This episode is all about the coronavirus effect

Is rent to rent dead?

What about the future of HMOs in general?

Would you be crazy to get started now?

Is now the right time to get started?

What’s the lowdown?

I get asked this question a lot

Because…

• We’re in lock down

• We’re overeating raw cashews

• We’re binge scrolling photos of cute dachshunds

• We’re home-schooling

• We’re on furlough

• We’re working

• We’re worrying

So should you get started in rent to rent?

If you’re in financial distress,

you just want to focus on keeping your head down and getting through this then,

I have to give you the honest answer which is no this is not the right time to start.

The other true answer is yes

This is the right time to get started in rent to rent.

And I know that if you’re here listening,

then you’re part of the 5% who want more than the 9-5

Maybe you have looked at your life and decided that enough is enough and you want to get started to get your own consistent cashflow outside your job.

Like I did.

If you’re on furlough and you want to make the most of this time.

If you’re working but you’re no longer commuting for hours and want to make the most of this time.

If you finally have some time and space to think.

Then yes it’s the right time. 

Because the truth is that 

Every time brings more opportunity

Boom times bring opportunity

Slowdown times bring opportunity

In fact the slowdown times bring more opportunity!

Because there are fewer people looking for it.

Right Now

• More landlords need you, a lot will be having problems

• You have fewer competitors

• There’s more opportunity to negotiate a better deal

We’re seeing lots of people in our Kickstarter programme who are negotiating deals with landlords and agents now, who previously hadn’t shown ANY interest.

And this is what it comes down to

• You are there when other people are not.

• That gives you the opportunities other people do not have.

• You get to take on a property and have an initial period of choppier water through the next few weeks.

• And then you have years of consistent cashflow.
  

Instead of keeping focused only on the now and the challenges.

Also raise your gaze to the future.

This is for 5 years.

A few months of challenge is just a tiny bump.

What can you do now to get started?

• Start your business and put everything in place – you’ll see in episode 9 what you need to have in place for a compliant business

• Build relationships with landlords and agents by letter and phone if you can’t meet them in person

• Get yourself in position so that you are ready to go as soon as the door is open.

• Get started when others are sleeping

The questions I get then are

• But how can I tenant a property in lock down?

• What if my tenants can’t pay rent?

• What if I can’t pay my landlord rent?

And in the next episodes I’m going to cover those

Right now 

Though I want to talk about what’s going to happen in the HMO market.

And is now a good time to be getting in in general?

What about Article 4?

What about HMO demand?

Article 4

Article 4 is coming in, in more places and this causes people to be alarmed.

Article 4 Direction is where some local authorities have removed some 'permitted development rights' which allowed people to convert property from C3 residential to C4 HMO status. 

That means that in those areas you require a planning application to be submitted to the local authority to change a single family house from residential to an HMO for up to 6 people.

Planning permission is, and always has been, required to convert a single family house into a large HMO with 7 or more unrelated persons sharing.

This would be a change from C3 Dwelling House to Sui Generis.

OK so now we know what Article 4 is.

Let me say this slowly because this one causes confusion.

Article 4 doesn’t matter.

It makes no difference to the rent to rent model we suggest.

Our model is to work with properties which are already HMOs.

And yes you can still make money when you take on a property which is already an HMO which I’ll cover in a future episode.

So many people are saying ‘But Article 4’

But nothing, Article 4 makes no difference.

You can have a successful rent to rent business in an Article 4 area.

Our area is Article 4 equivalent which means any property with 3 or more people from separate households requires an HMO licence.

And planning.

When you take on existing HMOs,

They already have the HMO licence.

They already have the Planning.

They already have the safety requirements in place.

I’ve heard our students recently saying that some properties are on the HMO register and don’t have planning so it’s wise to check in advance.

This will likely be the case where the HMO has been in existence for a long time, before the introduction of Article 4.  

In these instances the local authority will often continue to renew a HMO licence, without the requisite planning, a new licence application would require.  

To update the planning records the Landlord can apply for a “Certificate of Lawfulness for Existing Use or Development”. 

Typically, there will be a charge for this certificate.

The owner would typically only do this if they have to, for example, when they want to sell the property.

Demand for HMOs

It’s predicted that we’ll go into a economic downturn now.

There’s debate about the extent and length of the downturn, whether it will be a U, a V or W shaped recession. 

But I haven’t heard any commentators saying we won’t have one.

What does an economic downturn mean for HMOs?

An economic downturn leads to increased demand for affordable shared accommodation in HMOs.

And combined with restrictions on new HMOs caused by more locations being Article 4, it means that we’ll see more demand for our HMOs.

In addition, times of recession also unfortunately lead to more relationship break ups and many of the newly single will seek shared housing as a stepping stone while looking for somewhere longer-term.

Increased opportunity for creative purchase opportunities

Following coronavirus some HMO landlords will be looking to exit.

And it’s likely if there is a downturn that the landlord won’t be able to achieve the price they want and so they might be open to a lease option agreement or exchange with delayed completion.

These are strategies where you can buy properties without a big deposit and without a mortgage so great ways to get started.

If you’d like to know more listen to

episode 3 called How to buy property with no money down. 

For all the details on how to not just rent property but buy it so you get the capital appreciation long-term as well as the cashflow short term.

To summarise

Now is a great time to get started in rent to rent because

• There’s more opportunity for you to get a deal

• There’s more opportunity to get a deal at a lower rent

• There’s more opportunity for you to get that deal now at a time when demand for HMO rooms is increasing

• And as a cherry on the top, the more opportunity for creative deals is increasing so you can start owning property too.

But…

You’re going to say to me

• But how can I tenant a property in lock down?

• What if my tenants can’t pay rent?

• What if I can’t pay my landlord?

And I got you, I’m going to tackle those over the next few episodes.

Rent to Rent Real Talk

If you want to see how real people are dealing with corona in their rent to rent businesses join us for Rent to Rent Real Talk every Wednesday at 8pm in our Rent 2 Rent Success Secrets facebook group.

Have you found this useful?

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And remember,

Believe Bigger, Be Bolder and Be a Gamechanger!

See you next week.

Stephanie & Nicky

xx

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