The rent to rent model is very popular strategy investors are now using , it is a simple concept but very successful and profitable if done correctly , below is a little breakdown of what rent to rent is

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1.Company rents property from landlord for a term usually of 3-5 years

2.You pay the owner or letting agent a fixed guaranteed rent and you take on all bills

3.You rent the property to tenants for a higher rent you are paying the owner

4.The difference between the rent you receive from tenants and the rent you pay the owner is the profit

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Their are 2 main strategies that investors are now using in Rent to Rent and both have their benefits  

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1. HMO (House multiple occupation)

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The HMO Method is one of the most effective ways to do rent to rent , This is where you will rent out each bedroom in a property individually , This is commonly known as a Student house share where each person has their own bedroom but share bathroom and kitchen , in some cases some bedrooms will have ensuites.

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You will rent each bedroom for a fixed monthly rate , total income from all tenants should be higher than the rent you need to pay owner ,  difference from the rent you receive from tenants and rent you need to pay landlord and bills covered will be your profit 

Example

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5 bedroom house

Rent to landlord £1500 

Rent each bedroom at £500 pcm to student   x5 £2500

Bills £100 a room 

Total income £2500 minus rent £1500 + bills =£500 profit for investor 

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2.Serviced Accommodation

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Serviced accommodation focuses purely on the nightly rentals of the whole property rather than splitting the property into individual rooms , investors will use portals such as airbnb , booking.com to achieve a nightly rate totalling higher than the rent thus making their profit 

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Please bear in mind although the total income can be higher there is more outgoing also , booking fees, cleaners , etc 

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If you are an investor would like to know more about getting started in rent to rent please do not hesitate in contacting us 

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Lettings@brown-sharp.co.uk

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