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david graham

Realistic rent to rent cashflow

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Hi,

I was wondering if any experienced rent to rent investors could advise me what is a realistic cashflow for a single let and for multi-let?

 

I know mark and Brad at Goliath describe rent to rent as good for cashflow but in my head I can't understand why a landlord would rent his / her property out with a discount of more than about £100 or else why would they not just rent to tenants themselves or hire a letting or management agency for about 10%?

 

I'd love to hear from anyone what kind of cash flow is achievable.

 

Thanks,

David.

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i gave a property to someone doing rent to rent simply because i don't have the time or energy to convert it to HMO etc - also they will pay for lots of day to day repairs expense etc plus rent is more reliable. Most likley afetr a couple of years i may well take it back and carry it on as a hmo myself. It was a 4 bed terrace and they converted it to 5 bed hmo so suspect they doubled the rent they are paying me so clearly its a workable model

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Hi David

 

Clearly, Haf is doing this already as a landlord and seems to be happy with the arrangement. Although, the comment about taking the property back in the future should caution you in terms of how much money you invest up front. The general rule with rent-to-rent (R2R) is the longer the rental term the better, usually secured through a commercial lease. Add a purchase option on top and you have property Nirvana potentially.

 

The model is built around a concept known as 'arbitrage' - where you buy/rent in one market to sell/rent in a different market to make a profit margin. As Haf said, his agreement is the equivalent of a single let but the R2R operator is selling rooms in an HMO, which is a different market and that's what creates the opportunity there. Another example would be serviced accommodation, where the R2R operator rents on a single let basis and then onwards rents the property by the night to short-term guests at a higher rent instead. These are the two main markets and lend themselves to different types of property in the most part as well.

 

Best

Richard

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