‘Rent To Rent’ Millionaires In The UK

by Mark Alexander - Founder of Property118

18:48 PM, 14th May 2022, About 3 years ago 11

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In my 30+ years of investing into UK rental property I have had the pleasure to have connected with 1,000’s of people who have made their millions by doing the same things as me.

I’ve also met more than a handful of people who have made their fortune as a result of teaching newbies their ‘Rent To Rent‘ strategies. Some call them guru’s whilst others call them “Furu’s” (Fake guru’s), but they tend to call themselves “Property Educators”. Whilst I don’t have an axe to grind with these people, it recently occurred to me that I have never met anybody who has actually made their millions using a ‘Rent To Rent‘ strategy to build a rental property business as opposed to teaching it. Perhaps this is because ‘Rent To Rent‘ is so frequently sold to wannabees who don’t have money to invest into property? Do these people get frustrated and drop out of the market or do they go on to make enough money to invest into property they own themselves?

I know for a fact that ‘Rent To Rent‘ is a real strategy and that deals really do get done. I even invested into shares in a ‘Rent To Rent‘ business once via a Crowdfunding platform but, despite the very impressive pitch that lured me in, even that business hasn’t performed anywhere close to projections of the business owners.

I’ve also come across some terrifying ‘Rent To Rent‘ stories of woe from property owners who have willingly agreed (and many more who have been duped into) renting their properties to ‘Rent To Rent‘ operators. One of the problems I’ve come across is the use of the wrong agreements between the property owner and the ‘Rent To Rent‘ operator. This is not expensive to fix though and there is a simple solution.

My main question however is whether there are really any ‘Rent To Rent‘ millionaires, and if so where are they all hiding and why haven’t I ever come across them?

Somebody once told me that the first step towards owning £1,000,000 of ‘Rent To Rent‘ property is to buy properties worth £2,000,000. The second step is to let them to an inspired wannabee, fresh off a ‘Rent To Rent‘ Get Rich Quick course, which of course they paid for by increasing the limits on their credit card. The third step is getting rid of the people occupying the property when the ‘Rent To Rent‘ operator has seemingly disappeared off the face of the earth. The fourth step is to put right all of the damage to the property or take a big hit by selling it in a distressed state in a public auction. What do you think?

It would be great to read the thoughts of our Members and Subscribers in the comments section below.

All the best

Mark Alexander – Founder of Property118

PS – Here’s a link to an associated article explaining how property owners and ‘Rent To Rent’ business operators can improve their likelihood of success by using the right contracts https://www.property118.com/guaranteed-rent-to-rent-lease-contract-template-download/

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Comments

DPT

17:21 PM, 21st May 2022, About 3 years ago

Even then things often go wrong. My brother in law let his property to a rent to rent company against my advice. The guy who ran the company was very decent and professional, but used a modified AST to govern the relationship. I dont think he realised the implications, but its wholly unsuitable for a company let and the forfeiture clause in the event of non payment was effectively useless as it required the superior landlord to serve notice and seek a court order. The company overstretched and he didn't manage the HMO very effectively. He also didn't notice that the Council had introduced an Additional Licensing scheme and his 4 person HMO was now in breach. By the time the neighbour complained to my brother-in-law there were 12 people living there as the tenants had invited others in. At that point the insurance came up for renewal and my BiL couldn't get any because the property wasn't licensed. The company eventually obtained a licence but then covid struck and some of the tenants stopped paying the rent because of no work or poor management. The rent guarantee evaporated and my BiL stated to lose money. He had no real redress because its a commercial contract and not covered by consumer rights. It is all now resolved, but he lost a lot of money and ended up inheriting a lot of bad tenants when the company surrendered its interest by mutual agreement. I still speak to the guy who runs the company who was trying to do his best, but was out of his depth and lost money himself.

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‘Rent To Rent’ Millionaires In The UK