HOW TO FIND RENT TO RENT DEALS & OPPORTUNITIES
David Barr
January 21st, 2021
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Whether you’re a landlord interested in getting a tenant on a rent to rent basis or the opposite, a tenant looking to find the perfect landlord and property, finding the best deal is essential to maximise profits.
Rent to rent is an often misunderstood subject, so we’re going to dive right into finding out exactly what a rent to rent is, why anybody would want to do it and how to find the best deals, all from both a tenants and landlords perspective.
We touched on this a few weeks ago with our guide on exactly what Rent To Rent is, but to quickly summarise Rent to Rent is basically when as a landlord you rent the property out to a tenant on a single let basis, but they then, legally, sublet the rooms of the property out, essentially becoming a landlord themselves.
The owner of the property lets the property to a single tenant, on a fixed fee basis. The tenant could live in the property themselves, or they could rent out each of the rooms to individual people for a set figure and turn a profit overall.
Before understanding exactly how to find a good rent to rent deal, why would anyone want to do it? There are two perspectives that you have to consider when looking into why, one from the landlord’s point of view, and the other from the tenants perspective.
From the Landlords Perspective
This type of let won’t work for every landlord, but there are a couple of situations in which as a property owner, you might find it useful. Here are just a few of those circumstances:
Longer-term security
If you are looking at getting a tenant on a rent to rent basis then you will typically look to have a much longer rental term, usually between 5-10 years. This will alleviate any worry of having to find tenants every few years, and will significantly reduce the amount of time that your property would be left unoccupied in between tenants.
If you’re fed up being a landlord
Rent to rent situations attends to attract property professionals, who aren’t your standard tenants. This means that as the property owner, you don’t have to be a hands-on landlord, your tenant essentially takes up those duties. Being a landlord can be time-consuming, and one of the off-putting parts of renting out the property, and with rent to rent, you’ll mostly have this aspect taken away.
You can forgo responsibility for repairs
This depends on what you set out in your rent to rent contract with the tenant, but it’s not uncommon for the property owner to put the responsibility of the maintenance and repairs on to the landlord. This obviously means that you’ll have less unexpected outgoing when there are issues for the property, and allows you to be a truly hands-off landlord.
From the Tenants Perspective
There are benefits from a tenants point of view too, it can work for both parties. Here are just a couple of reasons you might want to consider a rent to rent option:
Lower than market-rate rent
As you’re often agreeing a much longer rental agreement period between the 5 to 10-year mark, you can often negotiate to have a figure that is lower than the market rate for the rent to help maximise your profits. The property owner is likely to allow for a small discount in return for the convenience as well.
Profit
Well, this goes without saying. As long as you work out the numbers correctly and in your favour, you’re going to turn a profit. Your aim here is to rent the property off the landlord at a low rate, then you split the rooms, like an HMO (house of multiple occupation) and rent them out individually with the objective of achieving a higher overall rental figure. You’ll often have to account for paying maintenance and repairs for the property over time.
Letting without owning the property
The major advantage to rent to rent is that you’re essentially becoming a landlord, and hopefully getting a decent and consistent profit, without actually having to put the money down for a Buy To Let mortgage, or buying the property outright. You also take no risks, you don’t own the property so you don’t have to be concerned with the housing market and whether the house price will increase or decline.
Interested? We don’t blame you, it can offer a great solution for landlord and tenants alike! The question, and the main reason that you’re here is, how do you find the best rent to rent deals and opportunities? Again. We’ll take a look from both perspectives.
From the Landlords Perspective
If you’re looking to specifically buy properties that are going to appeal to rent to rent tenants then there are a few things that you should look out for. You can increase your chances by choosing an area which has a busy rental market, near a university or if the property you are buying is already set up or has the potential of being converted to an HMO.
From the Tenants Perspective
As a tenant, there’s a bit more too it. You don’t tend to just find rent to rent deals at your local estate agent, they’re a bit more specialised than that and you have to search in the right places. Most standard rent to rent opportunities just look like your run of the mill, vanilla lets.
To get the best deal, you need to find property owners who are motivated or distressed and are looking for a quick solution to their issues. A great place for this can be landlord conventions, or events particularly targeted at landlords.
You’re objective is to find owners who are either fed up with being a landlord or are distressed. What we mean by that, is they need, financially, to rent out the property but might not be able to manage it themselves. This could be property owners in a variety of situations like ones who want to get rid of the property but have a mortgage and can’t sell in negative equity, they might be moving for work reasons and can’t manage tenants long distance, or they may have retired and like the idea of a consistent income.
Once you’ve found that perfect owner, you’ve got to ensure the numbers work. Don’t just look at what the landlords are asking for, think about what you can afford, you don’t want to overexert yourself and cut into your profits before you get started.
You’ll have to do your research and find out exactly what you can rent each room out for, and what profit margin you can expect, remember to include repair and maintenance fees! The main thing is knowing when to walk away, you should know exactly what rental figure can work for you, stick to it and don’t wipe out any of your profits.
Are you a landlord looking for a property suitable for a long term rent to rent type deal? That’s something we can help you with, and get you going on the right, and profitable foot. We offer below market value on deals on loads of properties across the country that would be suitable for rent to rent, including several HMOs, so if you’re interested, get in touch.
