Does Rent-To-Rent Work Everywhere? (HMO & SA)
Does Rent-to-Rent work in your area?
Discover how to research your area, estimate demand and my eight key questions I use to analyse a goldmine area…
This is one of the most frequently asked questions I receive, so I wanted to dedicate a podcast episode to answer in detail. This episode is structured into two sections, but first, I want to define Rent-to-Rent if you are new to the strategy.
Some people refer to HMO or Serviced Accommodation as Rent-to-Rent, but this misses some key elements of the strategy. Rent-to-Rent is a substitute for purchasing the property. Instead of buying the property and letting the property, you rent the property from a landlord and then rent out the individual rooms to profit. To find out how this is different to sub-letting, please listen to my podcast episode here.
Will Rent-to-Rent work in my area?
The first consideration needs to be property stock. First, you need to find out if there are suitable properties to let. For example, if there are many properties available that can indicate how motivated a landlord will be and if there is an opportunity for you to help.
Start by looking at your chosen area on Rightmove. When assessing a location, it’s essential also to consider your cash flow goals. If you aspire to make £750 a month additional income, then one property alone may achieve this. If you are looking to scale your property business and replace your income, you may need to look at a larger area with more opportunities.
The second consideration is to look at demand. Is there a tenant or company demand in your area? To find out, I like to ask myself eight key questions which I cover in this week episode.
In this episode, you will discover
How to research your area
If an area fits your goals
Analyse tenant and company demand
Eight key questions to assess demand
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Podcast Transcript↓
[00:00:00] I'm Simon. And a few years ago, I decided I wanted to make a change. I wanted to create a passive reoccurring income to support me and my family today. And a legacy for the future, a future fast forward two years, and I've managed to generate over 10,000 pounds worth of monthly passive income. I've set up the business, scaled the business, and now I've systemised the business to free up my time.
[00:00:33] So join me to find out how I've done it. How well does it it every day and how you can do it too.
[00:00:56] I'm Simon and welcome to another episode of the podcast where we talk all things property. Creative cash flow. And of course, how to be financially independent to day, not in 25 years. And if you're brand new to me, brand new to the show, we do this every single Monday, right here, dig through the archives, catch up.
[00:01:23] There's so much value. So many different concepts and strategies that I've kind of gotten to grasp over the last three years. And when I started this podcast, I decided I wanted to share and show people like me that maybe felt like property investment was out of their grasp. And I'm here to tell you it's not, anybody can do this stuff.
[00:01:49] You don't need loads of money. You know, you're going to need some money, but a lot of it is education, hard work and just making the right moves at the right time. And if you're brand new to me, once again, please feel free to check out Simon Smith, online.com to find out more about my story, how I begun my background and join us every single Monday right here.
[00:02:15] So without further ado, today's episode is, does rent to rent work everywhere. It's one of the most frequently asked questions. I get people want to know does rent to rent work near you. And I'm here to answer that today. So it's really, really simple. I'm going to split this episode into two sections. And these are the only two things you need to be concerned with when considering if it works in your area.
[00:02:46] So before we break that down, I just wanted to find rent to rent or my style, my opinion, you know, the way I see rent to rent, you know, some people refer to rent, to HMO as just rent to rent. And I kind of feel like that misses the point for me, rent to rent is a substitute for purchasing an investment property rather than buying to rent you rent to rent.
[00:03:15] Only once you've acquired the property is then the strategy that sort of counts in terms of cash flowing it. And of course, that decision process is multifaceted and it is. Uh, there is an integration there. However, when I look at property, when I look at rent to rent, I'm like, okay, I'm going to rent to rent it.
[00:03:39] How can I best cashflow it? And it's not as black and white. It's, let's get this property and pay X for it and let's make sure we can charge X, Y Zed for it. And the, the, the, the bit in the middle is the profit. So with that being said, does rent to rent work everywhere?
[00:04:00] Well, First things first you've got to ask yourself, is there stock available to let near you?
[00:04:10] I'm guessing the answer is going to be yes. And then it's going to be like, okay, well, how many are there? Because how many that are available is probably going to be a good indication on how motivated they are and how many tired landlords or. Problematic properties. There are that you could potentially help people because it is a people business.
[00:04:33] So if you look on right move in your area, and there's only seven properties available to let yeah, it's going to be a little bit tricky. Now, look, if you only need one deal because you only want to make 750 pound a month, then you know, that could be fine. In fact, I've seen situations where. When the stock is low and there's not many how shares or not many
[00:05:00] essays, you can actually feel a really good niche.
[00:05:04] But if there's only seven properties, you're not going to scale some massive business. The second consideration is then, okay. Is there tenant or company demand? And what I do is I ask myself these simple eight questions and it's worked wonders for me. So I'm going to share them with you right now. I look, it's not rocket science, but it's really powerful.
[00:05:28] It allows me to systemize my decisions and I found the more of these eight you've got the higher, the demand is likely to be, so you don't need them all. But the more you've got the better. So number one, are you in or close by to a major city, big cities, big populations, larger accommodation requirements.
[00:05:49] Simple as that point. Number two, is there big business near you? Big business equals employment and jobs of course equals higher.
[00:06:00] Accommodation requirements now what's interesting is that you may not be near a big city, but there might be massive jobs. For example, the likes of Amazon and MNS and other massive companies will opt for cheaper land outside of major cities, but they'll have huge employment and therefore it could be a really good hack to find in a cool area.
[00:06:25] Number three construction. Are there a lot of new developments? You know, because that's going to bring in the jobs. Number four, are you near a hospital? A major hospital can be really, really powerful number five university. And you guys will know. I diversify between professional and student tenants.
[00:06:47] Number six is tourism. So if you're near a massive tourist site, you know, like an ode to, or a big stadium or a concert hall, you know, post COVID, then they will be. You know, consistent demand, especially for short stays. Number seven is major transport links. So I'm talking about big airports train stations.
[00:07:10] They're not only great because there's a lot of travel people coming in and out, but they also create jobs. So it's a bit of a double whammy and last but not least hotels. Hotels spend millions of pounds and dollars on research in the best sites. So if there are major hotels near you, I would trust their research.
[00:07:33] There's clearly demand for short-term accommodation. So there you have it. There are the eight key things to ask yourself in terms of assessing the demand for rooms and S a. So, as I said, part one, you need to find out if there's the stock. Is there the stock for you to reach your goals. And in step two is like, okay, is there demand once I've got these properties, once I've rent to rent it, some of these properties, how can I best cashflow them?
[00:08:04] So you'll just basically on that. See sore of balancing gait, and ideally you want a decent level of stock and a decent level of demand. One thing I would say is, think about your goals. If your aim is a thousand pounds passive income, that might only be one or two deals. So if you're in a smaller area, there's a good chance.
[00:08:28] They might be able to take a few more rooms. If your goal is to take over the world, then yet you're going to want to move towards a larger area. But the other thing is you don't need to confine yourself to one area. Once you grow a master, this, you can expand beyond it. So, you know, my first area, um, I focused on that at the beginning.
[00:08:53] Then when it kind of felt like maybe that was getting a little bit saturated, I expanded beyond that. And I think that's just part of scaling. So I hope that's useful. You know what to do guys hit me up on social media. Any questions, please subscribe to the podcast. Every Monday, you'll get a notification when the new episode drops and guys.
[00:09:15] Don't wait 25 years. Get creative. Thanks for listening. For more information, check out Simon Smith, online.com. See you next time.