Property investors are always looking for new strategies, and rent-to-rent has just risen to the top of the list. So, how does it work exactly?
Rent simply means that you identify owners who already have rental properties but want to transfer the responsibility for finding tenants and managing the property. In exchange for the ability to sublease the property for a profit, you pay the deposit and an agreed-upon monthly guaranteed rent to the landlord. While one property will not make you a billionaire, it is a simple process to copy and the profits will begin to build up.
Why Are So Many Real Estate Experts Talking About It?
Low Capital Investment
Rent-to-Rent is a much lower entry level for people just starting out in real estate. Rather than saving a big deposit for your first house, managing someone else’s rental property allows an inexperienced investor to get started in real estate for a few thousand dollars rather than tens of thousands.
All you need is a deposit and enough money to fix up the rental property. Even once sourcing costs are deducted, the start-up cost is likely to be significantly less than £10,000, depending on the location of the residence.
It is not just a low-risk investment, but it may help an investor develop their nest egg faster than most other methods.
Money vs. Time
Rent-to-Rent connects landlords with properties who are short on time with individuals who have a small amount of money but the time to care for renters.
When a homeowner does not want to cope with the inconveniences of owning a buy-to-let property – agreements, upkeep, identifying and negotiating with renters – the idea of delegate duty to someone else is quite enticing.
Allowing someone else to do all of the work is better than putting the property in the hands of a realtor, because the homeowner will still have some concerns to deal with. A Rent-to-Rent investor avoids all of the hassle, but they must invest their time rather than their money.
A Technique For Earning Valuable Experience
Serviced Accommodation (SA) is another appealing investment opportunity since the revenues are substantial as long as the facility is rented the majority of the time. Obtaining a loan for serviced accommodation, on the other hand, is not always simple for investors who lack necessary qualifications.
Lenders want to know that the mortgagee knows what they’re doing and has a track record of success. In other words, they want to know if the house will allow the owner to keep paying mortgage payments. Unused rooms or properties result in a loss of income.
Gaining experience in the SA sector through Rent-to-Rent opens the door to eventually being your own SA owner.
Best Areas To Invest In Rent-To-Rent
Manchester has swiftly become one of the most attractive regions for landlords to look at, thanks to the likes of Oasis and the Happy Mondays for music and the new center of operations for BBC television at MediaCity in Salford.
The continuing reconstruction of the city center into a busy metropolis with more pedestrianized zones and new architectural selections makes it perfect for those landlords, in addition to the strong student population, which will assure steady occupancy. Outside of letting, you can probably count on property values to continue to rise in a positive direction for the near future.
Liverpool is one of the best rent-to-rent areas in the UK when it comes to rental yields. According to Property data, the postcodes L7 and L1 consistently achieve yields of 8.2 percent and 8%, respectively, with increases of 15% and 12% in the previous five years.
Despite the fact that price growth has slowed in 2019 following an incredible Q4 of 2018, the home of the Beatles remains a top attractive investment in the north, owing to innovative initiatives, fantastic employment prospects, and increased tenant demand across the area. Throughout 2020, JLL predicts a 2% increase in property prices and a 3.5 percent increase in rentals in downtown Liverpool.
Sheffield’s housing prices are still at the lower end of the range when compared to the majority of UK cities, making it an ideal place for a first-time investor. Property values have increased by 19.5 percent since 2014, and by a staggering 223 percent in the previous 20 years.
The rental returns, which are now at 7.30 percent on average, are the most appealing feature. Sheffield’s appeal is only going to expand among residents and visitors alike, thanks to a £480 million makeover of the city’s retail centre that dramatically improves its services.
PropTech Makes It Simple
Property investing has never been easier than it is now. It used to be difficult to locate potential Rent-to-Rent properties. Many landlords had never heard of it and preferred to locate a renter through a rental agency.
There is software that allows you to assess the possibilities – such as market rent pricing and yield for your home – and you have access to a wealth of information that allows you to perform thorough study in minutes rather than months.
One of the most well-known is DealSourcing. This proptech technology can speed up the process of looking for a property in the United Kingdom by merging several components into a single system that acts as your own real estate agent. The system can discover and categorize investments throughout the internet using algorithms and automation.
You’ll save time as well as money! The platform’s key selling point is its capacity to find high-yielding assets. If you want to invest in the UK property market, DealSourcing.co is a must.
The system can also evaluate the return on investment for each house posted on Rightmove, Zoopla, and Gumtree, as well as locate underpriced properties for sale, saving time and money for investors.
This information was provided by DealSourcing.co.
DealSourcing.co allows you to control the influence of technology. You can search over 200,000+ Below Market Value transactions (Buy-To-Let, HMOs, and BRRR) with ROIs of more over 15% with the click of a mouse. You can rapidly identify high-yield properties using our basic and easy-to-use tools.