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To use a letting agent or do it yourself

By Micheal Owens,2014-11-13 17:36
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To use a letting agent or do it yourself

    Use a Letting Agent or do it yourself?

    This is one of the most common questions that the new landlord asks and as I feel it is so important, I would like to discuss the issues involved. As with everything in business and I suspect in life it is almost impossible to get independent advice. Ask a letting agent, as they want your business, they will tell you horror stories of nightmare tenants, regulations etc so to encourage you to use their services. Most agents are also very anti HMO’s and will refuse to look after a HMO, perceiving them, sometimes wrongly, as being too much work. Ask an established landlord who looks after their own properties and most won’t even give you the droppings from their nose. We, landlords, are as a whole a selfish, paranoid, miserable group of people who will look upon you as competition and do not want to give you free advice when it was so hard earned by them.

    I tell it as it is, letting and managing property is so easy I find it boring, once you get over the learning curve. There is so much

    information out there on how to do it yourself, compared to when I started, and if you want to To use a letting agency or do it yourself? 1 of 4

    ? C. J. Haliburton 22.02.08

    talk to someone about it, join one of the Landlord Associations. They not only

    recommend books but have web sites on how to do it and all provide advice lines where you can talk to someone with experience. I belong to all of the Landlord Associations and occasionally call them for advice. You can never know everything and sometimes it helps to talk it over. Details of the Landlord Associations are at the end of the article and they all cost about ?70 each to join for the year, ?300 to join the lot, fantastic value for money! I find it difficult to choose between them, they are as good and bad as each other but they are all we have got.

    A landlord is no more than a hotel chamber maid mainly dealing with fairly menial tasks. Don’t get me wrong, I enjoy going out and meeting new people, dealing with tenants and their enquiries and get pleasure out of helping them by solving their problems, but like I suspect with all jobs it gets repetitive and can wear you down. The injustice and unfairness of being a landlord is the subject of an endless tome. Most people would not voluntarily choose to be a landlord, but for the money which usually only comes from property To use a letting agency or do it yourself? 2 of 4

    ? C. J. Haliburton 22.02.08

    appreciation, which brings me back to the point of all this. If you do it yourself you will save a substantial amount of money and where yields are tight reduce your loss or make the difference between a loss and a profit or even better, if you are making profit make even more profit.

I also suspect that by managing your

    properties yourself, in most cases, once you get over your lack of confidence, much, much better than most agents. After all, it is your money and normally no one looks after anything better than you do. Now that you make more money this will also compensate you for the trouble of teaching yourself to be a landlord. I am a qualified lecturer and trained ‘Landlord Accreditation’ trainer and I run regular courses on how to become a landlord and provide on the job training for those who want to have practical experience.

    But what about the midnight calls you ask? What about them? Very few letting agents can be contacted outside office hours and many even during office hours! You could say that tenants have to learn to look after themselves or you arrange cover from one of the

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    ? C. J. Haliburton 22.02.08

    reasonably priced insurance schemes which charge about ?100pa to provide for tenanted properties a 24 hour emergency service for leaks, electrical faults, central heating breakdowns, broken locks & windows etc. See my book ‘How to Become a Multimillionaire HMO Landlord’ for more details on insurance. As for the other enquiries, an answering machine will do, you can call them back at your own convenience.

    As for all the rest, being a landlord is essentially a people business and you should look after your tenants. How much attention and crap you put up with is down to you but many letting agents I know of just deal with the persistent complainers, they ignore 99% of the rest and most of the problems are solved by themselves or go away, but this is true in a lot of businesses which deal with people.

    There is not much to being a landlord once you accept you are a door mat in an unfair system, the rest can be learnt on a need to know basis. I would always ensure I do and know about the following, but I know many landlords who do not even bother with the first To use a letting agency or do it yourself? 4 of 4

    ? C. J. Haliburton 22.02.08

    three and can be surprisingly lax about the last point:

    1. The property is up to a reasonable standard

    and has a gas certificate and where required

    is licensed.

2. Have a written tenancy agreement,

    obtainable free of charge from any of the

    Landlord Associations mentioned earlier or

    use my agreement, see my web site

    HMODaddy.com for details.

