- STR registration: $150
- Business license: $100
- Total: $250
Insurance (First Month):
- $150
Photography:
- $350
Operating Capital:
- $2,500
Hidden Costs:
- Application fees: $75
- Moving costs: $200
- Initial setup: $150
- Total: $425
Grand Total: $13,050
Frequently Asked Questions
How much does rental arbitrage cost to start?
Total startup costs range from $5,000-$15,000 for a 2-bedroom unit, with an average of $10,000. This includes first month’s rent, security deposit, furnishings, permits, insurance, photography, and operating capital. This is 90% less than property ownership ($50,000-$150,000+).
Can I start rental arbitrage with less than $5,000?
While possible in some markets, $5,000 is the minimum recommended. Lower budgets require cost-saving strategies, basic furnishings, and careful expense management. Most successful operators start with $8,000-$12,000 for professional setup.
What’s the biggest startup cost?
Furnishings are the largest startup cost ($4,500-$7,500 for 2-bedroom unit), followed by first month’s rent and security deposit ($3,000-$5,000 combined). Professional staging increases ADR by 12-18%, making it a worthwhile investment.
Do I need to pay for permits before starting?
Most cities require permits/licenses before operating. Costs range from $50-$500+ annually. Check with your city’s planning department or business license office to determine requirements and costs in your market.
Can I finance startup costs?
Yes, financing options include personal savings, personal loans, business loans, credit cards, and partners/investors. However, having sufficient capital reduces risk and increases success rates. According to 10XBNB data, operators who self-financed had higher success rates.
Conclusion
Understanding startup costs is essential for rental arbitrage success. The total investment of $5,000-$15,000 (average $10,000) is 90% less than property ownership, making rental arbitrage accessible to more entrepreneurs.
Key takeaways:
- Total startup costs: $5,000-$15,000 (average $10,000)
- Largest cost: Furnishings ($4,500-$7,500)
- Operating capital: $2,000-$3,000 recommended
- Hidden costs: $500-$1,300 often overlooked
- Cost-saving strategies available
- Financing options exist
Ready to start your rental arbitrage business? Join 10XBNB for cost planning tools, furnishing guides, and mentorship from successful operators.
Related Guides
- Complete Rental Arbitrage Guide – The ultimate guide to rental arbitrage
- Rental Arbitrage Calculator – Calculate profitability and ROI
- Rental Arbitrage vs. Buying Property – Cost comparison
- Rental Arbitrage Profitability – Profitability analysis
Last updated: January 22, 2026. Cost breakdown based on 2026 market data and proprietary research from 1,247 successful 10XBNB students.
