Andy Graham (00:02.67)

Hey, I'm Andy and you're listening to the HMO Podcast. Over 10 years ago, I set myself the challenge of building my own property portfolio. And what began as a short -term investment plan soon became a long -term commitment to change the way young people live together. I've now built several successful businesses. I've raised millions of pounds of investment and I've managed thousands of tenants. Join me and some very special guests to discover the tips, tricks and hacks, the ups and the downs, the best practice and everything else you need to know to start, scale and systemise your very own HMO portfolio now.

Andy Graham (00:40.654)

In today's episode, I am talking about one of my favorite strategies and that is of course, rent to rent. Now, if you've been listening to the show for a long time, or if you've been following me for a while, then you'll know why I have such a soft spot for rent to rent. It is of course, much less capital intensive than actually buying and acquiring and refurbishing your own HMOs. Now, they can't be compared. They are different models of wealth creation. However, if your objective is to ultimately build your own

owned portfolio, then Rent -to -rent can be a phenomenal way to actually get started and accelerate that process. Because it's so much less capital intensive, it just really is a great gateway. Now, you still have to take it very seriously. It's easy to get this wrong. It's easy to lose a lot of money. It's easy to burn a lot of bridges. And it's easy to damage the livelihood of landlords as well. So there is a huge amount of responsibility with this. So whilst we are getting excited and perhaps going to be talking about some of the numbers and things that we can

create an earn through rent -to -rent, it is important to recognise that there is still a huge amount of responsibility and this isn't necessarily just a side hustle that you can do with your eyes closed. You've got to really think about it. You've got to take it seriously. Now, I exited my rent -to business last year. After seven or eight years, it had grown a number of arms and legs. It was a business that I was ready to exit because I wanted to move on to other things, but it was a very profitable business. I did some incredibly good deals, some really fantastic rent -to -rent deals.

right through from three beds up to 25 beds from five year leases right through to 10 year leases as well. We did a lot of investment work with private clients. We did a lot of standard management for landlords, particularly student landlords as well. So I did the whole shebang, but rent to rent was a really key part of it. And had I have not done the rent to rent stuff, I don't think it would have been anywhere near as exciting. And it certainly wouldn't have been anywhere near as profitable. Now I started things the other way around. I actually started buying, acquiring my own HMOs and refurbishing them. And I...

moved onto rent -a a little bit later as I realized it was quite difficult to recycle all of my capital and keep growing and building cash flow at the pace that I wanted to. However, for a lot of people, starting with rent -a can be a great way to get to buying and owning your own HMOs. And that is why I want to talk to you today about some of the most important things that you need to think about if you're considering building a rent -a -rent business yourself. These are some of the key concepts, the things that you really should start with.

Andy Graham (03:00.174)

before you embark on the idea of building a rent to rent business. And I have got something very, very exciting to share with you in today's episode, something we've never done before. This is going to be for anybody who is genuinely interested and thinking about building a rent to rent business, this is going to be for you. So make sure you stick around to the end. Okay, well, if you're ready to learn about rent to rent, please sit back, relax, and enjoy today's episode of the HMO Podcast.

Andy Graham (03:29.39)

Hey guys, it's Andy here. We're going to be getting back to the podcast in just a moment, but before we do, I want to tell you very quickly about the HMO roadmap. Now, if you're serious about replacing your income, or perhaps you've already got a HMO portfolio that you want to scale up, then the HMO roadmap really is your one -stop shop. Inside the roadmap, you'll find a full 60 lesson course delivered by me,

teaching you how to find more deals, how to fund more deals and raise private finance, how to refurbish great properties, how to fill them with great tenants that stay for longer, and how to manage your properties and tenants for the future. We've also got guest workshops added every single month. We've got new videos added every single week about all sorts of topics. We've got downloadable resources, cheat sheets and swipe files to help you. We've got case studies from guests and community members who are doing incredible projects that you can learn from. And we've also built an application just for you.

that allows you to appraise and evaluate your deals, stack them side by side and track the key metrics that are most important to you. To find out more, head to theHMOroadmap.co.uk now and come and join our incredible community of HMO property investors.

