Most bad arbitrage deals aren't bad because of the rent - they're bad because of a clause nobody read carefully until it was already a problem. A lease is where the real terms of your deal live, not the verbal conversation you had with the landlord. Here's what to check line by line before you sign.
1. The subletting and assignment clause
This is the single most important clause in the document. Read the exact language - not just whether subletting is allowed, but under what conditions: does it require written landlord consent for each sublease, a flat prohibition with narrow exceptions, or silence (which in many jurisdictions defaults to restrictive)? If the lease is ambiguous, get an explicit written addendum rather than assuming a favorable interpretation.
2. Use restrictions
Separate from subletting, many leases restrict how the unit can be used - residential-purposes-only clauses, restrictions on business use, or specific language about occupancy limits. Short-term rental use can conflict with these clauses even when subletting itself isn't explicitly banned, so read the use clause independently.
3. Insurance and liability requirements
Check what insurance the lease requires you to carry, and what liability it assigns to you versus the landlord. If the lease doesn't address short-term-rental-specific liability at all, that's a gap to close with an addendum - not a reason to assume you're covered by default.
4. Early termination and break clauses
Understand exactly what it costs to exit the lease early if the arbitrage deal doesn't work out - a fixed penalty, forfeiting the security deposit, or liability for the remaining lease term. This directly affects your downside risk, and should factor into how much you're willing to spend upfront on furnishing.
5. Renewal terms and rent escalation
Check how renewal works: does the lease auto-renew, require advance notice to renew or terminate, and does rent increase on renewal - by how much, and under what formula? A deal that pencils out in year one can stop working in year two if the rent escalation clause is aggressive and you didn't budget for it.
6. Joint-and-several liability and co-signer terms
If you're leasing with a business entity or partner, understand exactly who is personally liable for what. Some leases require a personal guarantee regardless of the entity structure on paper - know this before you sign, not after something goes wrong.
7. Maintenance and repair responsibility
Clarify who's responsible for what repairs and within what timeframe. As the operator dealing directly with guests, slow landlord response to maintenance issues becomes your problem in a way it wouldn't be for a standard long-term tenant, since it directly affects guest experience and reviews.
The takeaway
None of these clauses are deal-breakers on their own - they're negotiation points. The mistake is not reading them closely enough to negotiate at all, and finding out the hard way three months in. Read the lease like the actual contract governing your business, because it is one.
AirLoom screens the property and market side of the deal - live rent, real demand comps, and compliance signals - so the lease is the one thing left for you to read carefully yourself.