    3. Do not take deposits, charge what you like

    instead, but call it a administration fee, see

    my article ‘Twelve ways to avoid the

    Tenancy Deposit Scheme and Turn it into a

    Financial and Marketing Advantage’ it is

    on my website HMODADDY.COM the

    article does what it says in the title.

    4. Act promptly on rent arrears and do not

    believe any of the excuses about late

    payment.

    Whatever the agent charges I believe it is too much and is better in my pocket. It is not only the 5%-20% management fee but the set up To use a letting agency or do it yourself? 5 of 4

    ? C. J. Haliburton 22.02.08

    fee and extras they add on for dealing with problems from your tenants, if they ever get round to dealing with them. You may consider using a let only service where for about a months rent they will find and maybe vet a tenant for you. Check if and how they will vet the tenant before using the service.

    It is worth looking at what some agents charge and for what and learn from them. Most landlords do not charge their tenants anything for setting up the tenancy agreement, renewing the agreement, references, call outs, cleaning, inspections, vetting the tenant etc. I was pleasantly surprised just how little resistance I had when I started to charge an administration fee for setting up a tenancy.

     My main two concerns about agents are that they often do very little for what they charge and secondly, so many go out of business owing the landlord money. If you do use an agent then it is worth using one who belongs to a professional association, which provides a compensation fund.

    I have heard so many terrible accounts of landlords being fleeced by their agents, it is To use a letting agency or do it yourself? 6 of 4

    ? C. J. Haliburton 22.02.08

    bad enough being robbed by the tenants. With the Tenancy Deposit Scheme being widely ignored I suspect many more problems will emerge with non-compliance.

    I was drawn into using a letting agency as a way of building a business relationship, I gave the agent four of my properties to manage to encourage him to pass on to me the below market value properties he came across. He ran off with the best part of ?10k in rent and deposits from the tenants. I should have known better! But as I say, the only person who does not make a mistake is a person who does nothing and they make the worst mistake of all, by doing nothing with their life!

    I estimate, if all your properties are close by i.e. within 5 minutes or so of your base, I believe you can look after about 100 single let properties or 10 HMO’s all by yourself and it will take around 3-10 hours work a week, hardly noticeable if blended into your weekly activities.

    I hear the argument that a property investor should be spending their time ‘Working on

    their business’ not ‘Working in the businesses.

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    ? C. J. Haliburton 22.02.08

    Instead of dealing with tenants, chasing up rents, cleaning and changing light bulbs you should be out finding more good deals and sorting out finance. I agree with this to the extent that this should be the priority but I do not believe that most people do not also have a few hours spare to manage their properties as well. I used to treat my rent collecting and doing viewing days as an opportunity to meet people and widen my social life, but then, maybe, I am a particularly sad person.

    Do not assume a letting agent is the end to your problems of managing properties, often they only increases your problems by their poor management and rapacious attitude. Some agents do very little apart from find the tenant and collect the rent by standing order. Any fool can deal with that. As soon as problems occur they pass them directly on to you instead of sorting them out themselves and or want to charge extra for dealing with the problem, for example, non- paying tenants, repairs etc. By the way if you are worried about having bad tenants you can insure against this as well for a modest amount, about ?140pa. It is all in my book ‘How to Become a Multimillionaire HMO Landlord’.

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    ? C. J. Haliburton 22.02.08

    I have no experience of managing properties at a distance but from contact with other landlords the magic number is 30 properties UK wide. These landlords say that they can manage up to 30 properties by themselves and begin to struggle above 30 single properties. They are all full time property investors and they do not count their time. Some are starting to rationalise by selling off properties outside their main areas so they can buy more but within a limited geographical area so they can more easily manage them.

    To sum up, I do not wish to be unkind to the good agents out there who do an excellent job and having tried managing other peoples property, they are like builders, another one of my bones of contention see the section in my book about good builders, more sinned against than sin. Looking after property is no big deal, just do it.

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    ? C. J. Haliburton 22.02.08

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www.hmodaddy.co.uk

Many thanks

Jim Haliburton

    HMO DADDY

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    ? C. J. Haliburton 22.02.08

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