How rent-to-rent works
In a rent-to-rent deal you take on a property from a landlord for a fixed rent over an agreed term, often several years, and let it out yourself, typically room by room as an HMO. Your profit is the gap between what the rooms bring in and what you pay the landlord plus the bills and running costs.
You don't buy the property, so there's no mortgage or stamp duty, but you do put cash in: a deposit to the landlord, legal fees, furniture and often some refurbishment. The contract length matters as much as the monthly profit, because that cash has to come back before the agreement ends.
Work out the maximum rent before you negotiate
The quick maximum-rent check works backwards: potential room income, less bills per room, less management and other percentage costs, less the monthly profit you want to make. What remains is the most you can pay the landlord and still hit your target. Knowing that number before you sit down with a landlord stops you agreeing a rent the deal can't support.
Payback and return over the contract
Because you don't own the asset, the return on a rent-to-rent deal is best judged over the contract. The calculator shows how many months of profit it takes to repay your set-up cash, the total profit over the term, and the return including the landlord's deposit coming back at the end.
If the payback period is close to the length of the contract, a few slow months or an unexpected bill can wipe out the whole return. Look for deals where the set-up cash comes back well before the agreement ends.
Compliance and agreements
Make sure the agreement with the landlord clearly permits you to sublet, and that the landlord's mortgage and any lease allow it. HMO licensing, safety certificates and repairs responsibilities need to be agreed in writing, and if you manage the property for the owner you may need to belong to a property redress scheme. Take legal advice on the contract before you sign.