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  • Rent-to-Rent

    Some basic questions about Rent to Rent

    I'm new to this forum and trying to learn some of the basics.

    How does the owner protect themselves in the event of a rate rise where they're on a tracker? How does that impact the R2R person?

    What are the three biggest risks in R2R?

    How does the R2R person participate in the capital growth or is that only for lease options?

    Thank you.

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    Hi Chris and welcome to the tribe.

    This thread answers all of your questions and more so sit down with a cuppa as it has 98 replies:

    Rent 2 Rent - I am having a "blonde moment"!

    The Rent to Renter does not participate in capital growth.

    The biggest risks are:

    1.  You have guaranteed the rent to the landlord, and you can't fill the rooms, so you have to pay the rent even though no income coming in.

    2.  You create an illegitimate HMO.

    3.  Your margins are so slim, that one empty room means you make a net loss.

    I am not a fan of Rent to Rent for a number of reasons, and I don't believe the margins are anything like the trainers, mentors, and gurus claim, so approach with caution.

    ​I hope that helps for starters?

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    This is massively helpful. R2R seems to be THE strategy most pushed at the moment. I will read through carefully.

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    Yes, its THE strategy being pushed because it has a veneer of possibility about it. 

    People with no money for deposits can be led to believe that they can get into property with no funds ... and there are a huge amount of people in that boat ... so trainers have access to a large audience of people who will readily pay for training, evening borrowing money for the course on a credit card, to learn how to do this.

    See - Are all property education courses a scam?

    Someone I know who runs a large R2R agency in London told me it costs around £12K to prepare a property legitimately for R2R, and for the first year, he makes a loss.

    A lot of the marketing and advertising of these courses is highly misleading imho.

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    Don't do it.  As a strategy for building a solid property company it is a bag of crap.  The only people making money out of R to R are the duplicitous gurus charging people like you five grand to learn how to do it.

    It looks too good to be true and it is.   One bad month and your're dead in the water unless you have good cash reserves.  If you have good cash reserves build your own portfolio in a limited company.

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