Glossary
Rent-to-rent: R2R
Lease a property from a landlord and sublet it as serviced accommodation or an HMO.
What it means
Rent-to-rent means renting a property from a landlord on a fixed rent, usually for three to five years, and subletting it at a profit, either by the night as serviced accommodation or room by room as an HMO. You don't buy anything, so the cash needed is the set-up and the deposit, but you carry the risk of quiet months and you need the landlord's consent, the right lease and, often, the landlord's lender's consent.
Worked example
ExampleA two-bed flat leased at £1,050 a month and let by the night at £125 with 68% occupancy.
- Revenue
- 248 nights × £125 = £31,025 a year
- Cleaning, fees, bills, rates, insurance
- £14,531
- Rent to the landlord
- £12,600
- Profit
- £3,894 a year, about £324 a month
Revenue covers the rent 2.5 times, but costs leave a 13% margin. The set-up takes 20 months to pay back.
Information, not advice. Example figures are fictional and for illustration only.