As
a busy landlord juggling a portfolio of multiple properties, you might be
thinking about ways to reduce your workload or secure a regular income. Have
you been enticed by promises of guaranteed rent?
Guaranteed
rental schemes or rent-to-rent (R2R, not R2D2) schemes are growing in
popularity. But hold on for a minute, what do they actually mean?
In
a nutshell, it’s where you rent your property to a rent guarantee specialist
who promises to pay you a certain amount every month and takes on the burden of
managing your property.
Sounds
great, doesn’t it? But is it too good to be true?
In
this two-minute read, we look at why you should be cautious of rent-to-rent
schemes and how they could be less profitable in the long run.
Less rental income
While
you might be tempted to enter one of these contracts, often, the way the
business offering you the R2R option can be profitable is to offer you less
than the typical market rate.
By
offering you a lower rate for a fixed term, the R2R business model will only
work if the person managing your property charges tenants a higher rate.
Therefore, you could be earning significantly less than if you were to rent
through a regular letting agent.
The unknown agent
Once
you sign up, you’re basically losing control of your rental property for a
fixed term. How many tenants will be living in your property? Who will ensure
that all the correct procedures are followed? What happens if significant
repairs are required? What’s the tenant turnover like?
While
a lot of these details can be included in a rent-to-rent contract, as a
landlord, you may be putting your reputation at risk by offering up your rental
to a third party.
Fast cash
The
attraction of the guaranteed rental model is quick profit and few overheads.
Little to no experience is required before setting up this type of business. This
means your rental investment may be put at risk by agreeing to work with people
who have little, or no cash at stake. Can you really afford to hand over your
hard-earned investment to someone with no proven track record?
Using a local agent
When
you use a reputable local agent, they are regulated and experienced in letting
out properties and often have a strong team behind them. They know what
certifications are required, what makes a good tenant, and have access to
tenancy deposit schemes and such like. So, you can feel confident in the
knowledge that your property and tenants are looked after.
At Ridgewater Sales and Lettings, our lettings team has been working in the local community
for many years.
We
can achieve market rate rents and we keep our fees as competitive as possible.
Call us on 01803 525100 for more information.