A new kid on the block, the Rent2Rent strategy is good for cashflow, and is fairly quick and easy to set up. It’s great for beginner investors or established investors who want to quickly increase their cashflow.
The basic concept of the Rent2Rent strategy, or Rent to Multi-let, is to find a property large enough to have a minimum of five habitable rooms. Speak to the landlord and agree on a guaranteed rent for a three to five year period. It is as simple as that.
When you own a property, one of the main problems you might have is the void periods. Getting the right tenants can be very challenging, especially if you manage the property yourself. The Rent2Rent strategy is very attractive to owners/landlords because it ensures a guaranteed rent for 3-5 years, with no voids and no maintenance.
After you take possession of a house previously rented on a single-let strategy, you can multi-let the property. Renting out the rooms as bed-sits can massively increase the rental income. Basically, you pay a fixed amount to the landlord for a single-let property then rent out the individual rooms as a HMO (House in Multiple Occupancy). Your profit is the difference between the rent you pay and the rent you receive!
The Rent2Rent is an incredibly profitable strategy that could guarantee you from £500 to £1500 profit pcm, per property.
Transparency is very important when you talk to the owner of the property. Rent2Rent is a strategy totally different from sub-letting, but sometimes you need to explain it to the landlord.
Take the property on a management agreement and guarantee the rent to the landlord. Then rent it out by the room and enter into separate agreements with each of the tenants, taking care of the management as well.
A commercial lease could also be a great solution if you want to take the property for 4 or 5 years and issue your own separate AST contracts.
There are many ways you can get a property, but it is extremely important that you know what you are doing and which kind of agreement you use. A specialist, such as a solicitor, can always help you and advise you as to the best strategy. Always perform careful and thorough research before you take any action and make sure to consult the right experts.
All that glitters is NOT gold!
Multi-let requires many responsibilities and duties. A property manager needs to maintain the property in good condition at all times and to look after it. At the end of the agreement period, he will have to give the property back to the owner in the same condition that he took it.
In some particular areas, you need to look at the local council regulations and sometimes you might need to spend some money on fire doors/alarms.
When you rent out by the room, you generally have to pay the bills such as gas electricity and water. If you really want to maximise your profit, you need to take care of your tenants and provide them with the best service. Don’t forget a fast broadband service! We can secure you up to a 25% discount on your utilities.
Our first R2R property was a large house we got in Reading, some 6 years or so ago. It had previously been used to house hotel staff, so it was easily converted into a 6 bed HMO. Net profit was £2500 pcm. We did need to install another shower area and put a bigger water tank in the loft. (And that required strengthening the loft floor joists!)
This is a quick and easy way into the property market. Please Contact Us for more information.