Landlord Rent-to-Rent Guide (It’s Garbage, Don’t Do It!)

Table of contents

• What is rent-to-rent?
• Why rent-to-rent is high-risk (and not worth it)!
• Why property “gurus” teach rent-to-rent!
• Why you don’t need to pay for rent-to-rent training courses
• Can you make money from rent-to-rent?
• If you really want to learn rent-to-rent… do it the right way!
• Better Property Investment alternatives to rent-to-rent

What is rent-to-rent?

It’s a simple strategy (which is why it blows my mind when people pay thousands to enrol onto rent-to-rent property courses! But more on that shortly):

• Step 1: You find a rental property which you believe is falling short of its full potential.
• Step 2: You rent the property off the landlord, often on the basis that you will guarantee rent every month, as that encourages the landlord to lower the asking price because they have a guaranteed income.
• Step 3: You rent out the property yourself to other tenants for more money than you’re being charged by the landlord. Essentially, you take on all the responsibility of managing the rental property as if you’re the landlord.

So it seems as though the landlord is happy as Larry because they have a guaranteed income, and they have alleviated themselves from the laborious duties of managing a rental property, and you’re equally as smug, because you’re making profit from a property without having spent thousands on buying it.

What a time to be alive.

Yeah, it’s still garbage! Smoke and mirrors.

Why rent-to-rent is high-risk (and not worth it)!

See, this is what they don’t tell you. “They” being the army of property experts pushing it [like their life depends on it].

They don’t give the full picture, because that would unravel the sham, and quickly expose how terribly unsafe and unreliable rent-to-rent is to achieve wealth and property success, particularly for novice and inexperienced landlords.

1. Firstly, rent-to-rent doesn’t generate “passive” income! Greaseball experts love to throw around the word “passive”, because they want you to believe it’s effortless. It’s not.
2. Nope, you don’t need to put down a deposit, but that’s because you don’t actually invest in property or take ownership of any valuable asset, which means you won’t benefit from capital growth (that’s how most landlords/property investors become financially secure in the long-term and absorb unforeseen expenses and losses).

   Rent-to-rent is not an “investment”, it’s more like a brokering service.

3. Rent-to-rent can only profitable if tenants pay rent on time, otherwise it’s a money-pit, especially if rent has been guaranteed to the owner/landlord (which it usually is). That means, if the tenants don’t pay rent, you still have to. That’s an extremely silly and highly leveraged position to be in.
4. It’s very easy to be unprofitable:
   • Vacant periods between tenancies, especially if you have a hard time finding replacement tenants
   • Rent arrears
   • Normally, you will also take on the responsibility for repairs and maintenance, because after all, you have agreed to take on the management. However, that’s not an exclusive arrangement with rent-to-rent, but it is the norm. So presuming you are responsible, that’s obviously another easy way to get hammered into the red.

   One or more of those circumstances can easily wipe out several months of profit, if not more.

5. Rent-to-rent is usually most profitable (I use the word “profitable” in extremely loosey goosey terms) when operating a HMO, so you’re generally dealing with low income individuals. Unfortunately, out of all tenant types, they’re most likely to face financial hardship and fall into arrears.
6. Rent-to-rent breaches almost all anti sub-letting terms and conditions found in mortgage policies, insurance policies and leases. Generally speaking, it’s extremely difficult to operate rent-to-rent legitimately (which is why most of them are illegitimate, and open to legal prosecution).
7. You effectively become the middleman between the landlord and the tenants, and that can be a logistical nightmare, particularly when it comes to managing repairs.
8. Last but not least, it’s not the easiest way to turn a profit, let alone make serious money.

Bottom line, it’s insanely difficult to be successful with rent-to-rent, and you’re taking on an incredible amount of risk and hassle without benefiting from the most compelling aspect of property investment: capital growth!

The risk/reward ratio is extremely unpleasant in reality.

Why property “gurus” teach rent-to-rent!

So, if rent-to-rent is as terrible as I say it is, then why are buttload of experts selling rent-to-tent courses like it’s the golden ticket to property success?

Well I’m glad you asked, because it’s an issue that really gets on my tits.

The reality is, the “property mentor” market has become contaminated with a lot of people with limited experience and success, and all they’re doing is trying to cash in on selling useless courses. Unfortunately, those that are financially successful (most of them aren’t, it’s just a scam) preyed on vulnerable people, many of which are facing hardship and looking for a way out.

To answer the question at hand directly, here is why the bottom of the barrel property experts flock towards selling rent-to-rent courses:

• It’s an easy dream to sell

  “Become a property million without putting down a deposit”

  Ahhhh, the appeal, it’s blinding.

  The most compelling selling point of rent-to-rent is that it requires very little capital to get started, so almost anyone can do it, which makes it easy to cast a huge net.

  However, if it sounds too good to be true…!

