Arbitrage

When people hear the word arbitrage, they think high level traders on wall street using powerful technology etc.

There are other forms of arbitrage available to the rest of us as well.

An example of sales arbitrage might be a company that is looking for a sales team but wants to pay a high commission and no salary. You might know some great salespeople who will accept a much lower commission but want a small salary. If you are confident with their ability to sell this particular product and are confident that the commission margin between what they will accept and what you can make is large enough then you could hire the salespeople and contract them out to the company and keep the difference in compensation.

Another, more common example, might be real estate. If you know someone who really wants a house but can’t afford the down payment or can’t get a mortgage but can pay a high enough rent (for a long enough period of time) to make it worthwhile, you could purchase the house and let the tenant cover all of your expenses PLUS profit and have them pay for the house, for you,

Both of these would be examples of different types of arbitrage. Is there a way you can use arbitrage within your industry (it’s best when it results in three sides all benefiting such as the seller of the house makes the sale, the renter gets to live where they want and you get the profit)?

Have a great day!

Lawrence

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