Start Your Property Business In No Money Upfront

In this module of the short term and service to accommodation series, I’m going to be showing you how you can get into this game with little to no money down, using the rent-to-rent strategy. First and foremost, let’s cover what the rent-to-rent strategy is, or rental arbitrage, as it’s known in many other countries around the world. In essence, we are going to rent a property which we will then use as an Airbnb, or a short term rental, as it’s actually known. Although, when you try and say short term rental, the people don’t really know what you’re talking about until you say Airbnb. We rent the property. Now, why would a landlord want to rent a property to you, so you could make a profit from it? Well, many landlords just want their rent. They’re not really bothered about who’s going to be using the properties, they just want their rent.

Now, it helps if you’re credible and professional, and they can trust you. For sure, you will acquire more deals. However, in the main, there are a lot of landlords that just see their property as an investment. They’re not emotionally attached to it, and they just want the money coming in for that property. There are many reasons why we are far superior to a tenant, which I’ve covered in some of my other previous videos on the channel. In the main, we help the landlords make more profit by renting to us rather than renting to a tenant, which is obviously a big factor for them. In terms, why would a landlord not do it themselves, if there’s so much money in it? Quite frankly, some of them just don’t want to. Some of them are a lot older, they’ve got businesses that are doing well. They just don’t want the added hassle and strain on their businesses.

Quite often, they don’t want to change. A lot of people don’t like to change, and if they’ve been doing something for so long, they just do not want to change, no matter what the upside potential might be. In the main, we can find a lot of stock. When we’re renting a property for short term rental versus renting for HMO, there is a lot more stock available. As I explained in my previous videos in the series, a lot of houses, a lot of flats, there are a lot of different types of properties that work. Everything from studios all the way up to big houses, big apartment blocks, luxury villas, that sort of thing. Naturally, we’ve got the pick of all the stock. With HMOs, you typically need a four, five, six, or seven-bed house, if not more, to make them work financially, on a rent-to-rent basis.

Now, if you look down the average street, there are not loads of five, six, or seven-bed houses. The majority of the stock is one, two and three beds. We get the lion’s share of the stock, and that’s fantastic, and it makes deal-finding a lot easier for this strategy. Rent the property, and we run it on Airbnb. Again, I’ve talked about how we make money on the uplift of that side.

Ways Of Doing It

Now, how do you do this with no money? There are many ways that we can do this with no money. Quite simply, it all comes down to the contracts that we put in play with the landlord, and how you can acquire properties. What we’re looking for, in an ideal world, is a contract where there may be a bit of a delayed start. Now, by having that delayed start, it means we can get the property set up, and we’re not incurring any costs, and we can potentially get it generating some revenue before we actually have to pay the rent. That’s one way that you can get into it with no money down. Now, you’re probably thinking, “What about the setup costs?” Again, with the setup costs, you’ve got all your different bits of furniture, that’s meant to be a couch, and we have to pay for that. What you can actually do, you can get funding on that. You could actually get furniture finance. Now, in furniture finance, typically, your first payment comes out 30 days after you take the stock. We’re going to get paid instantly. That’s the great thing about service to accommodation.

What happens when we take a booking in? We get a booking in from Airbnb. The day that they stay, the day that they check in, and the very next day, we get money in our bank account. If you’ve got 30 days lead runway before you have to pay your furniture payment, you’ve got 30 days worth of potential payments that you can have in your bank before you have to pay for the furniture. If we get a delayed start, where we can get the keys and we can get going, and we don’t have to pay the rent until maybe two or three weeks down the line, again, we get that delayed start, and we start to collect money before we get in there. But, this all comes down to you, and how efficient you are at setting these things up.

Now, deposits. Deposits are another thing that you can easily overcome, and you don’t have to pay upfront. For me, I don’t pay deposits on my deals, because we get deposits from the tenants, or, should I say, the guests. I don’t pay deposits on my deals, because we get deposits from the guests. I thoroughly explain that to the landlord, and I get them to understand why they don’t need to take a deposit from me. My entry into these types of deals is minimal. I do not have to pay anything upfront. I’m using the revenue from the unit to fund all the debt costs that are going to come up. Typically, with your utilities, your wifi, and all the other things that you have to set up, again, they’re typically 30 days before you make your first payment. You can get it going.

Being Confident Is Essential

Now, you have to be confident that you’re going to get the money in. We’re going to come onto that in the deal analysis part of this series, to make sure that we’re picking the right areas, and we’ve got the right locations and the right property. Make sure you subscribe to the channel, so you do not miss that, because it all fits into the same. You can also look at, how can we reduce the furniture costs? Quite frankly, you could go rent furnished properties. The downside of that is, that most landlord furniture is odds and sods, hear from there, and they’re just chucked in to try and appease a tenant that needs a bit of furniture. Tenants aren’t as fussy as guests on how these places look, you might have a load of mismatched stuff.

You can stumble across a good property with good furniture every now and then, but in the main, you’re going to get more traction from unfurnished properties. Ideally, you just want them to be modern and unfurnished, so you can put your little touch on them. But, if you can find a property that’s furnished, or if you do not have the capacity to get the finance or to buy the furniture, you need to be searching for furnished properties only, and you got to make it work.

But, what you can do is, you can take a property that’s maybe not in the ideal scenario, it’s not got the best furniture. You can get it running, and from this bit of profit that comes in, as well as paying your bills, you can maybe go and replace the couch for a better couch. You can replace the bed with a better bed. Before you know it, with the first few months of revenue, you’ve set up a really nice unit. You’ve managed to get it looking exactly how it needs to look. Naturally, your ADR, your average daily rate, plus your occupancy, will start to rise, and you’ll make more money.

There are so many ways that you can actually do this without having to invest any money. The thing is, you’ve got to get creative. You don’t know what you don’t know, and if you don’t know what you don’t know, what don’t you know? When you do know it, and you understand all the different ways that we can try and make things work, and how the whole process works out in terms of when payments are due, how the different channels pay you out, when am I going to get revenue in, cash flow forecasts, this is a business, at the end of the day. You need to understand the ins and outs of it. You can start pulling off these deals, and it doesn’t actually take any money out of your pocket.

Conclusion

It’s a fantastic business model. With HMOs, you don’t have this. If you get a six-bed house, typically you’re paying your rent. Even if you get a little settle period, you’re paying your rent. It’s going to take you anywhere from probably four to eight weeks to get that house fully occupied. By the time you’ve done all your viewings, you’ve moved people in, you’ve waited for their contracts to end with their previous tendency, and then, they’re coming into your property, you’ve got void periods all the way through. With this game, we can earn money from the day we put it on, my first property, the minute I listed it, I had 3,500 pounds worth of bookings within the first five days. I was hooked. I was blown away. This stuff, this is normal. When you live in this world, this is normal.

It’s not unnormal, it’s not new, it happens all the time. 10,000 bookings, 5,000 bookings, 2,000 bookings, 20,000 bookings, this stuff happens in this game, and that’s why it is such a fantastic industry to be in. That’s how you can get started, in my opinion, and in my experience, with no money down.

In the next module, we’re going to be covering how to find your first property deal. Make sure you subscribe.,