You don’t know what you don’t know. This adage couldn’t be more accurate when it comes to property and different ways to cash flow your rental property!
Single lets are normally what come to mind when someone says they’re a landlord or property investor. However, there are at least 6 other rental strategies that can be used to cash flow a property.
The following different rental strategies have a variety of advantages and disadvantages. Ultimately, the best rental strategy for you depends on your property’s location, condition and your own personal criteria/aims….
Single Let
A single let is a property which is rented out with one tenancy agreement (AST). The holder (individual, couple or family) of the AST has the right to occupy the entire property, for the period defined in the agreement. Tenants with an AST have a legal right to occupy the property they’re renting for a minimum period of six months. Subsequently, this is a long-term rental strategy.
House of Multiple Occupancy (HMO)
i.e. Multi-Let
A House of Multiple Occupancy (HMO) is any property which is let out with multiple tenancy agreements (ASTs). Each holder (normally students or young professionals) of an AST has the right to occupy one bedroom and share the lounge, kitchen and bathrooms (known as communal areas). As per a single let, the minimum tenancy period is 6 months. Subsequently, this is also a long-term rental strategy.
Student Let
A student let is similar to either a house of multiple occupancy (HMO) or a single let, depending on how many students occupy the property. Typically the only difference is that the tenancy period is defined by the academic year. Due to the AST(s), the minimum tenancy period is 6 months. Subsequently, this is a long term rental strategy.
Serviced Accommodation (SA)
Serviced accommodation (SA) refers to a fully furnished property which is available to be rented (typically by the night) for short-term stays. It is the most flexible rental strategy as it doesn’t involve ASTs or management contracts. These properties are a cheaper alternative to hotel accommodation. Therefore, they are popular amongst professionals or holiday go-ers looking for a hotel equivalent.
Holiday Let
Similar to serviced accommodation (SA), a holiday let is a fully furnished property available for short term stays (each rental period cannot exceed 31 days). However, the tenancy type is specific to holiday go-ers.
Corporate Let
A corporate let is where a property is rented to a business. There is a management agreement between the property owner and the business allowing the business to manage the property for their desired use. Management agreements are typically 3-5 years. Subsequently, this is a long term rental strategy guaranteeing the landlord a rental income for the duration of the agreement.
Social Housing Rental
This is similar to a corporate let. However, instead of renting a property to a company for a guaranteed rent, you rent your property to a local authority or housing association for guaranteed rent. The local authority or housing association then uses the property for their social housing needs.
These are our top 7 rental strategies to cash flow your property. Some are more hands-off than others; however, it is possible to find a management company for all these different rental strategies making them all as hands-off as each other.
The success of a particular rental strategy is dependent on a property’s location, condition and desires of the property owner. If you’re looking to change your rental strategy, a local independent property advisor (IPA) will be able to discuss which is most suitable for you and your property!
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