No money? No income? Low credit score? You are not alone and Rent to Rent deals (R2R) may be the solution you need to make the life changes you seek. It can seem like an impossible task to start out as a property investor with no funds or mortgage ability. If we told you, you can earn income from property without even needing a mortgage, would you be interested? This is just 1 of 5 reasons why we love the Rent to Rent strategy.
What is a Rent to Rent Deal?
In simple terms you pay a landlord a monthly fee in return for having control of their property as the new landlord. You then find your own tenants for the property who pay you enough rent to cover your costs and fees plus an adequate profit in your bank account. The obvious question that arises, is why would a landlord agree to this?
The truth is that not all landlords are happy landlords. For some, property rentals have become a burden and a source of pain in their life. Perhaps they cannot afford the upkeep of the property. Perhaps they are struggling to find tenants. Perhaps life has moved on and they just want out.
Whatever their cause of pain, for many, being offered a guaranteed income from their property with zero concerns could be the solution they need. These are the landlords who will benefit from Rent to Rent and the ones that may say ‘yes’. With the benefits being multifaceted, let us share what we love most about this approach.
- No Mortgage
The big M word may be a stumbling block for many aspiring to generate income from property. In a Rent to Rent deal the property ownership remains unchanged and you will simply be controlling the property without buying it. Hence, no need for a mortgage application, any of its associated costs or a credit check.
- No Credit Score – no problem
Without the need for a credit check, it opens up a world of opportunity for those who have a low or even no credit score. However, the longer-term benefit is that earning income from your Rent to Rent business will be a significant step in the right direction towards building your credit score. But surely I’ll need to have some money to get started, I hear you ask?
- Low Start-up Costs
Naturally some money will be required. However, this will be a relatively small hurdle to negotiate in comparison to paying a mortgage deposit, conveyancing fees and relevant taxes. By implementing Creative Finance strategies, the task of funding your initial deal will be much more of a mole-hill than a mountain. Broadly speaking, your costs will be limited to legal fees, finding tenants and bringing the property to the required habitable standard perhaps even converting to an HMO.
- Move Fast
Consider for one moment the time it takes to find a property, arrange a mortgage, exchange contracts and fully refurbish. With a Rent to Rent deal the entire process from finding a landlord to getting tenants in place can be weeks rather than months. This will allow you to start earning income much sooner and potentially put a smile on the face of a once unhappy landlord.
- It’s a Win-Win-Win
As we eluded to earlier, one of our biggest loves with Rent to Rent deals is the ability to take away the pain of others. Removing a burden from a troubled landlord is a huge win for them. You also win as you earn an income and progress as a property investor. In addition your tenant wins by having a wonderful home because at the Asset Academy we wholeheartedly teach how to be a fantastic and considerate landlord.
Real-world Rent to Rent
Everything we teach is designed to give a balanced, honest and real-life perspective on property investing because our goal is to help people succeed… long-term. It is therefore our duty to highlight some notable considerations that should be taken into account before setting forth with your Rent to Rent business.
Firstly, the level of work and due diligence required should not be underestimated. This strategy will involve working in your business rather than on it, therefore it will be hands-on and demanding of you time. Secondly, as you will not own the property you will not benefit from any capital growth, all of your money will be earned from tenant rental payments alone. Thirdly, there are risks surrounding how the deals are structured from a legal perspective. Contracts will need to be carefully written by experienced professionals and you will need some knowledge to navigate the process safely.
To conclude, the Rent to Rent strategy offers fantastic potential for those with limited funding, mortgage concerns or low credit scores. Understanding the 5 things we love most about Rent to Rent deals has hopefully opened your eyes to yet another opportunity that lies before you and one less excuse for not achieving your goals. We are passionate about opening these doors of opportunity, however only you have the power to step through the door.