Let's talk Letting Agents
People often ask us if we manage our own properties and it’s a topic that often appears to divide investors.
So let’s talk Letting Agents (by the way I know all of our Letting Agents read our social media - hello to you guys!)
All of our properties are let and fully managed by letting agents. When I say ‘letting agents’ I mean ‘letting agents’, not estate agents who do lets on the side. This is important to us as outsourcing our property letting means putting our primary source of income into someone else’s hands and trusting they will work effectively in our best interests; so we are only interested in Letting specialists.
Typically we pay between 10-11% (plus VAT) of a property’s gross monthly rent to a Letting Agent. That’s a decent wedge!
So why do we part with so much potential income when we could “save money” and do it ourselves?
REASON ONE: Tenant hassle
We managed our first property when we bought our second home and kept the first one instead of selling it. Overnight we transformed into classic ‘accidental landlords’.
Looking back I feel a bit sick at how little we knew when we undertook finding our own tenant and managing it ourselves - no credit checks, no employment checks, no real grasp of what legislation we needed to adhere to. We had 4 tenants over 4 years, and we did OK.
The overall experience wasn’t bad but it was full of irritations - being called out as the surround sound wasn’t working (it wasn’t switched on) (can you believe we provided surround sound!), being called out at 10pm at night with a grisly baby in tow as both tenants had forgotten their keys and were now locked out, that feeling of dread when your tenant tells you that they wont be able to make their full rent (uh-oh, how do we handle this correctly??), doing an inspection and realising your tenant had wallpapered (badly) and kept a house rabbit without permission (who enjoyed nibbling skirting boards).
I literally said to Charlie in the process “I don’t want to own any more properties”.
Fast forward a few years, we now have a portfolio. Can you imagine multiplying the irritations we got from one self-managed property by a portfolio? Lots of people would still take it on but if we are going to scale up and be in this for the long game then I would much rather leverage the expertise of a Letting Agent.
Obviously we still have to deal with stuff that comes up on our properties and we care about our tenants but it’s easier managing a handful of agents than tens of tenants - that’s worth a lot to us.
REASON TWO: Value for time
I don’t doubt that if one or both of us put our minds to it, we could learn what we need to manage our own properties safely and legally.
The time required to learn the legislation, stay abreast of any changes to regulation as well as manage the tenants would have to be at the expense of something else - so what would that be? Finding deals, finding finance, investor relations, pushing builds through, time with family and friends. Stuff only we can do for our business and personal lives.
We both agree that it’s better to pay someone to take the letting management of our portfolio on - we’d rather re-invest the time in creating high income-generating opportunities that will more than compensate for the 10% management fee across our portfolio.
REASON THREE: Doorway to deals
At least once a week we receive an email, call, or text off one of our Letting Agents with properties they’ve seen or heard of that might fit into our income strategy. We’ve even had tenants tip off our agents of upcoming properties they think we might be interested in!
Our Letting Agents are working with lots of investors between them, some of them with hundreds of properties to their name.
If we can get a sniff of any landlords offloading properties then we want to be the first to know - and our Letting Agents are a gold mine of information and leads.
REASON FOUR: Due diligence
Every single property we have in our portfolio has gone in front of one of our trusted Letting Agents before we’ve purchased it.
In an age of property apps we’ve generally got a good idea of rents in an area just by doing our own online research, but our Letting Agents provide a good sense check, and can often advise on any street by street variation on achievable rent and desirability. That can be the difference between a good investment and a bad one.
Am I talking rubbish???? Would love to know your thoughts and experiences! Drop us a DM on Facebook or Instagram (@capstonefoxproperties), or straight to our inbox firstname.lastname@example.org