The Property Unleashed Podcast

How Much Money Do I Need For My First Rent 2 Rent Deal?

• Mark Fitzgerald • Episode 296

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This episode provides valuable insights into the actual costs and strategies needed to launch a successful rent-to-rent business. 

Mark Fitzgerald emphasises the importance of education, practical budgeting, and marketing for anyone aspiring to enter the property market in a sustainable manner. 

• Understanding the financial requirements for starting rent-to-rent 
• Importance of education and mentorship before investing 
• Focusing on HMOs vs. serviced accommodation strategies 
• Budgeting effectively for property improvements 
• Exploring financing options for furnishing and improvements 
• Necessity of marketing in the rent-to-rent business 
• Encouragement to reach out for further training and support

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Speaker 1:

How much do I need when doing a rent-to-rent deal? Let's find out, shall we? Hello, my name's Mark Fitzgerald. It's great to have you joining me here today. So a question I get asked all of the time I'm sure I've answered it before, but I'll go and answer it again now, here in 2025, is how much money do I need to start a rent-to-rent business or just to start getting rent-to-rent deals, and, of course, that can vary on the deal. But here I want to give you a bit of clarity on that.

Speaker 1:

I really want to give you a good overview of the sort of finances that you need to have in place or have access to, and it doesn't always necessarily have to be your own money as well. So, firstly, whenever you're embarking on using a strategy like rent to rent, you want to be thinking of it as a business. I look at it as property businesses that I can systemize, that I can potentially sell in the future if I want, or I can buy the assets it's all of those sorts of things, but I've always looked at it as a business, so it's a business expense. Now, probably, investing is pretty much like setting up a business, but it doesn't cost you as much as it does. To set up a normal business. If you're looking at selling stuff, then you've got to buy stock. You've also got to have capital and things like that. Now you could say the same about property. But a rent-to-rent business is very, very low startup fees, very, very low capital needed, which is great when starting out, because a lot of the times we don't have the money, do we?

Speaker 1:

I didn't have buckets and buckets of money. I had taken voluntary redundancy, so I had a few thousand pounds, but I had to live on those few thousand pounds as well because I didn't want to get a job. I was going to start a business and I wanted that business to pay me. So over the course of nine months, I managed to, of course, accumulate a big enough portfolio of rent to rents that not only paid me what I was being paid in my corporate wage, but actually trebled it by the end of the year, which was great. And I'll tell you what the best feeling I ever had was when I actually, I think, I had five properties which then replaced my corporate wage after taxes and everything, and that was the best feeling that I've ever had. Subsequently since then, we've gone on to do a lot more as well.

Speaker 1:

But how much do you need to get stuck in and to get started with Rent2Rent? Well, firstly and I am going to say this because this is a fact you need to know exactly what you're doing, or this business can end up costing you a lot of money. Ok, that is the warning. If you don't know all of the facts, if all of you've done is listen to podcast episodes, watch YouTube videos and you haven't invested in yourself, then that could be the first stumbling block and that could end up costing you thousands, tens of thousands, potentially even in fines, because you don't know exactly what it is you should be doing and how you should be doing it.

Speaker 1:

I have people that come and join my rent-to-rent training who have already gone out there, fumbled and bumbled around and not done very good deals. They've done okay deals in some cases, but they've not done very good deals. Some of them have locked themselves into massive contracts with big expenses just because you don't know what you don't know, you think everything's a great deal and we're going to make a million pounds and all of this sort of thing. So, firstly, the caveat is go and get some training and support. It's one thing, learning it, watching videos and things like that. It's another thing actually having a coach or a mentor or the support that you need there, and that is one thing that we do very, very well. We don't just give you all the tools, all the training, and send you on your merry way. We stick with you, you know, over six months at least. But you have a lifetime access to our support, to our Facebook groups and, of course, if you need any help or anything like that, you just reach out to us myself, the team and we will help you on your business building journey.

Speaker 1:

So, firstly, put a pot together to educate yourself, to spend that time to really know the numbers, to know what a good deal is, know how to get a deal and make sure that you can show those deals, like I do with my mentees is they send me their deals, let me look at them, let me check your numbers, let me make sure they're good deals. Why? Because I've done good deals. Mark my words. I've also done some bad deals. Now, luckily, I've done more good deals than I've done bad deals, and I've got better over the years, of course, as you should do, but my first few deals weren't always the best. There were some little gems there, but there were some not so good ones as well, but that's what I have in my training is I teach people and I go through the bad deals, not just all the good stuff, that, oh, this is what worked. There was a few that didn't work as well as they should have, but we weren't tied up into things, and I like to go into that, because you'll learn more from mistakes than you do, obviously, from everything going really really well for you.

