02 · Rent to Rent
Rent it. Re-let it. Profit from the spread.
You sign an agreement with the landlord at one rent, then operate the unit — typically SA or HMO rooms — at a higher income. Tight margins, real risk. We'll tell you if the spread justifies the setup cost.
01The Agreement
What you pay the landlord every month. Negotiate this — every £100 off is £1,200/yr of profit.
How long the landlord agreement runs. 3-5 years is typical.
One-off cost to make it legal and lettable: furniture, EICR, gas safety, alarms, photos.
02Income Model
Pick the model so the explanation matches what you're really doing.
For SA: nightly rate × occupancy × ~30. For HMO: sum of room rents at full occupancy minus a void allowance.
Bills, consumables, wifi, council tax (if you cover it).
10–15% for HMO, 20–25% for SA. Include it even if you self-manage today.
Strong R2R deal — £762/mo on a £6,000 setup.
After paying £1,100 to the landlord and £538 in costs, you'd clear £762 a month — a 31.8% margin.
Your £6,000 setup would pay back in 8 months, leaving £27,432 of profit over the 36-month agreement.
That's a 152.4% return on capital each year.
- Rent to landlord. Every £100 you negotiate off rent is £1,200/yr of pure profit.
- Income (occupancy or room rates). Mid-stay model: pushing occupancy from 80% → 90% changes profit dramatically.
- Setup cost. Cheaper compliance/furnishing = faster payback and higher ROCE.
The maths
- Gross monthly income
- £2,400
- Less: rent to landlord
- − £1,100
- Less: operating costs
- − £250
- Less: 12% management
- − £288
- Net monthly profit
- £762
- Annual profit
- £9,144
- Total profit over 36-month contract
- £27,432
- Setup cost
- £6,000
- Payback period
- 8 months