Anyone know about renting out a property then re-renting for a higher price?

Question

I read about this in a book how to make money one of the ideas was to rent out a property your renting to someone else for a higher price.

Answer 1

That's called sub-letting. Your landlord would have to approve the transaction. Most landlords won't allow their tenants to sublet as it complicates the issue substantially. Very few jurisdictions grant a tenant the right to sublet without the landlords consent.

Where it is permitted -- either by law or contractual agreement -- you are still liable to the landlord for the rent. Even if your tenant fails to pay, you still must pay the landlord. You still must pay on time, even if your tenant is late. And you must evict your tenant if they fail to live up to their sub-lease with you.

If the lease is assignable as one poster suggested, the landlord would collect the increased rent, not you. You'd be out of the transaction completely. You wouldn't be liable for payment by the substitute tenant, but would not make any money either.

Do keep in mind that you're not likely to get more than about a 5% increase in the rent. If the rent is $1000.00 a month, you'll be lucky to make an extra $50.00 a month unless rents are rapidly increasing. Not a great rate of return for a relatively large risk. If the property stood vacant for a month while you located and qualified a tenant, you'd be out about $400.00 after a year. Even at $100.00 a month extra, you'd only profit $200.00 in a year.

This type of transaction is fairly common with commercial leases. You lease a property long-term, say a strip mall or warehouse for 20 to 50 years, and then either subdivide the property to a number of small tenants or place a string of shorter term tenants. It's highly speculative but can be profitable if you really know what you are doing. I'd wager that you don't, though.

Answer 2

I agree with both answers.

But also what if the person you rent too finds out, your paying less rent for the same property ??

Now with internet technology, a person can find out information to just about anything.

With every contract, an Attorney is attached to it.

Answer 3

You're talking about an assignable lease. You lease a property and then assign your rights to someone else for a higher payment. Good luck finding a naive landlord that doesn't understand what "and/or assigns" means after your name in a contract. Not to mention, a paying tennant as well.

However, the books I read talked about assignable lease and/or purchase options.

Regards

Answer 4

I wouldn't recommend doing that! most likely you would be in a contract with owners
of the property.Also, you would be legally bound to anything they might do to the rental.
It would be one heck of a risk,but true, you could make a small profit that wouldn't be
worth the headaches having renters will cause. think about it first! good luck

Answer 5

good idea if the person renting it to you does not put a clause in the rental or lease agreement that you can not sub rent or sub lease....then you have a problem..........