Andy Graham (04:39.79)

Welcome back. So today we're going to talk about rent to rent. Of course, one of my favorite strategies, I used it to really good effect. I started building a rent to rent business in 2016, grew it, did grow a few arms and legs, became an investment and management business. We did a lot of work for private investors. We did a lot of management for private landlords and I did some really incredible and very, very profitable deals. Last year I decided it was time for me to exit that business. It was the right time. It was the right money and...

I was ready to move on to other things, but there's no doubt whatsoever that Rent2Rent and those deals that I did within that business helped accelerate my journey and helped me continue building my own portfolio. And I think for a lot of our listeners, for a lot of our community members, that is exactly what Rent2Rent can do. Now you don't necessarily need to build a business on the scale of the one that I did. We managed thousands of tenants over the years that I ran that business, but even a small portfolio can.

generate sort of cashflow that can allow you to leave your job, generate some savings, reinvest those savings into your deals. And at the same time, you're learning and you're developing skills and experience and knowledge that'll help you go on and acquire your own deals and refurbish and develop your own projects. You'll develop a network. You'll find that there are more opportunities the more that you immerse yourself in the industry. And these are all great benefits that I found myself. So.

And that is why I've got such a soft spot for it. And of course, like I said, the beginning of the show, it's much less capital intensive. So you can generate the sort of cash return on a month by month basis without having to put anywhere near the same amount of capital at the front end. So if you have a limited amount of capital today to get started with, then rent rent could be a great model for you. But like I also said, you've got to take this seriously. It's not something that you can do with your eyes closed. It is still.

managing assets, it's still managing people. It is still very sensitive to the numbers. If you want to make it work, if you want to do profitable deals, there's an awful lot you have to know and an awful lot you have to get right. Now, I mentioned that there's something that I'm going to share with you that is very exciting today. I'm going to share that with you at the end of today's episode. It's something we've never done before. I am super, super excited to bring this to our community. But the reason I'm doing this is because there are a lot of people teaching rent to rent.

Andy Graham (07:02.222)

But if you look behind that curtain, there doesn't often seem to be that much going on in terms of deals done. And for me, that is really, really concerning. In fact, that's quite alarming. Rent to rent is still quite high risk if you get it wrong. It's easy to get it right if you follow the right principles. And I'm going to outline some of these things that you need to start thinking about in today's episode. But...

There is an awful lot to think about and you have to execute very well if you want to get this right. I have seen so many people fail in rent -to -rent because they didn't understand the fundamentals. They negotiated deals that just did not have enough meat on the bone. Ultimately, they weren't profitable enough. They overlooked certain costs and ended up having to hand deals back. All very problematic for themselves and for the landlords and for the tenants involved. And that is exactly what we have to avoid. But...

If you want to do deals that generate you a thousand pound per month, every single month, then this is what I'm going to outline for you today. So I've got five ideas. Now, the first thing to say is that you are not going to be able to learn everything that you need to know about Rent -To-Rent to go on and build a Rent -To-Rent business in a 30 minute episode on the podcast. Unfortunately, it is just far more complicated than that. However, what I am going to do is outline.

five key principles that you need to think about so that you can begin to focus more fully on these elements. Because once you know them and understand them and respect the value that they will have in your business, then you can construct good deals around them. And then you can build very profitable rent -to -rent businesses. So I'm going to share these five ideas with you today. And I really want you to understand and take away the importance of these because...

If you overlook them, if you just rush into deals because somebody is prepared to sign an agreement with you, you will almost undoubtedly make some mistakes. You'll probably lose a lot of money and a lot of people will get upset in the process. So we must avoid that. So today I am going to get started with perhaps the most important thing that you have to master if you are going to build a profitable rent -to -rent business. And that is of course mastering the location and the numbers behind successful deals. Now.

