Airbnb rental arbitrage is the act of renting a property longterm and then rerenting it shortterm on vacation rental sites like Airbnb or Vrbo. Arbitrage funds has less risk and returns are also less .Rental arbitrage is similar to subletting as it involves renting out a property that you are leasing from the property owner. Yes, rental arbitrage is legal in California! Rental arbitrage is you as the investor rents a home and becomes the tenant. Loose Definition of Arbitrage: A trading strategy that earns something from nothing, no matter how the market evolves in the future.