Rent-to-rent

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Discussion

olivebrown

Original Poster:

137 posts

109 months

Friday 27th February 2015
quotequote all
Heard about renting to rent properties on a Facebook group recently and wanted to see what people thoughts are on it. Now I'v heard how people make fortunes from this , but dig deeper and they are selling courses on how to do it also rolleyes .

So you rent a property from a landlord, which you rent out individual rooms with your profit being the difference between the rent you pay the landlord and rent received. Now factoring in costs such as empty rooms, utility bills, damages and other associated costs, it seem like a very hands-on and risky strategy to me and that's not including the potential legal issues with this method of renting.

Anyone got any real world experiences of this process? It's not something i'm looking to do myself but maybe for some people it could work in dense student areas or London.

Eleven

26,271 posts

221 months

Friday 27th February 2015
quotequote all
olivebrown said:
Heard about renting to rent properties on a Facebook group recently and wanted to see what people thoughts are on it. Now I'v heard how people make fortunes from this , but dig deeper and they are selling courses on how to do it also rolleyes .

So you rent a property from a landlord, which you rent out individual rooms with your profit being the difference between the rent you pay the landlord and rent received. Now factoring in costs such as empty rooms, utility bills, damages and other associated costs, it seem like a very hands-on and risky strategy to me and that's not including the potential legal issues with this method of renting.

Anyone got any real world experiences of this process? It's not something i'm looking to do myself but maybe for some people it could work in dense student areas or London.
Lots of challenges. Here are some:

1. Managing a House in Multiple Occupation is like running a day care centre for the mentally deranged.

2. It's often difficult to fill all the rooms.

3. You'll get a lot of bad debt.

4. You will probably need to collect some cash payments.

5. The local authority may have made an Article 4 Direction, which means you'll need planning permission to change the use of the property from C3 to C4. Which you probably won't get.

6. Most sane property owners won't rent you a property in the knowledge that you intend to sub-let it.

I could think up a lot more for you if you like.

BTW I am a landlord and I rented rooms for many years. I don't do it anymore.




anonymous-user

53 months

Friday 27th February 2015
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Seriously, just don't.

olivebrown

Original Poster:

137 posts

109 months

Friday 27th February 2015
quotequote all
That's what I thought, as most people sell this idea as a passive income stream. From what i can see it is far from it.

olivebrown

Original Poster:

137 posts

109 months

Friday 27th February 2015
quotequote all
That's what I thought, as most people sell this idea as a passive income stream. From what i can see it is far from it.

skwdenyer

16,180 posts

239 months

Saturday 28th February 2015
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Around my way (London E1), there are many people renting flats or even whole buildings of flats, then letting them out via AirBnB. It is not clear whether they have landlords' permission to do this (in at least once case I know they do, however).

This is illegal under planning law. It may well be illegal under other regulations. But I know one chap with over 200 (I searched on AirBnB and added them all up) - he's making a _lot_ of money right now.

98elise

26,376 posts

160 months

Saturday 28th February 2015
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Is this with or without thw landlords permission?

If not then its going invalidate the AST, and possibly the landlords insurance. Personally I can't see it being anything but grief.

Hoofy

76,253 posts

281 months

Saturday 28th February 2015
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Guess it depends where you're coming from. If you have nothing to lose...

olivebrown

Original Poster:

137 posts

109 months

Saturday 28th February 2015
quotequote all
I believe the opportunity lies where there is landlord who currently rent HMO's or BTL, but cannot or does not want to actively manage the properties. They then get a fixed rent per month guaranteed from the rent to renter for a number of years through this scheme.

The landlord should be aware of the situation and I believe that the landlord and rent to renter would have a commercial tenancy between them. The rent to renter would then issue a license to the tenants to occupy the property. There is many legal issues you could pick from this rental method, but as mentioned above it could work for some who are willing to sail close the wind.

Eleven

26,271 posts

221 months

Saturday 28th February 2015
quotequote all
olivebrown said:
I believe the opportunity lies where there is landlord who currently rent HMO's or BTL, but cannot or does not want to actively manage the properties. They then get a fixed rent per month guaranteed from the rent to renter for a number of years through this scheme.

The landlord should be aware of the situation and I believe that the landlord and rent to renter would have a commercial tenancy between them. The rent to renter would then issue a license to the tenants to occupy the property. There is many legal issues you could pick from this rental method, but as mentioned above it could work for some who are willing to sail close the wind.
Issuing licenses instead of tenancies in the resi sector is tricky. Not impossible but you've got to be very careful. Also if the LL has borrowing there's a good chance the terms state AST, which the commercial lease would not be.

Kudos

2,672 posts

173 months

Sunday 1st March 2015
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I've rented out two 1 bed apartments to a lady who then lets them out to corporate lets or holiday lets. I don't mind as I get the rent paid every month and she keeps the place spotless.

She is clearly making a profit, I'm glad she does

sjg

7,444 posts

264 months

Sunday 1st March 2015
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I've kind of done it with a few house shares - the HMO rules make it tricky for landlords to rent out rooms separately so tenants either have to do a joint contract (and deal with changing it every time someone leaves), or one just takes on AST and it falls on them to rent out the rooms. That ended up being me a couple of times, was always living there at the time though. Never had an issue getting people (mostly 20s/30s professionals, some older who needed a Mon-Fri place for work), not many with damage either. Biggest issue was finding out the dodgy landlord hadn't bothered paying his mortgage for about 18 months (one without permission to let) and the lender finally dragging him through the courts to get possession.

Really wouldn't surprise me if what's described is a common thing - most landlords don't care much if the rent is always paid on time and the tenants aren't complaining about anything. In London so many places have overseas owners and leave it all to (lazy) letting agents. Full, legal HMO conversion is expensive (fire doors, exits, etc), lots of councils are trying to stop every big family house being split into flats, but they don't rent for as much whole.

z4RRSchris99

11,221 posts

178 months

Monday 2nd March 2015
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skwdenyer said:
Around my way (London E1), there are many people renting flats or even whole buildings of flats, then letting them out via AirBnB. It is not clear whether they have landlords' permission to do this (in at least once case I know they do, however).

This is illegal under planning law. It may well be illegal under other regulations. But I know one chap with over 200 (I searched on AirBnB and added them all up) - he's making a _lot_ of money right now.
you sure the chap with 200 isnt just offering to put peoples flats for them on air b n b .. i get things through the door all the time offering to put my flat on air b n b and manage it etc.

Frimley111R

15,537 posts

233 months

Monday 2nd March 2015
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The smaller the rent to lower social level of tenant. It can be good money but you'll be dealing with the dregs of society who are constantly moving in and out, mistreating the property, falling out with each other, clearing off after not paying, paying rent late, etc.

MitchT

15,788 posts

208 months

Monday 2nd March 2015
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olivebrown said:
... but dig deeper and they are selling courses on how to do it also rolleyes .
Congratulations. You just discovered where the money is being made and by whom.