Speaker 1:

So make sure you've got a pot of money together so that you can get yourself educated. If you need any help with that, then reach out to us. We can help you in any way that you like. Just reach out to us. Links and everything are below. Firstly, now you know what you're doing. Okay, now I've got confidence. Now that you can go out there, you know you can know how to stack deals, know how to find deals, know how to negotiate deals, making sure that they're great deals and you know how to fill the properties.

Speaker 1:

Now there's two fundamental strategies when it comes to rent to rent that you're going to use Now. You can use both or you can use one, and that is HMOs, which is houses of multiple occupation where you rent the rooms out on an individual basis, normally five rooms or more or serviced accommodation, airbnb, bookingcom, holiday lets. Ok, those are the two different strategies that most people use. You can do it with single lets, but there's only a couple of places that it works. I've got a student that's doing it brilliantly at the moment, but I wouldn't recommend that. There's a lot that can go wrong with that. You really really need to know what you're doing. But you can make it work, but it's not predominantly the greatest way to do things and the landlords for those can be very, very difficult If you are going to let the properties as a single let, which is just a one person, one family of things. Service accommodation is what we predominantly use single let properties for and, of course, hmo properties, where it's already set up, rented out by the room.

Speaker 1:

Now, if you're going into the HMO, we'll start with that. It can be great to go for pre-existing HMOs, so not looking for properties, which is a very old way of doing things, that people which you'll see, because a lot of people were doing this about 14 years ago or even eight years ago and stuff, and if they're showing you how to do it now, then it's a mistake because that will cost you a lot of money to set up. You're talking 10, maybe 15, maybe grand in somebody else's property. We don't want to be doing that. You go for pre-existing HMOs. Hmos are the setup that are licensed, that are already running.

Speaker 1:

Now most people say to me Mark, why would they want to do business with me if they've already got it set up and it's running? Because they're not always being run very, very well. Okay, some people self-manage and get fed up with that. Some people have an agent doing it, maybe not doing the best job for them, so it maybe not doing the best job for them, so we can do a better job for them, and I'll share that with you in a minute. So you go for pre-existing HMOs. Sometimes you're going to see some grubby HMOs. Sometimes you're going to see some what we say student HMOs with mismatched furniture and things like that. Now, if you can go for nice HMOs I always go for nice HMOs they have to be in good condition. We'll do a great job for you and, of course, that's what I teach people.

Speaker 1:

You can do a deal for as little as 200 pounds Okay, and that 200 pounds is normally for bed dressings, for picture frames, stuff like that, just to make it look good, to dress one of the rooms and things like that. Now I've probably got students that haven't had to spend more than a thousand pounds on the properties that they've got. Most of them haven't spent anything realistically. Sometimes you have to give them a lick of paint, a few hundred quid, here or there. So what I would say is, if you have a thousand pounds at your disposal or 500 quid, if you're going to do the work yourself and things, give maybe a lick of paint, maybe dress it a bit, maybe the odd bit of furniture, then you're onto a winner there. But we can show you how to get these deals without actually having to put any of your own money into them either. And the most I've ever spent on an HMO deal is 900 pounds and that was to have the hallway painted and some of the rooms and two carpets were changed as well. The furniture was fine and everything, but it just needed those things doing to make it look nice to bring it to the standard that we use 900 pounds, 900 pounds.

Speaker 1:

That wasn't my first deal either. My first deal didn't cost me anything because it was in really really good nick. So all I had to do with my first deal was spend a couple of hundred quid on some dressing. We put a heat shield up over the cooker as well and we just tinkered a few bits to make it a bit nicer, a bit more appealing to the people that were in there and stuff. The second deal I had as well was the same. We spent a couple of hundred quid on that, just painting a couple of the rooms because they were a bit Magnolia City, but other than that we were up and running.

Speaker 1:

I have looked at properties which are going to cost a lot of money and I walk away from those. They're not the best use of my time or methods or anything like that. And you should too. Realistically. So with HMOs, if you really set yourself a budget of about £200 to £2,000, you're there. Quids in easy and most people can do that on a credit card. If they had to, they could go and get an interest-free credit card over 24 months or something like that, and they could pay for everything on that credit card and then pay it back from the profits that they're getting.

Speaker 1:

Now. I don't recommend that I think it's better if you can save the money and commit to it. But again, you don't necessarily need all of that money right away. You just need to find the right deals. Now there's a lot of work that needs doing on the property. I'll actually ask the landlord or the owner of the property to do it themselves, to put that money into the property, and then I'll maintain it for the duration that I've got the property in that time. Okay, so that works really really well and it doesn't mean that you need a lot of money to start it up. Okay, because you're going for already pre-existing properties. Now, as I say, you can finance it yourself. You can get a loan off of a family member or a friend or anybody like that. You can pay them back through the profits that you're making with your deal. But you've got to make sure you know what you're doing so that you know that you're doing good deals. Okay, so HMOs are relatively cost-effective way to start Service accommodation, holiday lets, airbnb.

