Rent to Rent Deal Analysis Spreadsheet:
What to Model Before Every Deal

The Five Numbers Every Deal Analysis Must Include

A rent to rent deal analysis is not complex – but every number must be accurate. The five critical inputs are:

1. Gross potential income – number of rooms multiplied by achievable room rate multiplied by 12 months. This is the theoretical maximum if every room is let at full rate for a full year.
2. Void allowance – reduce gross potential income by 20 percent (for 80 percent occupancy modelling). This is your projected annual income.
3. Fixed annual costs – guaranteed rent (12 months), insurance (annual premium), HMO licence fee (spread over contract term)
4. Variable annual costs – utilities (estimated annual cost), maintenance reserve (100-150 per property per month), council tax if applicable
5. Setup cost – refurbishment, furnishing, compliance certificates, licensing application, marketing costs for first tenants

Net monthly profit = (projected annual income minus total annual costs) divided by 12. Annual ROI = (net annual profit divided by setup cost) multiplied by 100.

The Three Tabs of a Deal Analysis Spreadsheet

Tab 1: Deal Inputs
A simple input form where you enter the deal-specific numbers: property address, number of rooms, achievable room rate, guaranteed rent offered, rent-free period, contract term, estimated setup costs (line by line), utility estimate, and insurance quote. Everything else is calculated automatically from these inputs. For more detail, see insurance requirements for rent to rent.

Tab 2: Monthly P&L Projection
A 36-month (3-year) month-by-month projection showing: rental income at your modelled occupancy rate, all fixed costs, all variable costs, net profit each month, cumulative profit, and cumulative ROI on setup costs. This shows you when you break even on setup costs and what the deal generates over the full contract term.

Tab 3: Sensitivity Analysis
The most important tab. This models what happens to net monthly profit if: occupancy drops to 70 percent (worst case), utilities increase by 20 percent, or the guaranteed rent is 50 pounds per month higher than negotiated. If the deal still generates positive profit in the worst-case scenario, it is a robust deal. If it turns loss-making in the sensitivity analysis, it is too risky. For more detail, see rent-to-rent negotiation tactics.

Green Lights and Red Flags in Deal Analysis

Green lights – deal is worth progressing:

• Net monthly profit above 600 pounds at 80 percent occupancy
• Annual ROI on setup costs above 60 percent
• Break-even on setup costs within 18 months
• Sensitivity analysis shows positive profit even at 70 percent occupancy
• Guaranteed rent below 40 percent of gross potential income

Red flags – approach with caution or walk away:

• Net monthly profit below 400 pounds at 80 percent occupancy – margins too thin for operational risk
• Guaranteed rent above 50 percent of gross potential income
• Break-even on setup costs beyond 24 months
• Negative profit in the sensitivity analysis at 70 percent occupancy
• Deal only works if utilities stay flat and you maintain 90 percent occupancy simultaneously