If you’ve ever considered venturing into the exciting world of property investment, you must consider renting a property. The rent-to-rent business model appeals to property investors and landlords who wish to earn passive income through their existing property.
In a rent-to-rent arrangement, you rent a property from a landlord and then sublet it to tenants. Your goal is to get a long-term lease from the property owner at a fixed rental rate. You can then sublet the property to tenants at a higher rate and make money from rent to rent by pocketing the difference as profit.
This arrangement is often called a "guaranteed rent" scheme because you guarantee the landlord a steady rental income, irrespective of whether you have tenants. If you want to generate profit and maintain a presence in the rental market, self-storage options have risen as a viable option.
Here’s why you should consider self-storage for rent-to-rent arrangements.
If you’re a property owner or investor looking to explore this model, self-storage can be the perfect option, here’s why:
By converting your property into self-storage for tenants, you can experience consistent demand. Self-storage facilities have seen a surge in demand over the past few years. People often need extra space for their belongings. As many people are either downsizing, moving, or simply gathering more items, they need a place for storage.
This consistent demand translates into a steady stream of rental income. Unlike residential properties, self-storage does not face seasonal fluctuations and tends to have a more stable occupancy rate.
Compared to residential properties, self-storage units generally require less maintenance. There’s no need to worry about plumbing, electrical issues, or tenant complaints. The main expenses are security and regular maintenance. So you can save on repair costs and spend more time expanding your business.
Self-storage facilities offer flexible leasing options, both for you as the rent-to-rent operator and for your tenants. You can negotiate short-term or long-term leases with the property owner. In turn, you can offer your tenants monthly or annual rental agreements.
Managing self-storage units is often simple. There are fewer tenant-related issues, and the management tasks are more straightforward. You won’t have to deal with late-night emergency repairs or neighbour disputes.
With lower operating costs and steady demand, self-storage units often offer high-profit margins. The difference between the rent you pay to the property owner and the rent you charge your tenants can be substantial.
Self-storage facilities are adaptable to market changes. When the economy is slow, people may downsize their homes and need extra storage space. In booming economies, businesses and individuals may need space for their growing needs.
With solutions provided by Wigwam Storage Management, you can minimise the hassles of developing and managing a self-storage facility and focus on expanding your business.
Read this blog for more insights: Why set up a self-storage business?: Reason and Statistics.
Here are a few reasons rent-to-rent is gaining traction:
However, it’s not without risks.
Thorough research and careful planning can help mitigate these risks. For example, you can understand the local rental market and have a contingency plan for periods where you don’t see tenants to maintain a steady income stream.
There are several business models to make money from rent to rent. The three main ones are HMOs (Houses in Multiple Occupations), serviced accommodations, and single lets.
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Here are the key distinctions:
If you want to start a rent-to-rent business model, here are some steps.
Starting a rent-to-rent business for self-storage can be a profitable venture with proper planning and execution.
Research the market before diving into how to make money from rent to rent. Try to understand the demand for self-storage in your target area. Look for areas with high rental demand, such as those near universities or business districts.
Consider the following factors:
Focus on areas with high rental demand and a steady flow of potential tenants. Urban centres and student towns are ideal locations. If the property is close to amenities like public transport, shops, and other facilities, it’s more enticing to tenants.
For example, if you are targeting working professionals, areas near business districts with good transport links would be ideal. For student accommodation, properties near universities and colleges are better.
A well-drafted business plan outlines your goals, strategies, and financial forecasts. A solid business plan can also attract investors and secure funding. Tools and guidance from Wigwam Storage Management can help you create accurate financial forecasts.
Your business plan should include:
To make money from rent to rent business, it requires some initial investment. These can be deposits for leasing properties and funds for refurbishments. By securing some funding, you can cover these costs.
Here are some funding options:
Read: How To Start A Self-storage Business?
There are many operational steps and legal considerations when starting a business. To set your business up for success and profit, try to understand and execute the following steps.
Finding the right property that offers favourable lease terms is crucial.
When negotiating lease terms, aim for:
The next step is to furnish and decorate the property to attract your target tenants. Whether you are targeting students, professionals, or other businesses, the decor should appeal to them.
Equip the property with modern appliances and amenities to add value. For example, a property aimed at young professionals should include features like frequent access, secure systems, and easy transportation.
To maintain high occupancy rates, you need to market the property. It also ensures a steady income stream. You may use some online and offline marketing strategies to reach potential tenants.
These include:
If you want reliable tenants and minimise risks, take thorough screening procedures. It can include background checks, credit checks, and references from previous landlords.
Steps for screening:
Make sure all your activities comply with local laws and regulations to avoid legal issues and protect your investment. Consult with experts at Wigwam Storage Management for legal guidance tailored to the self-storage business.
Key legal considerations:
Starting a rent-to-rent self-storage business is just the beginning. Managing and growing the self-storage facility efficiently is crucial.
Effective property management is crucial to maintaining high occupancy rates and tenant satisfaction.
Read: Best management systems for Self Storage Businesses.
Data is a powerful tool for monitoring the performance of your rent-to-rent business.
Scaling your rent-to-rent business can increase your income and market presence.
You may require additional funding to expand your business.
Understanding the key factors for success will help you navigate the rent-to-rent landscape more effectively. Try to build a positive relationship with both tenants and property owners. Also, make sure to adapt your property to new market demands.
Starting a rent-to-rent business is a viable way to make money from renting houses, flats, and other properties without substantial investments. You can build a successful self-storage facility and make money from rent to rent by following the key steps.
Looking to further maximise your property's potential? Wigwam Storage Management specialises in developing, investing in, and managing self-storage facilities across the UK.
Wigwam offers flexible, secure storage solutions that perfectly fit your needs. Ready to unlock the true potential of your rental property and explore the world of self-storage? Head over to Wigwam Storage Management's website to learn how we can help you maximise your investment and explore innovative storage solutions!