Speaker 1:

Now that can be a little bit more expensive. But let me tell you why. Because predominantly, you go for a single let property which could be empty. It could be part furnished, maybe the furniture, and hopefully the furniture is up to scratch. You're laughing, but a lot of the times when we've done this they've been empty. Now we then have to furnish the properties because people are staying in the properties for one night, two nights, three nights a week. It's short-term lets. They're not bringing their furniture with them, they don't even want to bring bedding with them, so you've got to supply everything like you would at a hotel. So that can get more expensive Depending on the size of the property. You could be looking at about 2,000 or 3,500 pounds just to furnish a flat. That can go up from 6K to 8K to 10K, depending on how you do it and where you source your furniture and everything from. Okay, maybe you need to add a bit more paint to the walls as well. Give it some feature walls and things like that Make it more appealing because it wants to be high end. That can obviously add to the expense. So serviced accommodation can be more expensive. If you've got a little pot of money, it's great.

Speaker 1:

Now, both of these strategies HMOs and serviced accommodation if they do need money or they do need new furniture or doing anything like that or any works to the property, you don't necessarily have to have the cash right here right now. We work with a little pool of finance companies that will actually finance the furniture for you or finance the paint and the work that needs to be done on the property. So you don't need to find that money right here. Right now you can actually get hold of the property. You can pick all the furniture and everything you want to put in there and then you'll have a monthly fee to pay to the finance firm, a bit like if you went to, you know, or your local catalog. I say if you went to, you had a local catalog, or you went to DFS or something like that and you paid monthly installments on your sofa before you collected in the things these guys will let you have all the gear and then you just pay them a couple of hundred quid out of the profits.

Speaker 1:

Now you might have three properties. Two are fine, you don't need to do anything. One you need to do a bit of work on. Well, the other two properties will help you finance the third property and if you don't have any properties and this is your first one it won't be all your profits that you're going to be using to pay the finance company. It'll be a couple of hundred quid over two to three years, depending on how much you've had to borrow. So that can be a really, really good way for people to be able to get started.

Speaker 1:

Now, as I said, when you're starting a business, you will need some money to set that business up with. Realistically, you can sign up and start a business for about £10. You can do it yourself and it's free, but you can pay £10 or £20 and a company can set it up for you. You will need insurances, but you don't need any of those, of course, public liability and professional indemnity insurance. As a business. You don't need those until you actually sign a contract and there's a few other bits and bobs of course, prs that you're going to need and some nice to haves and things like that that you want to make sure that you're paying for the stuff that you need to have right here right now and you're not paying for it until you get those deals that can keep it as cost effective as well.

Speaker 1:

But I do get asked this all the time. I get emails all the time how much money do I need, mark? I had a gentleman say to me once I'm going to save up 10 grand, then I'm going to join your training and I'm going to go for it. And I said to him okay, what strategy are you doing? He says I'm doing HMOs. I said you might not need 10 grand. I said and why not learn how to actually do this strategy? Okay, whilst you're saving, so invest in yourself, which is always the best investment anybody can make and then, obviously, save that money up whilst you're looking for deals and things, because it can take a little bit of time for you to get traction, for you to get out there and for you to get deals and things.

Speaker 1:

Obviously, you need a little bit of money for marketing as well. So you need to have business cards, you want to be sending out letters and things. You might want to be boosting your Facebook posts and ads and stuff like that as well, so that can cost you 50, 60, 70 quid and things, but you don't need massive amounts of money to do this and, quite honestly, because we supply you with everything that you possibly need, then you don't need anything. To be quite honest with you, to actually do this, you will need money for marketing, you will need money for compliances, but a lot of the time once you get the deals and you start getting the money coming in. It's just a byproduct of having a business. So if you have any questions on this, do feel free to reach out to us More than happy to point you in the right direction.

Speaker 1:

Obviously, we've done lots and lots of different deals service accommodation, hmo deals as well. We help people with HMOs with the rent-to-rent training. We also have the ultimate service accommodation business builder, which will show you everything the four different ways of getting SA deals, which one of those includes rent to rent and, of course, if SA is your thing, then that's a great one for you. There we also have a one-to-one coaching where I help and support people. We have a few places for 2025 and we have a January deal on at the moment. So reach out to us and we'd be more than happy to speak to you about the potential deal and about potentially working with you as well. The trainings that we offer are included in the one-to-one coaching, so we're all there to make sure that you can push forward and create the property business that you desire. Thank you for joining me here. I look forward to you joining me in the next episode. Take care and bye for now you.