A Stress-Free Way to Make Money
Being a private landlord in London can be a stressful business. You can never be certain whether your tenants will pay their rent on time and in full, or there may be periods when the property is unoccupied and you’re losing money on your investment. Of course, there are other options available to you that can ensure a certain level of continuity and stability at the cost of a slightly reduced income, but are they profitable? In this article, we’re going to look at how you can make money with a guaranteed rent scheme in London.
What is a guaranteed rent scheme?
It’s pretty much what it sounds like—a way to ensure guaranteed rental income on your properties, regardless of how reliable your tenants are or whether the house itself is currently occupied. Also known as a rent-to-rent arrangement, a guaranteed rent scheme involves you leasing your property to a third party for a specified period of time. This third party is typically a letting agent or property management company, although you can make such an agreement with another private individual if you wish.
For the duration of the agreement, the third party will be your renter. They will pay you a fixed sum every month, whether or not the property is tenanted. It will be their responsibility to sublet the property to a tenant, who will pay them directly, covering their own administration costs.
Benefits of a guaranteed rent scheme in London
- Consistency: by far the greatest advantage of a guaranteed rent scheme is knowing that you’ll be getting a steady income month to month. While it might not be as much as renting direct to a tenant, it is guaranteed, even if the house sits empty or the rental market decreases in your area.
- Less Hassle: The renter will typically deal with tenants, regular maintenance and inspections, and often minor repairs, freeing up your time and lightening your workload as a landlord.
Potential pitfalls of a guaranteed rent scheme in London
- Lower Income: Since your renter needs to make a profit subletting the property, any guaranteed rental income will be less than you could make renting directly to a tenant. This, of course, is offset by the reduced risk.
- Contract Terms: You will still have some responsibilities as a landlord, such as major repairs and maintaining building insurance. The extent of these responsibilities will be determined by the terms of your arrangement with the renter, so it’s important to read through the agreement thoroughly.
Can you make money with a guaranteed rent scheme?
Absolutely! As with any business arrangement, it’s all a matter of due diligence and making the arrangement work for you. Make sure you’re dealing with a renter you can trust to not only make their agreed payments on time but also to fulfil their other contractual obligations, such as general maintenance, regular inspections, managing their tenants, and so on. Any trustworthy renter should have testimonials from their current or former landlord partners that they will be happy to show you to prove their reliability.
If you’ve done your research, checked through your agreement, and understand both parties’ obligations under the arrangement, a guaranteed rent scheme can be a stress-free way to make money from your property portfolio without the day-to-day hassles that come with being a landlord.
If you’re ready to make the most of your London rental property, speak to the team at Abel Living. With decades of relevant experience in the industry, we have a reputation for honesty and transparency among our landlords. We are a reliable rental partner, ensuring a stable, hassle-free income with minimal risk to you. For more information, call Abel Living today on 020 4538 8852 for a free consultation.