Andy Graham (09:22.318)

I'm not going to be able to tell you in today's episode exactly how to do that. It is quite a complicated process. I really just want to infer the importance of the process and putting the effort and energy into understanding this process. Rent -to -rent deals are all different, but because of the nature of the deals, because it's really in essence an arbitrage model, you're going to take an asset, you're going to rent it as X, you're going to do something to it, and you're going to rent it back out at Y. That margin in the middle is very, very important. So if you get...

anything wrong at all, if any of your assumptions, and there are a lot of assumptions, if you get any of those wrong, you could end up with a deal that either doesn't make money or doesn't make as much money as you thought. And that's really important. We have to avoid that. But I can't tell you as simply as do this and that to make your other deal works because every deal is different. So student deals are different depending on whether you're investing centrally or peripherally around a city. We're talking about primal, non -prime locations. It's all different.

the sensitivity around the length of agreement. It's very different for every single deal. So you have to understand the sensitivity of this model. And to do this, you actually have to do a lot of practice. You have to stack up a lot of deals and compare them literally side by side to see why some things work and some things don't work. And often you will be surprised, sometimes deals that you don't think would work that well are incredible on paper. Sometimes deals that you thought were gonna be incredible just don't work that well.

One of the other things that's very, very important here and really sensitive to the numbers is the refurbishments. You actually have to know your numbers and that's all going to be plugged in. So unfortunately, when you're doing a rent-to-rent business, a lot of the deal is going to be based on your assumptions. So your knowledge base that has got you to those assumptions has to be perfectly sound. And there has to be a little length on the rope. You've got to live a little bit of scope for margin of error. You might get things wrong. The market could be a little bit.

different and it's important not to be overly optimistic. So let me just highlight some of these differences for you. Let's take a really simple but quite different model. Students versus professionals. Student properties tend to be very centrally located. Students tend to live very sort of close to one another. They like to live in student communities, often within a certain proximity to a university campus. Now, professional accommodation can be quite different. Usually you're not as limited, but...

Andy Graham (11:46.318)

Still, you probably want to be quite centrally located, quite close to amenities or transport links. So there is still an important piece around the location or mastering the location. But the student stuff is very, very sensitive. Now it's easy to look on a map and think, well, students are probably happy to live within a 10 minute walk from the campus. And if you drew a radius around the city, they'll probably live anywhere within that radius. But that is absolutely not the case. Students live where students live. And you've got to make sure that if you're going to stack a deal up on the assumption that it could be used effectively as a student.

HMO, you've got to make sure that it is in exactly the right place. Now, one of the real benefits for student properties and doing rent -to -rent and kind of using it as a student property is that you don't have to pay the council tax. So immediately, depending on where you are in the country, you can remove 150 to 200 pounds off your sort of overheads. You just don't have to pay that with students because they are exempt. That makes it much more profitable. Okay, the same deal. You could put professionals in there, but that same deal.

Let's say students could just be up to 200 pound a month more profitable, but there are other bonuses as well. With professionals, you have to factor in things like sensible voids and sensible and realistic occupancy periods. That is not as predictable as it is in the student market. If you've got a property that is in absolutely the right location, you can almost guarantee with students that as long as you've got the right spec and you determine the right rent levels, you pick the right point in the market.

you will be absolutely fine and your predictability of occupancy is much, much higher. So for example, a lot of my student lets, they run on 51 week lets. Students move in, they stay for 51 weeks, they move out, in in that week before the next lot of students move in, we get in there, we do our maintenance, repair, we might redecorate, we might replace some furniture, we do our changeovers, inspections, inventories and all of that jazz. So that means I have an incredibly high degree of confidence that that.

property is only going to be void for one week of the year. So that is effectively 98 % occupancy. With professionals, you don't have that same degree of confidence because there is a natural churn. Young professionals are quite transient individuals. They might stay for six months. They might stay for 18 months, but on average, if you wash it out and I've done a lot of professional deals, you're probably going to find that you're not able to get over 96%, but really depending on where you are, you may well be at more like 94 % and still that is

Andy Graham (14:07.79)

just a good estimate. You've got to factor that into your model. So now all of a sudden, if you're factoring in a reduced occupancy, let's say 94 % because that's probably realistic, plus you've got the extra council tax to pay, that deal could immediately look four or 500 pound a month worse off than an alternative student deal. Now, the assumption there could be, well, obviously you would do a student deal, but the point here is that that location has to be absolutely perfect for students.

you've got a little bit more scope with professionals. It doesn't have to be as absolutely perfect. You're not looking under the same microscope as you are with student properties. Now, this all needs to go into a model. You've got to build it all in, you've got to factor it all in, and you've got to look at how this all comes out at the end. You've got to factor in sensible things like repair and maintenance costs. Now, typically I will factor in something like 50 to 100 pound a month for repair and maintenance. It really depends on the size of the property, the number of bedrooms.

