My sublease arbitrage math looked right until I actually read the master lease

That $200-300 net on a good month is doing a lot of work in this math because it assumes cleaning and restocking costs behave, and they almost never do in Phoenix summer when turnover is brutal and your cleaner has twelve other hosts competing for the same two-hour window.

The lease clause thing is real but the landlord timing question is the one I'd want answered before anything else. Is that building already on Airbnb with other units listed?

The lender's framing is sharper than it might sound. What he is describing is counterparty risk embedded in the cost structure, and you have already done the work of finding it in section 14.

Your $200 to $300 net is thin before you price that risk in. The assumption doing the most work in your model is lease continuity. At 68 percent occupancy and $110 ADR, you have almost no buffer for a lease termination event. One lease cancellation, one municipal enforcement action, one landlord who finally reads section 14, and you exit with nothing except back rent owed and possibly a damages claim. No equity, no depreciation basis, no asset to refinance. You identified this yourself, and the Albuquerque situation is the right frame. The parallel holds.

What your math does not capture is the probability-weighted cost of that termination. If there is a 20 percent chance the lease collapses in month six, your expected net is not $2,500 for the year, it is something considerably worse once you factor in moving costs, lost deposits, and transition vacancy.

The risk you did not name: some markets have ordinances that hold the operator, meaning you, liable for violations even when the landlord is also in breach. Phoenix has had shifting STR rules at the city and HOA level. Confirm your specific municipality's current enforcement posture with someone licensed to advise on it, because that exposure does not disappear just because the landlord stays quiet.

Co-hosting solves the lease problem entirely. You run the operational side, the owner holds the asset and the compliance obligation, and your margin is 10 to 25 percent of revenue without monthly rent as a fixed liability. At your Phoenix condo's performance level you already have the operational credibility to pitch that model.

What does your current Phoenix condo net on a per-night basis after all costs, and have you modeled what co-hosting three comparable units would produce against your arbitrage projection?

The sublease clause is the right place to have stopped, and the question worth sitting with now is whether the deal works at all if you negotiate transparency into the lease from the start, meaning the landlord signs an addendum that explicitly permits platform subletting and short-term occupancy. Some landlords in high-turnover markets near airports will do it in exchange for a small premium over market rent, say $150 to $200 a month, because it trades their enforcement headache for guaranteed income and a tenant who actually has skin in the relationship. That eats into your $200 to $300 net but it also converts your occupancy risk from a lease-termination risk into a revenue risk, which is a meaningfully different problem to manage.

The number doing the most work in your model is that 68 percent occupancy figure, and Phoenix airport-adjacent seasonality will put real pressure on it in summer. I would want to see what the trailing 12-month occupancy looks like for comparable listings on AirDNA or a similar data pull before treating that as a floor rather than a ceiling. What is your source for the 68 percent assumption?