The Property Unleashed Podcast

Mastering the Rent-to-Rent Model for Quick Cash Flow and Minimal Investment

• Mark Fitzgerald • Episode 292

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Ready to break into property management without breaking the bank? Discover how the rent-to-rent model can revolutionise your property ventures with minimal upfront costs. Join me, Mark Fitzgerald, as I unveil the secrets to generating quick cash flow through smart property strategies. From transforming a space for just £900 to mastering the art of leasing with no furniture anxiety, this episode is your roadmap to success. We'll explore why rent-to-rent is not only a cost-effective entry point but also an agile way to test whether HMOs or serviced accommodations align with your business aspirations.

Forget the traditional routes filled with red tape and hefty investments. With rent-to-rent, you can leap into the market and start earning immediately. I'll guide you through selecting the right properties — pre-existing and furnished — to ensure a swift, hassle-free setup. This flexible strategy allows you to sample different property management styles, giving you the freedom to pivot and refine your approach without the commitment of ownership. Tune in and learn how to make confident, informed decisions that will position you for success in the property world.

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Speaker 1:

some of the major benefits when doing rent-to-rent. Hello, my name's Mark Fitzgerald. It's great to have you joining me here today. So what are some of the major benefits of starting your own successful rent-to-rent business Now, whether that's with HMOs or a serviced accommodation? I'm going to help you with that now.

Speaker 1:

So, firstly, let's start with the obvious one, which is a low initial investment when it comes to starting a rent-to-rent business. A lot of people think you need thousands and thousands of pounds to start a business, and in most cases you do. If you're going to go out there and buy properties, you are probably going to need thousands of pounds, hundreds of thousands of pounds potentially. But when you're acquiring properties via rent to rent and using that strategies, the startup level is very, very low. The most I've ever paid actually for a rent to rent deal is 900 pounds and that was for a couple of carpets and a bit of paint. We do tend to spend a couple of hundred quid, you know, making sure that the properties are nice and decorating the properties and things. But we go for good properties and that's what I help and show my students how to do as well. But you will be getting out there, you will not have to spend thousands and thousands of pounds and you will not have to wait for solicitors to go through. You know if you're buying a property's conveyance in and all of those things as well.

Speaker 1:

Now, serviced accommodation. Okay, I was talking about HMOs. A serviced accommodation can cost you a few quid to start up, because normally you've got to dress and obviously put all the furniture in the properties and that can cost you a few thousand pounds. But again, it's not going to be tens of thousands of pounds. If you do things the right way, you can actually get leasing companies who will lease you the furniture and keep it cost effective. So the initial investment is very, very low. Another benefit of it of course, it can generate cash flow very, very quickly. You could take on a property today and actually start making money the same day, as long as you know what you're doing and you set yourself up in the right manner.

Speaker 1:

Now, sometimes you will get properties that are empty. Yes, you've got to fill the properties with your guests or with your tenants, depending on what you're doing, but you've still got to make sure that you're getting out there and, of course, you are still going to be making sure that you are getting great cash flow in, whatever the deals are that you're doing, that you are getting great cash flow in whatever the deals are that you're doing. It's also a great way to be able to test the market to see if you like the strategy that you're trying to do. So for argument's sake. Maybe you're interested in HMOs but you're not 100% sure. Do some rent-to-rent deals. Get hold of some HMOs. Start managing those HMOs, renting them out, and see whether it's a strategy that you'd like to put the majority of your portfolio money into these sorts of properties or serviced accommodation. Go for some single lets. Start doing serviced accommodation. Make sure you're compliant and you're set up right Now. Listen to other and watch other episodes to be able to do that here on this channel. But make sure and see whether that's a strategy that works for you Before you bought a property.

Speaker 1:

If you buy a property and do service accommodation on it and it doesn't work for you, maybe you can fall back onto letting it out as a single let, but it's not the best use of your finances and your money by doing it with rent to rent. It's very, very cost effective and cheap to be able to do so. Of course, hmos you want to go for pre-existing HMOs, already set up, hmos already furnished, keeping all of those costs away from you actually having to put that time and effort in. Another great benefit of it is very, very quick to set up, ok, it doesn't take months and months to set any of these up. There shouldn't be any big, massive refurbs or anything if you're going for the right properties.

Speaker 1:

So again, I always joke and say that you could actually have somebody contact you in the morning who has a potential rent to rent deal. You could meet them at lunchtime, ok, and you could have a look at the property. You could put an offer into them in the afternoon and you could sign the contracts in the evening and be given the keys that day. I've never done it that quickly. Maybe I'll try and do it that quickly one day. Make sure you do your due diligence. I am having a bit of a laugh and a joke here. Make sure, obviously, that it is a good deal. You know your numbers and if you need any help and support with that, then check out thepropertyunleashedcom, my website free resource section. There's loads of free tools and resources and spreadsheets there to be able to analyze deals for your HMO deals, service accommodation deals, and there's some guides and things like that there at thepropertyunleashedcom.

