The property market right now is booming.
Property prices are incredibly high and sales take absolutely no time from being on the market to selling.
What this means is that it is especially hard for property investors to find property deals and invest using traditional strategies.
Which is why creative investing strategies like rent to rent are so hot right now.
Read on to find out why I think the rent to rent strategy is brilliant and why you should consider the rent to rent strategy for yourself.
Quite often one of the biggest restrictions in terms of people not getting started with property investment is the fact that they do not have large deposits saved, they don’t have cash reserves to pay huge stamp duty costs. They don’t have legal bills to cover the associated costs with traditional property investment methods.
The beauty of the rent to rent strategy, of course, is that we’re taking over the property from a property owner and we’re effectively running it better than they were running in the first place. What that means is there is very little start up capital needed to get started. Now, of course, there’s a varying level of refurbishment, depending on how much work you want to take on, depending on what the numbers in the deal allow you to do.
But the fact is, you have the choices. You do not have to pay a 10 percent, 20 percent, 30 percent deposit. You do not have to pay stamp duty loan terms. You do not have to pay legal bills. So all that capital that you do have as a reserve is going to be able to be invested straight into that property deal in order to get that cash flow generating as quickly as possible.
Because rent to rent is about taking over other people’s properties on a managing agent basis, it allows us to take on multiple properties in quick succession in order to get to our cash flow goal. Now, of course, depending on what level you are with your experience, you are either going to take one on, experience how it is to run a property on a rent to rent basis and then look to expand your portfolio.
Of course, if you already traditional property investment and/or rental experience, but you’re looking to scale that portfolio more quickly, then you might be able to take multiple properties on. At the same time, the beauty and the general overarching feel for the strategy is the flexibility that allows you to do what you feel comfortable with in order to achieve the numbers that you want to achieve within the time frame that you want.
But the beauty is you can have multiple properties relatively quickly to generate that cash flow that you’re looking to achieve. And of course, that is a huge benefit of the rent to rent strategy.
If you have got limited to no property management experience from an agency point of view, then obviously you’re likely to only take that first deal on, experience exactly how it runs and then start to scale from there. If you’ve got a little bit more experience in terms of being a tenant, managing tenancies, already having an existing buy to let property, maybe then you might be more prepared to scale your property business much more quickly.
Again, the fact is that it doesn’t matter whether you’ve got no experience or whether you’ve got a little bit experience or you’ve got extensive experience. The fact is that you are in control of how you grow. Your rents are in business. So the beauty of not needing that much experience is that you can just start with getting a feel for how to manage tenants, how to manage the process, how to deal with licencing, if that’s the model you choose.
The beauty is that it’s totally up to you. You are in control.
Generally with the rent to rent strategy, we’re looking for motivated landlords who are experiencing some form of headache, hassle or stress with their current rental properties. And we’re going to take that stress away. We’re going to give them a guaranteed rent payment per month, which takes away all the thought processes about their property.
And then we’re going to take on all of the work load. We’re going to uplift the rent and we’re going to keep the difference as our fee. But the fact that we are helping that property owner get rid of the stress, the headache, the hassle is a huge positive in terms of why we get into property investment, certainly in the rent to rent strategy.
It’s a win win for us as well, because ultimately we’re going to benefit from the uplift in the rental income. We’re going to be more motivated to make sure that that property is running properly, efficiently in order for us to benefit from the main cash flow that it’s going to generate. So we are effectively always looking for that win-win when it comes to the rent to rent strategy.
I love helping people. I love helping landlords. And then the beauty of it is that you get a very healthy cash flow from it as well.
Quite often you may have heard of rent to rent as a multi-let, an HMO strategy where you simply take a property and convert it into room-letting and of course, you get the profit from that.
But actually the beauty of rent to rent is that there are three models that we can choose from that we teach here at Goliath, which are the single let, the single let to multi let and the existing multi-let model. Now, what these three models allow you to do is, depending on your risk tolerance in terms of your experience, in terms of your desire to get to a certain cash flow quickly and in terms of what your business goals might be, you’ll be able to choose the model that is right for you.