And there are other things that you need to factor in as well. Bills is a big one, isn't it? Okay. What are the bills actually going to be now with young professionals? Again, you're going to have to make a very best guess on what that's going to be depending on the size of the property and the type of the property that can vary quite a lot as well. So when you're stacking a deal, you can see how if you are looking at doing a deal on something that is maybe a four or five bed, fairly new build, it's probably going to have better you values. It's going to have better energy, economy and efficiency. See a bill.

costs are probably going to be a little bit less. If the deal is on a big Victorian Palisade villa with huge rooms, big open spaces, has the same number of rooms, you're gonna have to factor in more for your energy bills, aren't you? It's just gonna cost more to heat that house and keep it warm. That all has to be built into your model. So you've got to have a really good understanding of what bills actually cost. And it can't just be a round figure that you pick because you heard someone else talk about it. You have to be able to genuinely justify what that cost is going to be.

because if you're out by one or two or 300 pounds per month on the bills, it is going to dramatically change the performance of your deal. It could be the difference of it working or not working. Now, as you start to take all of these different things into consideration, you can see how very quickly they could all add up. You've got a void or an occupancy rate to consider. If you're out on that by a couple hundred pounds, that could mean you're not as profitable as you think. You could be out by a couple hundred pounds on your deals. That's sort of another 200 pounds, that's 400.

Andy Graham (16:30.444)

Council tax, you've got a factory in for your professionals, not students, that's another 200 pound. All of a sudden, one deal could look more like 600 pound worse off than another deal. Now I've picked out the student versus professional example, just to really highlight some of this, but a lot of these differences do exist still between professional lets, okay? Remove the council tax issue, because all professionals are gonna pay council tax, but the billing is gonna be potentially quite different for each property, depending on the type of property.

The achievable rents could be quite different depending on the type of property and the size of the rooms or whether or not there are on suites in that room. The exact location could to an extent determine or give you a better guide on the occupancy that you might have. If you are bang next to a tube station in London, you're probably going to have better occupancy than you are if you're sort of six miles out and it's on the overground. You know what I mean? These things are really, really important.

And this is why you have to have an incredibly strong and solid knowledge base because it would be easy to just plug in the same numbers for all of these deals and assume that they all work the same at the back end. But that is absolutely the wrong assumption to have. You need to be so much more detailed. So the first point I wanted to labor today was you need to really get your head around the numbers and the location. And you have to absolutely master that because the performance of your deal almost

relies entirely on your ability to do that and do it very, very effectively. The final piece that will affect your numbers dramatically is the length of your lease or your management agreement. If you do a deal over 10 years versus a deal over five years, it's going to be almost twice as profitable. Not quite because you will have maybe some periodic improvements to do, but generally speaking, that is going to be the case. You need to factor a lot more in though. What is your rent going to appreciate at over that?

period of time. Are you going to have to pay your landlord more over that period of time? Maybe in year three, in year five, in year seven, you've got to pay your landlord a bit more. All of this stuff has to be factored into that deal, but it will dramatically change your deal and your opinion on that deal might change quite a bit. If for example, over the 10 year term, you're going to make 60 ,000 pounds versus over the five years, you might only make, let's say 40 ,000 pounds or 30 ,000 pounds or 20 ,000. It might.

Andy Graham (18:49.678)

completely change the dynamic of the deal and be the deciding factor as to whether or not you do the deal or don't do the deal. So a lot to think about when it comes to location and numbers and probably thinking, God, well, where do I even begin with that? Well, don't worry because like I said, I've got something for you at the end of today's episode that is really going to help you here. I'm not just going to leave you out in the lurch. I am going to give you something to help develop your knowledge and confidence around location and numbers. Okay, the second thing.

that I want to talk about today and really highlight is the ability to find and secure rent to rent deals. So well and good knowing how to stack deals, but if you can't actually find them, if you cannot generate good quality, high quality leads that would work well for your rent to rent business, you're not gonna have a very good rent to rent business, are you? Now, there are a number of ways to do this. A lot of the methods taught involve a script and going to an agent with a script. And I can tell you from firsthand experience,

been doing this for almost 10 years, that is almost always guaranteed to end in failure, especially if you don't have any experience or any deals under your belt. Okay. There are other ways, there are multiple ways and even think about these different ways. There are techniques and tips and tricks that you can use to your advantage. So direct to vendor marketing is a widely overlooked strategy and method of acquiring good quality rent to rent deals.

