As a property owner, you must have thought of ways to get a guaranteed return on investment. One way is to rent your house to a good tenant who can guarantee you an on-time rental.
But what if you do not get any tenants? The property will be just like any extra liability with no return on the investment. No one would want such things to happen, as in today’s world money is what matters the most.
To solve your problem, we have brought to you some different rental guarantee schemes that will ensure you rent all round year. Let’s go through some of them for your better understanding.
Guaranteed Rental Program
For this, most of the landlords have started to work with agents. In this guaranteed rental program, you are sure to get the rent as soon as you have over the keys to the agent. Here the agent will be your tenant who will make sure that you get the rent even though the property is empty.
This is the work of a property management company (i.e. an agent) who will find a tenant for your house and do the rest of the house management like taking good care of your house. You will keep getting the rent in your account, even if the tenant doesn’t pay the money on time or even when the property is all empty.
In this scheme, there are usually no fees levied by the agent. But the only issue here would be that the agent will pay you a little less than the actual rent as he would be keeping the difference amount as a profit to himself.
But this can be a good deal for many landlords as the agent will keep paying him the rent on a monthly basis, even when the tenant doesn’t or if the property is empty. He will not have to worry about paying off the utility bills or the council tax. This makes it a little worth it.
If you are a landlord looking for a Croydon guaranteed rent, then there are certain things that you need to look out for so that you don’t fall prey to scams. You need to ensure that you are working with the right agent or company for your work.
Important Things to Know About This Rent to Rent Program
There are 2 kinds of rent-to-rent contracts that can be used between the rent-to-renter and the letting agent and landlord.
- Lease agreement
- Management Agreement
1. Management agreement
This agreement gives the tenant the liberty to control the land or home on a specified basis
2. Lease agreement
This agreement is also called a commercial lease, where the agent will have the liberty to rent the home and rental fee it out to their own guests or tenants for a specific period of time.
This agreement can be used when:
- The agreement is directly with the owner
- The property is an existing HMO or any commercial property
Here the rent-to-rent agreement will be used:
- When the agreement is with the owner or letting agent
- This property is does not exist HMO or any commercial property.
Both of these two agreements are to make sure the property owner understands:
- That their mortgage lending allows will allow the agent to use this house for any tenant type he wants or even permit serviced accommodation
- The insurance of the property will also be used as a house share (HMO) for any tenant the agent wishes to rent to or even permit service accommodation
3. Pros and Cons of This Guaranteed Rental Agreement
The advantages of this program include:
- This is a safety net as if the property remains vacant, then the landlord is still able to get some steady monthly income as a part of the purchase agreement
- Some of the agreements also include the repair and maintenance costs of the property for a particular time frame. This can be very helpful for owners who have a tight budget and do not have time to manage the budget.
- If there is management included in this rental agreement, then it will be peaceful and free for investors living in different states or countries.
Similarly, the disadvantages of this program include:
- If the third party you rent is not renowned or has a bad image then he might not pay you the rent on time or you will also have some scam risks
- If the agent doesn’t care about the property well, or if the property is damaged during this period, then your property will lose its value. You will also have to pay extra money for these property repairs and maintenance
- You will not have any control over who lives on your property.
- Though you are no longer responsible for the property maintenance, you will still be responsible for someone who will live here on this property and sues you.
To conclude, this is a big-ticket investment, but you need to work with some good professionals who understand this market and are renowned to manage things legally.