The strategy of Rent to Rent HMO has caught my attention recently – it seems like a low cost/capital strategy to get into property investing. From my understanding, this strategy involves becoming a tenant of a HMO and assuring the landlord a guaranteed rent, however with an agreement in place that you can sublet the HMO at a higher price on after a light refurb. You basically take on the responsibility of finding tenants to fill up each room, paying the utilities and council tax, and so on.
Initially the strategy seemed quite sound as you offer to remove all the hassle of a HMO away from the landlord, but I don’t see how the numbers can add up. Assuming the rent for a 3-bed HMO is £2,000 per month and utilities are £500, that is £2,500 that you would need to pay. Let’s say I want to profit £500 a month from this HMO, I would need to charge all the tenants £3,000 in total. For a 3-bed that means each tenant needs to pay around £1,000 for a single room when the HMO was initially on market for only £2,000 per month.
How would this even work?
submitted by /u/-Adapted
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