Today’s post covers rent to rent contracts and how to get more deals
It’s a heavy hitter!

It’s great to see you here.

We’re back with Ask the Angels answering your rent to rent questions live.

And we've some amazing questions in tonight.

Rent to Rent is a great strategy and it can really transform your life, but if you're stuck at the moment and you can't get started then I think that these questions and their answers will really help you to get going.

I've grouped the questions together because there are two types of question today.

There's some questions about getting deals and some questions are about contracts. I know that contracts really do fox people so I know that you'll get a lot of value at that part of this evening.

Let us get started with the first question from Mike…

"How best to work with estate agents?"

Working with letting agents to find rent to rent deals

Working with letting agents is something that a lot of people do struggle with.

The main thing is to show that you offer what they want.

What letting agents want is

• Their commission paid

• Rent Paid on time

• Property looked after

What you need to do is develop your relationships, see them regularly, get to know them apart from the property side of things, get to know them as people and show them what you're doing and show them that you can help them.

This is to help develop trust

Agents won’t work with you if they don’t trust you.

A key way to demonstrate your trustworthiness is to do what you say you will when you say you will do it.

So that when you say you're going to call them, you call them.
When you say you're going to send them an email, you send them an email.
So they come to see you as a reliable person who's going to help them do what they want to do.

Yes you’re going to pay the rent
Yes you’re going to look after the property

Most of all letting agents are in business too so and they need to be profitable

If you can show a letting agent how you're going to help them get their commission more easily, with less work then obviously they're going to partner with you.

Agent action tips
So my action tips really to help you make this happen are to go in regularly or if you’re time pressed, at least go in at the start and then call up regularly.

Find out what properties are on and have a little chat with them. Maybe you are both into football, maybe you both got family, find those points of interest beyond property so that you can build a personal relationship beyond business.

Keep going in there be persistent.

What I would say is, when you first go out to agents you’ll learn which agents are warm to Rent to Rent and which are cold.

Once you know that, focus on the warm ones.

So maybe you initially try 20-30 agents in your area and about six are warm to the idea and the door is open.

Focus on those six and weekly or fortnightly go in and see what properties are on, let them know exactly the type of property that works for you and your area.

Build up that relationship weekly or fortnightly and you will get deals if there's a way for them to also benefit from working with you then they will do.

You just need to show them that working with you is a good thing and a low risk strategy. Because they won’t want to work with you if they foresee the risks as being greater than the reward.

The next question is from Jordan…

"How do i build up rapport on a cold call?"

Cold calling landlords on Spareroom

This question is about calling the landlords on Spareroom about renting out their property. Remember, landlords will be suspicious because they get so many calls from agents when their properties are on Spareroom.

So already there is a bit of a barrier there that makes it a little bit harder for you to get over. The first thing is just know that and know that you will have to be persistent.

A lot of people are not going to want to speak to you.
For example, if you call our company, we wouldn’t be interested.

The most important thing is to call up with the objective of solving their problem.
They want their property rented out, you want to rent it.

Know that you can add value to them, and do your research beforehand about their specific property.
Look at the pictures online, understand it, is it all empty, is it just a couple of rooms?
Use the Deal Analyser beforehand so you know what rent you can offer if it was in perfect condition and ready to let.

When you get a landlord who is a self-managing landlord explain what you do in offering guaranteed rent and paying the bills and that what you pay usually exceeds the net rent they are currently receiving. That might pique their interest and they want to know what you offer which is the perfect time to arrange a viewing.

If they insist on a number before arranging a viewing you can let them know you can then let them know the figure that you worked out. With the priviso that that figure would be if their property was in perfect move in condition.

That's a nice way to work on the spare rooms.

Rent to Rent Contracts

So now we're going on to rent to rent contracts.

We have a question from Matt...

"What is the correct type of contract to use for rent to rent with letting agents or landlords?
As was highlighted, there’s differences of opinion on what contract should be used.
In other forums it seems people are using corporate lets agreements!
Thanks!”

There are two types of rent to rent contracts

• Lease agreement

• Management agreement
  
  

Lease agreement

This agreement is a commercial lease and gives you the right to rent the property and rent it out on a specified basis (in this case room by room in an HMO) for a specified period of time.

