In my latest video, I took a tour of a rent to HMO and talked to the landlord about why it is such a win-win relationship. In many cases, landlords that are open to doing a rent to rent deal are accidental landlords or those looking to retire. However, they are not the only people open to these types of offers. In this case, the landlord buys and refurbishes properties ready to be used as HMOs and wants to focus his energy on expansion rather than managing tenants or a letting agent.
Often when people think about the rent to rent business they think about what is in it for the property entrepreneur, but the fact is it is just as good a deal for the landlord. It allows the landlord to be passive and focus on other things, whether that be having a relaxing retirement or expanding their property empire. In this article, I will give you 3 reasons why landlords should consider a rent to rent deal.
1. No Voids
One of the best things about a rent to rent deal is that you have a long term agreement whereby you will receive regular rent payments whether there is anyone in the property or not. This allows you to plan with certainty and not have to worry about having less money on a particular month.
Of course, it is important to choose someone to take on your property that you can trust to pay. It is also important to have a contract in place. Before signing an agreement, it may be worth seeking independent legal advice to ensure you know what you are signing. Be sure to understand when and on what basis the contract can come to an end.
2. No Managing The Agent
Another amazing thing about doing a rent to rent deal is that you won’t have to manage the letting agent again. It is up to the property entrepreneur to ensure the property is rented out. If they don’t, they lose out, not you. Normally the rent to renter will also handle maintenance as well, and you will not have to hear about tenants' problems again!
With regard to maintenance, it is likely that there will be a limit that the property entrepreneur will cover. This should be clearly spelled out in the contract you sign with them. Make sure you understand what they will pay for and what you will need to pay for. This is normally open to negotiation, so speak to them if you are unhappy with the deal they are offering you.
3. Grow Your Portfolio Without Limits
At a certain point, it becomes a full-time job managing a large portfolio of residential real estate. Even with a specialist HMO manager in place, there is still a need to manage the manager. At some point some investors move on to the lower ROI commercial property deals, as it is a lot more hands off.
If you do rent-to-rent deals, you can keep expanding your residential portfolio indefinitely. As long as you work with someone who is trustworthy and well trained, you will be able to be totally hands off for the most part. You will then be able to focus on building your portfolio or just sitting back and enjoying the passive income!