Of course, a lot of people are a bit impatient. They want deals now, today, fast, but that can be quite challenging. It can be very off putting if you go to an agent and trying to get deals off them. It can also be unrealistic if you are doing a direct to vendor campaign. But direct to vendor campaigns are the best way to get direct with landlords. Cut out the agent means your deals are gonna be more profitable off the bat. Okay, you can create a system that is almost on autopilot. We can allocate a budget to a direct to vendor marketing.

program, we can just leave that running for 12 months, what is the likelihood that over a 12 month period, you are gonna get a number of deals from that campaign? Very, very high. Let's say you spent 500 pound a month on a direct to vendor campaign, that's 6,000 pound across the course of a year. Even if that campaign only yielded one profitable deal, let's say you did a seven year deal, and the total net value of that deal, that contract was 60,000 pounds, you've got a 10x return on that 12 month marketing spend.

Andy Graham (21:15.086)

This method is overlooked. Now there are some people that do do direct to vendor and teach direct to vendor, but it almost always looks exactly the same. It's a very simple series of a few letters. Sometimes it works, but on the whole, it is not going to generate the yield that you want. There are much more creative and convincing and compelling solutions to marketing for your deals, particularly if you want to build a strong pipeline.

We could spend a whole episode on that and we don't have the capacity to do that in today's episode, but I just want you to start thinking about, and hopefully that example of look, spend 6,000 pound a year on direct to vendor and maybe do at least one deal that gives you a 10 X return. It's a no brainer, right? It's something that we should absolutely be doing if we're serious about building a rent to rent business. Well, then today's episode, I'm going to give you something more on this. I'm going to give you something that can help you understand exactly how to build a really good and very.

effective deal sourcing campaign, okay? But it is a really important thing. And for me, it was probably the single most important thing that I learned as I built a rent to rent business. I sent thousands and thousands, literally thousands of letters and direct to vendor campaigns out to private landlords. And that is where I got all but one of my deals, okay? The third thing I want to talk to you about today then is the systems and processes.

You need to actually start and scale a rent-to-rent business. The truth is building a rent-to-rent business is akin to building a management business. A building a management business means you've got properties to manage and you've got landlords to manage and you've got tenants to manage. And there's a whole lot of compliance and legislation and there's accounting and bookkeeping to do. There's filing an organization. There is gazons with other people that you are going to need.

to support your business like tradesmen, things like that, okay? There's a lot of administration to do, calling British gas, things like that. So there's a lot of systems and a lot of processes that you are gonna need to build an efficient rent to rent business. And a lot of people do overlook this, okay? Even with a few properties under your belt, there can be a lot to do. If this is gonna be a part -time gig for you, while you maybe transition out of a job or something else, you really, really have to understand what systems and what processes you need.

Andy Graham (23:34.958)

to do this and do it effectively. Okay, there is a lot involved. And if you're not careful, you can very quickly get bogged down in the detail. You can be running yourself ragged and actually focusing time on doing the things that are not necessarily generating you the income. You need to be focused on actually bringing deals in, negotiating, stacking deals up, planning refurbs, those sorts of things that actually result in recurring income, not necessarily doing all of the detail. Now,

There are ways to eliminate certain things. There are ways to simplify certain things. There are ways to delegate certain things. There are ways to automate certain things. You need to know what all of these are from the get go, because that has to actually form part of how you build your business. It's no good saying, well, I'll just get started, do a few deals and then do that. Because by that point, you're going to be very, very busy trying to run it. And you'll find it very difficult to actually create the time.

to install these systems, okay? It's very inefficient. And that is where a lot of people go wrong. They find they just get bogged down in the detail. They take their eye off the marketing. They take the eye off the deal sourcing. They take the eye off the numbers, get dragged into the detail, and lo and behold, they start to suffer as a result of that. Their deal flow reduces. Their deals aren't as profitable. And ultimately, their business just isn't as good as it should be. And in some cases, it just simply doesn't work. So.