  If you think the odds of achieving “financial freedom” (the term often thrown around by these snake-oil gurus) with property without virtually any capital, then you need a wakeup call. I’m sorry! But it’s so woefully unlikely, that it’s a joke it’s even taken seriously.

• It’s easy to teach
  Bear in mind, the majority of the buffoons selling rent-to-rent courses aren’t exactly the sharpest tools in the shed, so whatever pearls of wisdom they’re sharing has to be basic.

  Fortunately for them, the concept of rent-to-rent is piss-easy.

Take away what you will from this, just make sure it includes the understanding that rent-to-rent is not being taught because it’s the most sensible or robust means of property success. It’s being taught because someone wants to profit from teaching the garbage.

Why you don’t need to pay for rent-to-rent training courses

So, actually, many of the property seminars that teach rent-to-rent are free (so, a fair price, to be honest), and I wouldn’t necessarily discourage anyone attending a free seminar, especially if you have absolutely nothing else to do. You can actually learn some useful nuggets of information. But it’s important to understand that they’re free by design, and it’s certainly not because a self-proclaimed property millionaire is doing God’s work and “giving back to the community”

If you attend one of the freebie seminars, you’ll probably have the misfortune of hearing the following classic and nauseating line, “I DON’T NEED TO BE DOING THIS, BUT….I WANT EVERYONE TO HAVE THE SAME SUCCESS AS ME”

The freebie is usually just bate; it’s a ploy to lure people into seats so the organisers can up-sell “premium content” and one-on-one mentoring. Essentially, the free seminar is just one big honey-trap, riddled with all the usual snake-oil sales tactics you’d expect, like comical “90% early bird discount” and “limited availability”. It’s all so stupid, but that’s how they make their money!

Putting aside any possible merits of rent-to-rent, the reality and crux of the matter is that it’s not that difficult to learn, and all the information is freely available online. Simply, you don’t need to attend a free or paid seminar to learn rent-to-rent, and you certainly don’t need pay through the ass to unlock any premium content or mentorship to learn more.

Can you make money from rent-to-rent?

Yes.

Definitely.

I’m sure there are many landlords itching to smugly inform me of how they’re making a killing from rent-to-rent.

Despite my Debbie-downer opinion on the whole issue, I’m not against rent-to-rent per’se, and I’m sure people are having success with it, even though I believe the odds are stacked against them!

I do, however, think it’s a terrible strategy for the reasons mentioned, so it’s not a method I would ever endorse or encourage, especially to those with limited funds and experience.

My main issue is with “experts” mis-selling rent-to-rent to the wrong people, and charging a boatload to learn it.

If you really want to learn rent-to-rent… do it the right way!

Despite my resistance to accept rent-to-rent as a reliable strategy to invest in property, I’m not point-blank against it! Rent-to-rent is a strategy to earn money from property, I just happen to believe it’s the worst one out of the bunch.

As long as you’re aware of the risks involved, I’ve done my job, and at that point, I wouldn’t dream of stopping you or anyone else from pursing the journey if that’s the true desire.

My only recommendation would be to choose wisely in who you trust. I can confidently say that if a property expert is trying to sell a rent-to-rent course for thousands of pounds, then you’re probably in the wrong place.

If I wanted to jump on a learn rent-to-rent training course (which I never will), I wouldn’t pay more than a couple of hundred pounds. But my first port of call would be to read rent-to-rent books (there are a few on Amazon), join forums and Facebook groups, and independently soak up as much information as possible. You’re likely to get more value out of that than any course, in my opinion.

What I think is far more important than learning the strategy of rent-to-rent is learning how to be compliant, and that’s a course I would pay for. Rent-to-rent can be a legal minefield, and that’s why many are doing it illegitimately, breaching all kinds of terms. Sadly, most of the courses available are held by no more than salesman, so they have virtually no legal qualifications, and therefore don’t teach compliance. That’s an obvious problem.

I have no affiliation with Tessa Shepperson (a Landlord Law solicitor) from landlordlaw.co.uk, but I know she’s highly respected, and she holds rent-to-rent training days. Refreshingly, she’s not a property guru, she’s a highly experienced solicitor. That’s the route I would take.

Better Property Investment alternatives to rent-to-rent

If you’re looking for a quick, easy and cheap alternative to rent-to-rent that provides better odds, then unfortunately I don’t have good news for you. It’s a unicorn, it doesn’t exist, so I can’t point you in the direction you want to be pointed in.

For my sins, I’ve been a landlord for over a decade, and experience has taught me that there is no secret recipe or worthwhile shortcuts, despite what you might be being sold by a two-bit property guru. The old fashioned route to long-term and sustainable wealth via property isn’t sexy or easy, but it’s tried and tested, and it still remains king: save a deposit and buy the right property.

Now, if you want more information on that, I can definitely point you towards the direction of my free guide for new landlords.

Landlord out xoxo