Rent-to-Rent (R2R)
Rent-to-Rent involves an investor renting a property from a landlord on a corporate let, and then legally subletting it at a higher rate (e.g., as an HMO or Serviced Accommodation) to generate cash flow.
Rent-to-Rent (R2R) is a pure cash flow strategy that requires almost zero capital to start, making it popular among beginners. In this model, an investor signs a management agreement or corporate lease with a tired landlord, guaranteeing them a fixed monthly rent for a set period (e.g., 3-5 years).
The investor then takes over the property, often carrying out minor cosmetic refurbishments at their own expense, and sublets it to maximize revenue. The two most common R2R strategies are converting standard family homes into multi-let HMOs, or running the property as Short-Term Serviced Accommodation (like Airbnb).
The Risks
The investor keeps the difference between the gross income and the guaranteed rent paid to the landlord. However, the investor takes on the massive risk of void periods and maintenance. If the property sits empty, the investor is legally obligated to pay the landlord the guaranteed rent out of their own pocket.