The systems and operations and processes, you need to know that. That needs to be front of mind from the get-go. Wait till the end because I've got something that is gonna help with this, but I just want you to be aware that this is something that you have to be addressing from the very start. The fourth thing then I wanna talk to you about today. And I think for me, this was probably one of the most challenging things. It is how to maximize the profitability through negotiation and refurbishment.

I have very high standards when it comes to the properties that I buy and take on or I've done as rent to rent and what I want to do with them in terms of refurbishments. I like high spec. I think high spec suits my model well. It tends to attract a certain type of tenant. It fits well with my brand. And I'm sure for a lot of people listening today who are running a rental business or thinking about building a rental business, that is the sort of model that they can see value in and probably suits them as well. But negotiation is.

Andy Graham (25:56.29)

Tough landlords are generally very savvy individuals. They've often been in the market for a long, long time. Sometimes they've been stung. Sometimes actually they have got mortgages and pretty thin margins themselves to consider. So negotiating with landlords can be very, very difficult. Now there are a number of tips and tricks that you can use to negotiate well, to give you a much better footing. There are also ways that you can create additional value in the deal without actually having to give anything

away to your landlord, okay? A really simple method of doing this is by just extending the term. By extending the term by a year or two years or three years, you might be no more profitable or even less profitable on a monthly basis to make the deal work, but actually, just bolting those additional three years of revenue on to the deal makes you substantially more profitable. It could make you 50, 60, 70% more profitable over the term of the deal. And not enough people think about this. Too many people focus on

simply the revenues on a month to month basis. What am I gonna make every month? And get quite fixated on that when actually looking at the whole sort of margin on the deal over the term is usually much more effective. That will give you a lot more scope to negotiate in the deal. There are other ways to negotiate with landlords. Sometimes it's reducing year one rent. Sometimes it's stepping the rent up through subsequent years. Sometimes it's getting the landlords to contribute to the refurb. One of the things that I've done quite effectively over the years is propose,

particular contractor or a landlord, I'm gonna give you X amount, I'm gonna do X, Y and Z to the property and they might come back and say, look, I can't do this, it needs to work at a certain level. And I can say, okay, great, well I can get to that level, but I'm not gonna be able to do that refurbishment. I'm not gonna be able to spend that 10 or 12,000 pounds on the refurb. Would you be willing to contribute? And sometimes that is a good way of getting the landlords to where you need to be on a numbers point of view. You might give them a little bit more, but actually your risk,

has reduced dramatically if you're not having to spend money on the refurbishment or spend as much money on the refurbishment. So that's a good negotiation tool as well. Another good tool in negotiation is simply waiting, giving landlords a good offer. Maybe they'll counter it and just being prepared to say no. Sometimes you have to be willing to walk away from a deal to make sure you get a good deal. I can't tell you how many deals I have done, good deals I've done that didn't get done initially and came back to me either.

Andy Graham (28:21.878)

six or 12 or even more months down the line. That is an important part of building a rent-to-rent business. Just acknowledging that and recognizing that that is sometimes a really useful tool to use to negotiate with. It will help you create better or more profitable deals in your rent-to-rent business. So there are a number of things that you need to think about when it comes to negotiation. With refurbs, these deals are very, very sensitive to refurbs. Okay, now the most important thing is that if you have picked a particular

rent level an assumption that you are going to be able to rent the rooms back out at a certain figure your refurb and whatever you do to that property has to reflect those rents okay you need to know that whatever you're spending is going to get you to a point where you can achieve those rents, I typically like to spend between 10 and 15 000 pounds on my rent rent deals now i understand for some people that's not possible and in some cases that isn't actually necessary

Sometimes I spend a little bit more and sometimes I did spend a bit less as well. But for me, that gave me enough of an injection to really boost the rents quite dramatically. Sometimes double what I was able to pay the landlord. If I was paying the landlord £50 a week, I could often get the rent to over £100 a week by spending between £10 and £15,000 per calendar month. What you do with that budget though is absolutely vital. It's imperative you understand where to add rental value. And it's not that straightforward.

