In: Blog

What is Rent to Rent?

Rent to is widely being used to create high cashfowing businesses with low capital startup costs.

If you are looking to create an monthly income fast, may be to replace the day job and have a property business that can be up and running with a limited start-up capital costs, then rent to rent is a strategy could be for you.

How does it work

Basically, you offer a Landlord a GUARANTEED rental (plus you can offer other bonuses like taking over the up keep and maintenance of the property or furnishing it to a high standard) – This may be a fed up Landlord who no longer wants the hassle of renting out the property, or someone who is just looking for an easier life, and currently there are hundreds and thousands of them across the UK.

Let’s work through an example: you find a 4-bed house and you are going to offer the landlord the market rent of £1000 per calendar month.

With their permission, you use the property to house groups of people, may be professionals working in the area on contract or even students, possibly 4 or even 5 sharers if you can turn a second reception room into a fifth bedroom.

You charge £500 pcm bills included so now your gross rent is £2,500 per month (when 5 rooms are being let) and the property is costing you £1000 pcm. Obviously, you do need to factor in the bills that you will be paying too which will be deducted from this gross rent, plus allow for some voids which is inevitable in any rental property project.

Our rule of thumb for estimating figures for room rental is that 2 rooms should cover your guaranteed rent, one room will cover the bills, therefore in this example you would have a profit of approximately £1000 per month when all the rooms are filled. Having 5 rooms gives you the flexibility of having one room empty every month and still giving you a £500 profit.

Your profit is the difference between the two LESS all costs.

Rent to Rent can be daunting if you don’t understand the legalities of this type of business so our advice would be get educated. Find an experienced trainer (there are plenty to choose from if you search Rent 2 Rent on Google – do your diligence on them, seeing what others say about their training on property groups and the internet). The training will give you everything you need including contracts to be used and ideally support in working out the figures on just how much this will cost you per deal.

As much as this might sound like a great strategy to invest in if you haven’t got the capital to buy property just yet, Rent to Rent is NOT a hands-free passive income model, but it does enable investors to build up sizeable property business that generates significant profits in a short space of time. You will be working hard to build a reputable Rent to Rent business, dealing with tenants and systematising as much as possible to make life as easy for yourself as you can. Do it right, with the right support from experts and you could change your life forever without needing that large pot of cash to invest in property.