Speaker 1:

Also, when you're doing the right rent-to-rent deals in the right areas, they can be a great return on your investment. We're talking 100% plus. Why? Because there's so little money that you need up front when doing these. In fact, I would actually recommend that if you invest in the right training and coaching, you will actually save yourself more money in the long run.

Speaker 1:

A lot of people who have no money whatsoever think I'm going to get started in rent to rent and I'm going to start building up these businesses because I literally have no money and there's no other way of doing things. But they don't even invest in themselves, and I see a lot of people get tied up into deals that just aren't good deals and you can lose money as quickly as you can make money. So you have to make sure you know what a good deal is, you know that the numbers work and it stacks up, and, of course, doing a rent to rent deal can also help you build up your track record. Sometimes, when you get into the property game and you've got no background or experiences as a landlord and maybe you want to buy an HMO but you've got no track record. It can be difficult to get the lenders to actually give you a good mortgage rate because of no track record, and some won't even entertain you, whereas if you've been running a successful rent-to-rent business for over six months, you all of a sudden have a bit of a track record. You are classed as a landlord, so it can really really help you when it comes to getting out there and negotiating other deals as well. Rent to rent is a great little strategy when set up and done correctly.

Speaker 1:

And what do I mean by that? Well, like I say, you've got to roll it all back to know your numbers, know and stack deals. Practice this. If you're getting into this, as I say, go on to the Property Unleashed website, the Property Unleashed, and download my deal analyzer. I give it away for free. You know it's 100% free. I should charge to give stuff like that away, but I give it away for free because I see so many people who are struggling, who are just getting out there and can't afford a bit of training, can't afford a bit of support, doing bad deals because they cannot stack those numbers. Make sure that's not you by downloading that.

Speaker 1:

Then what I would say is start looking at your market rents for the HMOs in your area or the properties that you're looking for in your area. Then go on to something like you know spare room and start seeing how much rooms will we go for. What are the room rates in your area? Obviously you can go on Airbnb for holiday lets if you're doing those sorts of things as well and then start to fill in that deal analyzer, that spreadsheet, and start practicing. What sort of rents can you pay? Because some people will say I can't get any deals to stack and that's probably because the rents are so high in that area that it just doesn't work. But that's where you've then got to have values in your rent to rent business. You've got to know how to structure the deals, how to position yourself and what to say to these property owners. Ok, when we offer a guaranteed rent which we do with rent to rent OK, we will pay a guaranteed rent.

Speaker 1:

We take on the maintenance, we take on the utility bills and everything of a property that has to come at a bit of a premium price as well. So the owners of the properties cannot always expect to get the same month on month rent as they were if they were managing it themselves or had a letting agent managing it for them. So you may be saying to yourself well, why would they do this deal? Because we take care of minor maintenance issues. They have no voids. So at the end of the day, if they actually weighed up their full rental payment but they pay maintenance, they have to worry about voids and things like that. Yet we pay them a slightly lesser fee month on month, but we take care of minor maintenance issues up to £100. We don't have any voids. Obviously we have voids, but we can turn those voids around very, very quickly. Then the owner of the property, over 12 months, if you break it down, will probably actually earn more with a rent-to-rent deal than they would by having that higher rent, by just having somebody living in there and all the expenses themselves.

Speaker 1:

So it's all about how you can position this in such a manner that it works for not only, of course, your business, but for the person you're working with. Not everybody will want to work with you. Not all agents will get this and want to work with you. Not all landlords will want to work with you. It's about finding the right people to work with, and when you do find the right people to work with, it's like magic at the end of the day. Why? Because you help them in a situation where, potentially, they had a bad management company looking after it. They had lots of voids. They were just tired landlords themselves fed up with managing it and they didn't have any systems in place.

Speaker 1:

We can come in there and we can take our property, maybe give it a lick of paint if that's what it needs. We don't want to be doing too much to these properties. If there's lots of work that needs doing, it's about negotiating with the landlord to get that work done. But we can come in there and we can really help and support those people. I've done this over the last six years now. I now train and teach people how to do this as well in a successful manner that they're building up their own rent-to-rent businesses to replace their income, get them out of their day jobs and create the lives and the property investing businesses that they want. It's very fulfilling and it's really great fun. So check out the propertyunleashedcom for those free tools and resources, and if you need any other further help, assistance, coaching, then just reach out to us. We are more than happy to help. Hope you've enjoyed this episode today. I always enjoy bringing you these episodes. You take care and bye for now.