Part 3 of the Samuel Leeds Exposed series. Today we go in depth and find out the truth about Rent to Rent and look at the strategy of Rent to Rent, why it seems attractive, the mindset of R2R (and why it doesn't really make sense), the legalities involved and the levels of risk with R2R. The Rent to Rent strategy - 00:00 - 01:33
Rent to Rent takes on many forms such as R2R, R2SA and R2HMO. The idea is to find a house that you can rent and then either rent it for more, turn it into an AirBNB or rent it as a HMO.
Why Rent to Rent seems attractive - 01:33 - 02:50
Rent to rent seems attractive as it appears you can rent a house for a small price, such as £500, and then rent it out to other people for around £1,600 and the bills will be around £400. This would give you a huge profit! You also wouldn't have to save up for a deposit or really even need a salary.
The mindset of R2R - 02:50 - 06:25
Samuel Leeds suggests that landlord are un-intelligent, old, tired and don't want their properties anymore, which just isn't true, if someone didn't want to manage their properties they would just outsource to a property manager. A landlord is also almost guaranteed to be able to set an appropriate market rent as its super easy to find out how much a property will rent for, £500 is just ludicrous and just wouldn't happen.
The Legal side of Rent to Rent - 06:25 - 10:06
Rent to Rent is another term for subletting. Renting comes in a number of forms, the most common form, AST, Excluded tenancy, assured tenancy, regulated tenancy and FRI leases/commercial let. Subletting is not allowed under an AST agreement and therefore Samuel suggests that you use an FRI lease, which is an absolutely TERRIBLE idea, as under this kind of agreement you have to insure the property, repair it, return it to its original/modern state at the end of the agreement and you are often tied into the agreement with no escape and you'll be forced to pay for the entire length of the agreement.
Why R2R is HIGH risk - 10:06 - 14:04
R2R is high risk as Samuel doesn't give you the true costs, or all the costs, involved. You'll be incurring additional costs such as repairs, vacancy, insurance, legal costs, conversion costs, decorating costs, modernisation/un-conversion costs etc. It's also worth factoring in cleaning costs for an AirBNB and the lack of summer rent for students. As such, the profit margin is likely to be a lot smaller than Samuel suggests. Not only are you generating less profits but you also wont benefit from capital appreciation or mortgage paydown which is a huge drawback.
Shaf Rasul's latest video's on the same matter;
Part 1 -
Part 2 -
Part 3 -
Please note that I have not personally attended a Samuel Leeds course and not requested a refund, nor have I confirmed the legitimacy/factual nature of any of the posts/sources referred to in this video (ie screenshots from the Gov website/rental agreements). This information is available in the public domain and I have simply used some extracts. I have not received any private verification of Samuel's property business' success (ie from his tax returns). I have simply reviewed the information in the public domain. This video has not been made to slander Samuel Leeds or his brand but has been made to provide a fair and unbiased review (ie reviewing factual sources). I have no relation or business experience to/with Samuel Leeds either positive or negative.
It is very possible that these claims are unsubstantiated and incorrect, I have just not seen evidence to prove otherwise, Samuel could very well hold properties in his personal name and not via company. However, a Chartered Accountant has suggested that this would not be tax efficient and therefore would not make commercial sense.
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#SamuelLeeds #Exposed #RentToRent
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