You would use a rent 2 rent lease agreement when

• Your agreement is direct with the owner, and

• The property is an existing HMO or commercial property
  
  

Management agreement

This agreement gives you the right to manage the property on a specified basis (either HMO or serviced apartment)

You would use a rent 2 rent management agreement when

• Your agreement is with the letting agent or the owner and

• The property is not an existing HMO or commercial property
  
  

To protect yourself as much as possible it’s important to use the right contract and include the right clauses.

Many people don’t realise that solicitors start with a template for each contract type and then rely on YOU to advise all the clauses you would like to see in the contract.

When you’re starting out you won’t know all the clauses you need.

And if they are unfamiliar with rent to rent, which most solicitors are, your solicitor won’t know which specific clauses you need.

Over the years, we’ve had our contract revised to add new clauses.

For example, one of the things I see quite a bit is people struggling because a landlord won’t make essential repairs such as fixing a broken boiler in Winter. Our contract states that owners must respond to emergency repairs in a specified period and agree works to be carried out. If this doesn’t happen, we are able to carry out the works and recover the funds from rent.

We’ve never had to do this because we have great relationships with all of our landlords but the clause is there for exceptional cases to protect our tenants.

We also include a clause which states that if the law or statutory regulations change which change Council Tax or our ability to multi-let the property, we can re-negotiate and/or exit the agreement.

These are just two of many important examples I could give you about clauses to be included in a rent to rent contract.

Make sure you work with someone who understands Rent 2 Rent and test for it, even if they say they do!

Rent to Rent compliance

The other thing you need to do is to make sure your business is set up in the correct way to enable you to enforce your contract if need be.

For example, do you have professional indemnity insurance, are you a member of the Information Commissioner’s Office and you members of organisations which give free legal advice?

Do ensure you have all your based covered there.


Next question is from Phillip…

"In a Rent to Rent deal with an agent involved what type of contract do you give the agent?"

Now this is a great question.

And the reason why you are probably asking this question is because you've had so many people using all different types of contracts including Assured Shorthold Tenancies and corporate let agreements.

ASTs are for individuals and do not usually allow sub-letting and also confer rights on the tenant. Corporate lets are for employees of a specific company so not right either.

The correct agreement is a Management Agreement.

Question from Mike…

“Would you have a break clause to the management agreement with the owner?”

Yes we would.
And the clause is on our side only.
And that is so that if the property in some respect becomes unsuitable to be let as an HMO, for whatever reason (change of government policies, licensing changes etc), then we can give the property back because we can no longer do what we're contracted to do which is to multi-let property.

The reason we don't give the owners a six month break clause is that if we've invested in a property and are recouping that investment over a period of 5 years, then we can't exit at six months.

The owner is protected by the fact that if we do not deliver on our contractual obligations to pay guaranteed rent etc, then they can exit and reclaim their property. So far we've never needed to exit a contract and none of our landlords have wanted to exit either.


Next question is from Melanie…

“How do you choose the right solicitor to write up a contract, do you walk into any solicitors that deals with property?”

Deal with a commercial property solicitor because residential property solicitors are not always aware of all the different ways that these contracts can be set up.

You can also buy the rent to rent contracts we have developed.

Contracts for Rent to Rent Joint Ventures

Loise has asked…

"My question is what should be included in an investor funds contract? Should it be drawn up legally?"

Yes, definitely it should be drawn up legally.

Solicitors are inexpensive compared to what happens when contracts break down.

You need to work out the things that could go wrong and decide what you’d like to do if one of you wants to exit early.

Speak to people who’ve been in partnerships and joint ventures before and ask about the issues that they've had.

Often these issues have to do with the exit from the deal.

The contract will set out what your obligations are and will also define what happens if things go wrong. Those are two crucial areas you need to talk through with your potential business partner.

And then you’ll both need legal advise to put what you’ve agreed into a contract which gives clarity of roles and clarity of exit.

That’s all for today.
If you have a question you’d love me to answer in a video, please comment below.

See you soon!
Stephanie & Nicky
xx

Dream Bigger ⭐ Be Bolder ⭐ Be a Gamechanger

#YesYouCan #Rent2RentSuccess

If you want to get started in Rent 2 Rent and take your first step to financial freedom but you're not sure where to start, you're in the right place!

Get Started with our Free Online Training
CLICK HERE for the 5 Secrets to Rent 2 Rent Success

Want to fast-track your success?
Find out more about our Kickstarter Coaching Programme and work with us.
CLICK HERE to book a call with Stephanie

Questions?
Please comment below and we’ll reply!

#YesYouCan

CHECK OUT THESE POSTS TOO…