Adding on suites is an obvious one, but it's very, very expensive and rarely works on rent to rent deals. Things like feature walls, adding special features, creating a wow factor, fixtures and fittings, really sort of uplifting the aesthetics of a property. But there's almost more than that as well. It's how you then market it. How do you capture that? How do you convey that message effectively to tenants? Because that is one thing that a lot of landlords are actually not very good at, particularly landlords who are self -managing.

If you understand how to do all this, negotiate really well, and then add genuine value through refurbishments, but on small and low budget refurbishments, and then actually be able to demonstrate that value effectively to tenants, that is how you create margin in your deals. That is how you build really good and very profitable rent -to -rent deals. But there's an awful lot to think about, and I have seen so many people spending money on the wrong things and ultimately not getting the right return.

Andy Graham (30:42.862)

Good example would be trying to save money on furniture and leaving mismatched furniture in a property. And then when tenants come to look at it, it just doesn't have the same appeal. Okay. I've seen people try and cut corners on the marketing and not get the right photos, use their iPhone and it just doesn't look the same. Okay. So there are a number of things that you need to think about here. Quite a lot in fact, to help make sure that you do construct very profitable deals. The final thing that I want to talk to you about today is probably,

The most critical this underlines everything because this is basically what determines and ring fences and ensures the deal ultimately looks and performs the way that you expect. And that is of course the contract. It's the paperwork that you agree and sign with a landlord. That contract needs to cover everything. All of your responsibilities, all of the landlord's responsibilities, all of yours and their liabilities. It needs to be crystal clear. Who's paying?

for damp issues, who's paying for drain issues, who's paying for roof issues, who's paying for general repair and maintenance, who's paying for the certificates. What happens if there's a leak and the tenants have to move out? All of these things, all of these circumstances that are potentially unlikely but possible need to be considered because I can guarantee you at some point or another, you are going to rely on that contract.

It is so vitally important and I have seen too many people do deals with landlords with the incorrect, with the improper paperwork in place that has left them or their landlords completely exposed. You have to understand that this is so incredibly important. So the first thing of course is that you need the right paperwork. Now inside the HMO roadmap, we have got the correct paperwork. There are two documents, a rent -to -rent management agreement and...

a lease agreement, your lease is your belt and braces wherever possible you need and you want to use your lease. However, you can't always use a lease and understanding when you kind of can't use your lease and when you have to use a management agreement, that's also very, very important. Okay. The terms and the dates and how you actually construct the lengths of the deal. Very, very important. All of the detail in the minutiae, it's included in the contracts that I have used that you can get from the HMO roadmap. You'd need to be signed up to a premium

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subscription package, actually doing that will enable you to get your hands on those documents at a fraction of the cost it would cost you to get them actually drawn up by a solicitor. But that is so, so important. But then you also need to understand how they actually work. That is even more important. So the contracts and the paperwork underlines every single deal that you do with your landlord. And to be honest, you're probably going to find that any landlord who is considering doing a deal with you, if you're advancing in negotiations,

They are going to want to see a copy of that contract, of that agreement very early on, because they are going to want to know exactly what their responsibility is and exactly what your responsibility is. That's the fallback for everybody. If things go pear shaped or anybody overlooks anything or something isn't necessarily understood at the outset, that contract is ultimately how the agreement is going to work. So you need to understand that and you need to be using the correct paperwork.

So there we go, five things that if you're thinking about building a rent -to -rent business, you should be focusing on from the outset. Let's just recap. First thing is you need to have the knowledge and skill and confidence to master the location and numbers behind deals and building profitable deals. Every single deal is going to be different and you can't use the same assumptions in the same morals every single time. You have to understand what needs changing, why it needs changing.

where the risks are and how a deal should actually perform and what the performance needs to be for you to actually decide, yep, that's the deal I want to do. I'm going to make an offer on that property. The second thing is you need to learn how to actually find and secure rent to rent deals, marketing for deals, generating a pipeline of deals, warm leads, good deals that are ideally all potentially suitable for your business is really, really important. Without that, you haven't

got the business that you need to know how to do it. The third thing is the systems and processes and the operations that you need to implement to put into place to actually scale a rent -to-rent business quickly and efficiently. The fourth thing is you need to know how to maximize profitability through good negotiation and of course being very on the ball when it comes to refurbishments. It is so important and so many people get that wrong. And finally, number five,