Start your property portfolio today!
Whether you’re a landlord interested in getting a tenant on a rent to rent basis or the opposite, a tenant looking to find the perfect landlord and property, finding the best deal is essential to maximise profits.
Rent to rent is an often misunderstood subject, so we’re going to dive right into finding out exactly what a rent to rent is, why anybody would want to do it and how to find the best deals, all from both a tenants and landlords perspective.
We touched on this a few weeks ago with our guide on exactly what Rent To Rent is, but to quickly summarise Rent to Rent is basically when as a landlord you rent the property out to a tenant on a single let basis, but they then, legally, sublet the rooms of the property out, essentially becoming a landlord themselves.
The owner of the property lets the property to a single tenant, on a fixed fee basis. The tenant could live in the property themselves, or they could rent out each of the rooms to individual people for a set figure and turn a profit overall.
Before understanding exactly how to find a good rent to rent deal, why would anyone want to do it? There are two perspectives that you have to consider when looking into why, one from the landlord’s point of view, and the other from the tenants perspective.
From the Landlords Perspective
This type of let won’t work for every landlord, but there are a couple of situations in which as a property owner, you might find it useful. Here are just a few of those circumstances:
Longer-term security
If you are looking at getting a tenant on a rent to rent basis then you will typically look to have a much longer rental term, usually between 5-10 years. This will alleviate any worry of having to find tenants every few years, and will significantly reduce the amount of time that your property would be left unoccupied in between tenants.
If you’re fed up being a landlord
Rent to rent situations attends to attract property professionals, who aren’t your standard tenants. This means that as the property owner, you don’t have to be a hands-on landlord, your tenant essentially takes up those duties. Being a landlord can be time-consuming, and one of the off-putting parts of renting out the property, and with rent to rent, you’ll mostly have this aspect taken away.
You can forgo responsibility for repairs
This depends on what you set out in your rent to rent contract with the tenant, but it’s not uncommon for the property owner to put the responsibility of the maintenance and repairs on to the landlord. This obviously means that you’ll have less unexpected outgoing when there are issues for the property, and allows you to be a truly hands-off landlord.
From the Tenants Perspective
There are benefits from a tenants point of view too, it can work for both parties. Here are just a couple of reasons you might want to consider a rent to rent option:
Lower than market-rate rent
As you’re often agreeing a much longer rental agreement period between the 5 to 10-year mark, you can often negotiate to have a figure that is lower than the market rate for the rent to help maximise your profits. The property owner is likely to allow for a small discount in return for the convenience as well.
Profit
Well, this goes without saying. As long as you work out the numbers correctly and in your favour, you’re going to turn a profit. Your aim here is to rent the property off the landlord at a low rate, then you split the rooms, like an HMO (house of multiple occupation) and rent them out individually with the objective of achieving a higher overall rental figure. You’ll often have to account for paying maintenance and repairs for the property over time.
Letting without owning the property
The major advantage to rent to rent is that you’re essentially becoming a landlord, and hopefully getting a decent and consistent profit, without actually having to put the money down for a Buy To Let mortgage, or buying the property outright. You also take no risks, you don’t own the property so you don’t have to be concerned with the housing market and whether the house price will increase or decline.
Interested? We don’t blame you, it can offer a great solution for landlord and tenants alike! The question, and the main reason that you’re here is, how do you find the best rent to rent deals and opportunities? Again. We’ll take a look from both perspectives.
From the Landlords Perspective
If you’re looking to specifically buy properties that are going to appeal to rent to rent tenants then there are a few things that you should look out for. You can increase your chances by choosing an area which has a busy rental market, near a university or if the property you are buying is already set up or has the potential of being converted to an HMO.
From the Tenants Perspective
As a tenant, there’s a bit more too it. You don’t tend to just find rent to rent deals at your local estate agent, they’re a bit more specialised than that and you have to search in the right places. Most standard rent to rent opportunities just look like your run of the mill, vanilla lets.
To get the best deal, you need to find property owners who are motivated or distressed and are looking for a quick solution to their issues. A great place for this can be landlord conventions, or events particularly targeted at landlords.
You’re objective is to find owners who are either fed up with being a landlord or are distressed. What we mean by that, is they need, financially, to rent out the property but might not be able to manage it themselves. This could be property owners in a variety of situations like ones who want to get rid of the property but have a mortgage and can’t sell in negative equity, they might be moving for work reasons and can’t manage tenants long distance, or they may have retired and like the idea of a consistent income.
Once you’ve found that perfect owner, you’ve got to ensure the numbers work. Don’t just look at what the landlords are asking for, think about what you can afford, you don’t want to overexert yourself and cut into your profits before you get started.
You’ll have to do your research and find out exactly what you can rent each room out for, and what profit margin you can expect, remember to include repair and maintenance fees! The main thing is knowing when to walk away, you should know exactly what rental figure can work for you, stick to it and don’t wipe out any of your profits.
Are you a landlord looking for a property suitable for a long term rent to rent type deal? That’s something we can help you with, and get you going on the right, and profitable foot. We offer below market value on deals on loads of properties across the country that would be suitable for rent to rent, including several HMOs, so if you’re interested, get in touch.
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