How does rent-to-rent work? Why would a landlord want to rent so you can then rent out again for more money? All very good questions which I had before I started my rent-to-rent experience. In this blog, I deep dive into rent-to-rent strategies and how it works.

What is Rent-to-Rent? 

Guaranteed Rent, also known as Rent to Rent, is when a person or business rents a property from a landlord for a set period of time with a promise to pay a set rent to the landlord. The third party, referred to as “the Renter,” is permitted by the landlord to rent the property to additional tenants. They become jointly and severally liable for the rent as the tenant. There are a number of legal ways to sublet a property, most frequently involving corporate or commercial tenancies, management contracts, leases, and guaranteed rent programs.

How can you make money from rent-to-rent? 

Rent to rent is a great business model for entrepreneurs looking for a way to generate steady cash flow from real estate and break free from the 9 to 5 grind. The issue is that there is so much information out there that it is simple to become dazed and confused.

The rent-to-rent strategy is frequently pieced together by newcomers from YouTube videos, podcast episodes, and social media posts. It goes without saying that the rent-to-own business model has many moving parts, and by attempting to piece all the information together, it can be challenging to obtain a clear, step-by-step process of the path to success.

How does rent-to-rent work? 

The rent-to-rent model has a straightforward idea. Briefly, this is how it functions:

• You typically rent a house for three to five years.
• You provide a guaranteed rent to the landlord or letting agent. Normally, you shoulder any debt.
• You charge tenants a higher rent than you are paying the owner for the property.
• The profit for you and your business is the difference between the rent you collect from your tenants and the rent you pay the owner or letting agent after deducting property costs.

Why do landlords decide to rent out their properties through Guaranteed Rent rather than a traditional letting agent?

The agreement has advantages for the landlord in that their rental income is guaranteed regardless of whether the tenants who reside there pay the rent or if the property is left vacant. As it is their duty to return the property to the landlord in the same condition as when they took it, the “Renter” would typically also take care of any damage to the property. All of this gives the landlord peace of mind.

The landlord would not be responsible for any letting, management, or renewal fees. The landlord would be spared the time and expense of dealing with the plethora of laws and compliance issues by having the “Renter” handle them all. A longer lease agreement may be requested by the landlord. The landlord may also ask the “Renter” to sign a longer lease, lasting anywhere between one and five years. This gives the landlord more security so they may be able to make long-term financial plans.

Is rent-to-rent legal? 

But isn’t subletting renting to renting? And isn’t subletting against the law? Most people simply find it hard to accept that rent to rent is a respectable business strategy. Let’s resolve this issue right away.

Rent to rent is legitimate, yes.

Long-term leases known as commercial leases permit the tenant of a commercial property—typically a business—to sublet the property. These are typically “full repairing and insuring” leases, where the tenant is responsible for paying for all repairs and insurance on the property. The rent-to-rent model is based on this.

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