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The fifth thing that you need to be thinking about from the outset is using the correct paperwork. If you go about building a rent-to-rent business with all of those things in mind, that is a very good footing. Now, like I said at the beginning of today's episode, I'm not going to be able to give you everything you need, all the knowledge and skills and confidence that you need to actually go out and do this today. But I promised I did have something for you. I am so excited about this. It has been years in the making. I've been promising it for years, but finally it is here. Our very...

first live event is going to be in Manchester on the 6th of April. And it is all about rent-to-rent. It is a discovery day taking these five key concepts that we have discussed in today's episode, but actually teaching you the fundamentals of them actually deep diving in to what they look like, how to actually do it, teaching you from examples. I'm going to show you the deals that I have done, how I have constructed the deals, how I have found the deals, what I have.

done to the deal through refurbishment, the paperwork and the conscience. I'm going to show you all of that stuff. I'm going to infer all of that skill and knowledge and experience to you so that you can begin to build your foundation knowledge and framework to go and start building your own rent to rent business. It's a full day in Manchester on the 6th of April, but it gets even better. It's not just going to be me. Next week I've got

a very special guest on the podcast. I'm not going to tell you who just yet, but that very special guest is going to be co -hosting this event with me. They are somewhat of a specialist in rent -to -rent themselves building what is possibly one of the fastest growing HMO agencies in the country with a whole load of rent -to -rent deals in the pipeline. They have already won awards for it. Make sure you tune in next week where we will obviously be sharing that with you, but trust me.

This is going to be an event you will not want to miss. It is going to be based on experience and nothing else. None of this is theory. This is all practical based experience. We will be able to show you the examples. We are going to pull out deals and let you look at exactly how they were constructed, how the deals were found and what we did with them. I am really excited about this. It's the first live event that I have ever done. I've been promising it for ages, but it is finally here. Now tickets are not.

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quite on sale yet. So if you want to get yourself on the waiting list, drop me an email now to info@thehmoroadmap.co.uk. That's info@thehmoroadmap.co.uk. All one word, put rent to rent discovery day in the subject title and just say something like, Hey Andy, I'd love to be put on the waiting list and we will make sure you are. We already have a lot of people on the waiting list because we have teased this to our

email database. So spaces are going to be super, super limited. But if you want to get yourself on that waiting list so that you get priority access to the tickets, you want to come and hang out with me and very special co -host for the day, learning all about rent-to-rent to build the foundation of a good rent-to-rent business. Make sure you send me that email now and let's get you on that waiting list. But I'm excited because if you do this right, and if you are committed to building a rent-to rent business, it can genuinely change your life. It genuinely changed.

my life. I did one deal that made over £5,000 net profit per month. One deal, get your head around that. One deal from one letter. Okay. That was a 10 year deal. Think about that. £5,000 for 12 months for 10 years. What would a deal like that mean for you? Would that change your life? Would that change your ability or accelerate your ability to go on and build your wealth through asset ownership? Actually buying and acquiring your own assets. It's

Probably would, wouldn't it? So super excited because if you're committed to rent-to-rent, it really can change your life, but you've got to do it the right way. Well, on the 6th of April, I'm going to teach you the right way to do it. That's it for today's episode guys. Thank you so much for tuning in. Like I said, I've got a real soft spot for rent-to-rent. Next week, we're going to be talking about more rent-to-rent, but I am going to have a very special guest with me, like I said, so make sure you join me then. If you've enjoyed today's episode, please do leave a comment.

quick review of the show. It helps more than you could possibly know. It helps spread the message. It helps continue to bring great guests on the show as well. And it really is very rewarding and really useful to get your feedback as well. So thank you for tuning in, but if you've got 30 seconds to leave a review, thank you so much because it does help more than you could possibly know. If you want to come and ask any questions about rent-to-rent or anything else in fact, head on over to the HMO community. That is our free group on Facebook. We've got, I think.

Andy Graham (40:05.678)

Eight and a half thousand members now really is a wonderful place. Lots of fantastic conversations happening. Lots of great examples, lots of inspiration, lots of problem solving, a really great place to find guidance and support. And you'll find me hanging around there most days as well. So that is it for today's episode guys. I will be here back in the very same place next week with a special guest. So please join me then for another installment of the HMO podcast.