What would you pay for a good night’s sleep? I suppose that depends on how tired you are right? After weeks or even months of issues with a tenant not paying rent, mounting fees, lock-in agreements or poor service that leaves you tearing your hair out, even the most seasoned landlord can reach the end of their tether. In short, it can make you seriously dislike a property…I know, I’ve been there!
The world of letting agents is not a zero-sum game. Fundamentally it comes down to how conscientious your letting agent is. Some just work harder than others. But, in the face of that, here is a small list of the key factors to check before signing that can serve to cover you should you need it. Remember, you may be an investor, but as soon as your tenant signs, you’re a Landlord as well… Abdicate your responsibility at your own peril! If you are looking to find a Good Estate Agent… consider reading on!
Tip 1 – How big are they? Are they corporate, or personal?
When finding the agent that’s right for you, consider how you would like your portfolio to be run. What are your pain points? Would you pay more to know there is an agent ready to pounce on an issue and pro-actively jump over any hurdle that comes up, or would you prefer to leave it up to the corporate machine and save some money, but add in a little bit of difficulty if there are issues?
In my own experience, the corporate route can leave you frustrated if there are problems with a tenancy, as they are very limited in what they can do for you. They likely won’t have any kind of relationship with your tenant, and the options basically boil down to what buttons they have available to push, or automated letters they have available to send. You can get rates as cheap as 6%+Vat with a big agent, so they do wonders for cashflow, but be careful of the additional charges.
On the other hand, a small, local agent, with the business owner’s name above the door will be a reliable option if you want the hands-on approach normally. You will pay more, a lot more, maybe 10%-12%+vat, but you will get an agent who wants to protect their business by giving you excellent service. It’s likely they will inspect the property themselves in order to keep their costs low, and so will naturally be able to build a relationship with the tenant. When you call, they will be able to give you a lot more information as they likely will have been there themselves, whereas the corporate agents seem to take a ‘no news is good news’ approach…not helpful if you have a tenant that isn’t too good at communicating.
Pro-Tip: If you want the property to be managed in a hands-on way, pay the increased fee and get a local expert. Otherwise, if you have a lot of property and want a clean-cut and corporate service, go with a larger agent and save the money. In short, figure out what is more important to you, and what helps you sleep at night.
Tip 2 – What is their Legal Support like?
This is actually a pretty important and not-so-often discussed point. If a tenant stops paying, or damages your property, you’ll want to know what level of support they can offer you. This is covered a lot of the time by Landlord Insurance as well. A big agent will likely offer you pretty good support in the eventuality of a case going to court. They will also have a team of people to advise you on the correct course of action. A smaller agent will know the law but may not have the flexibility to offer you direct help in those cases. Remember, only a tenant themselves, or the Court can end a tenancy. Landlords have very little say in the matter when it comes down to it.
Pro-Tip: Make sure when you instruct an agent, that you have asked them what their process is, should there be any need for an intervention. Can they demonstrate a procedure?
Tip 3 – What do they charge and what are the hidden costs?
Ask for a price list. When we meet a new agent, we always request a draft AST (assured shorthold tenancy) agreement. We also ask for their price list. A lot of agents will charge some pretty big fees on things like certificates and maintenance. These can add up. Since the tenant fee ban in 2019, letting agents have seen their ability to make profit on the side, reduced. This cost needs to be made up somewhere… the Landlords. It’s a lot cheaper (maybe ⅓ to ½) to instruct your own certificates and manage your own work, but if that coincides with you being busy or unable to, or there are problems, it defeats the object of a fully managed service if you end up dealing with things yourself! If you need help understanding what things ‘should’ cost, just reach out to us!
Pro-Tio: Ask for the price list and check if it is reasonable. (or ask us and we’ll tell you!)
Tip 4 – Do they inspect the property themselves? Are they a presence in the property?
I like to ask this question. My first rental property was with a very corporate company. They brought in a third party company to inspect the property, the .pdf compiled from the inspection was uploaded onto the portal they gave me to be looked at “at my leisure” and nothing was ever said unless i raised an issue. It turned out that the tenants had been damaging the property, and no-one had flagged it to me. The inspection company compiled their report and reported to the agent, the agent uploaded it to the portal which notified me, and it was down to me to look at it and decide what to do. That was on a fully managed! If the agent had been more interested in the property and the success of the tenancy, they would have flagged it immediately and worked with everyone to get the situation under control. With a corporate agent managing hundreds of properties, it seems they like to use third parties to leverage the responsibility, and things get lost.
Pro-Tip: Inspections are important, especially at the start of a tenancy as they set a precedent for how things will be long term. Choose an agent that takes an interest in your property, (if you are interested yourself as a good landlord that is) and make sure they review the document before sending it to you, making sure they are being mindful of your investment, not just passing the responsibility to you.
Tip 5 – If you are not in the Country, avoid the ‘National Agencies’ that are based out of town.
Something that is more and more common these days, and something that is good to avoid. Rent collection is one thing, we offer this service ourselves. With rent collection, we charge 3%, and make sure the tenant pays on time, and if not we manage that for you, as well as providing you with nice neat invoices for tax. It’s a great little service and really popular as it allows the Landlord to keep a lot of the profit while handing the collection…or difficult conversations surrounding collection…over to someone else.
But, enter the National Agencies. They have hundreds of properties, are based well out of town, and cover a huge area. They offer a middle of the range price but provide little more than rent collection in terms of actual service. They are likely to use contractors they have not worked with before that they found online to do a lot of their work and won’t visit the property themselves. They will take on any property that will give them a profit and likely won’t have a niche. Fees will be high on certificates and maintenance as this is where they make a big slice of their monthly profit. So why are they popular? For the simple reason that you will likely be in touch directly with the business owner, so you get that personal service, but, the delivery of the service is poor and expensive. It’s almost the ‘illusion’ of personal service but spread out over multiple areas. As they cover such a huge area it’s likely they won’t know your property or tenant and will rely on local tradesmen to visit the property and update you based on their feedback. It won’t be their own team or a team they necessarily frequently work with. Look for agents advertising in Manchester but whose office is in Liverpool or Bolton for example. Small teams, personal service but poor execution and not much help in a crisis…usually.
Pro-Tip: Avoid the out of town agents who claim to deliver a good service, I’m yet to meet one that does!
Lettings really is the forgotten end of property investing for many reasons. The most baseline being that investors don’t like being Landlords. Unfortunately, this is no time to abdicate all responsibility for the management of your property to someone else, and hope it goes okay. In the same way there are good tenants and bad tenants, there are good agents and bad agents, at all different price levels. With a bit of investigation you can find out beforehand using this list, the indicators that will show you who the good agents are more likely to be, and from there, you can make a call based on the price point you are willing to pay depending on your strategy.
Agents are fundamentally all in sales. They sell a product, so they are likely to be able to sell to you on the phone or by email, regardless of their skill level at managing rental properties. If you are investing in property in the North of England and are looking in the big cities, it’s likely we will know who (in our opinion) the good agents are… or at least who the bad ones are. It’s worth getting in contact with us as we are always happy to advise…especially if it helps you get some more ZZZZ’s
If you have any questions regarding your property journey, would like more information on how to spot a good letting agent, or want us to handle the whole thing for you, sourcing, refurbishment and lettings, simply become one of our clients and we’ll take care of all of that for you!