[mbesto]

It's absolutely part of the investment structure. It's no different from buying a house that you would rent out for yield. If your yield outpaces the costs (maintenance, taxes, utilities, AND the mortgage rate) then you are basically have an arbitrage. This is no different from what PE does and is why they typically leverage ~50% of the acquisition price.

[clairity]

to nitpick, neither yield outpacing costs nor PE is arbitrage. arbitrage is structurally zero-risk, while those other cases have relatively small but non-zero risk, since yield, costs, interest rates, regulations, etc. can change over the lifetime of the deal. arbitrage generally happens due to a mispricing and an opportunity to buy and sell at (approximately) the same time.

[mbesto]

Fair point.