Landlords Don’t Be Fooled, Why Guaranteed Rent Isn’t Always the Answer

As a busy landlord juggling a portfolio of multiple properties, you might be thinking about ways to reduce your workload or secure a regular income. Have you been enticed by promises of guaranteed rent?

Guaranteed rental schemes or rent-to-rent (R2R, not R2D2) schemes are growing in popularity. But hold on for a minute, what do they actually mean?

In a nutshell, it’s where you rent your property to a rent guarantee specialist who promises to pay you a certain amount every month and takes on the burden of managing your property.

Sounds great, doesn’t it? But is it too good to be true?

In this two-minute read, we look at why you should be cautious of rent-to-rent schemes and how they could be less profitable in the long run.

Less rental income

While you might be tempted to enter one of these contracts, often, the way the business offering you the R2R option can be profitable is to offer you less than the typical market rate.

By offering you a lower rate for a fixed term, the R2R business model will only work if the person managing your property charges tenants a higher rate. Therefore, you could be earning significantly less than if you were to rent through a regular letting agent.

The unknown agent

Once you sign up, you’re basically losing control of your rental property for a fixed term. How many tenants will be living in your property? Who will ensure that all the correct procedures are followed? What happens if significant repairs are required? What’s the tenant turnover like?

While a lot of these details can be included in a rent-to-rent contract, as a landlord, you may be putting your reputation at risk by offering up your rental to a third party.

Fast cash

The attraction of the guaranteed rental model is quick profit and few overheads. Little to no experience is required before setting up this type of business. This means your rental investment may be put at risk by agreeing to work with people who have little, or no cash at stake. Can you really afford to hand over your hard-earned investment to someone with no proven track record?

Using a local agent  

When you use a reputable local agent, they are regulated and experienced in letting out properties and often have a strong team behind them. They know what certifications are required, what makes a good tenant, and have access to tenancy deposit schemes and such like. So, you can feel confident in the knowledge that your property and tenants are looked after.

At CWB Property, our lettings team has been working in the local community for many years.

We can achieve market rate rents and we keep our fees as competitive as possible. Call us on 01634304326 for more information.