Some of the landlords we speak to are concerned about the cost of employing an agent to market their portfolio, they think it's just not worth the money.
In our experience, this can be a false economy and you may even be letting your tenants down by not keeping on top of ever-changing legislation. Have you considered the cost of NOT using an agent?
This post is not about why you should use Redbrick Properties in particular, by why you should give serious thought to engaging an agent to market your properties at the very least. Especially if you market to students looking towards the 2016/2017 academic year.
Because this time of year is critical for the student market, this post contains information that's very relevant to the unique challenges of letting property in student areas. But many of the points raised are relevant to landlords of professional properties as well. We are experienced in both markets, and understand the unique challenges of the student season.
Factors to Consider
If you saw the day-to-day operations of a lettings agent operating in today's market, I think you would be surprised by just how much goes into marketing properties and performing application checks - and would see that the rates charged by some agents are competitive and justified. Not to mention staying on top of the complex legislation and avoiding fines.
When weighing up the cost of an agent, have you considered the following factors?
- Time consuming & expensive - how much is your time worth to you? Marketing your portfolio yourself, without the help an agent, can be a real drain on your time. What's the cost of the time spent marketing your properties, taking enquiries, arranging viewings, and performing the increasingly complex checks on tenants required by modern legislation? I can only speak for Redbrick Properties but we invest a lot of time and money into search engine optimisation, social media, branding and our website, as well as prime retail frontage and front of house staff, all to ensure our properties receive maximum exposure in an incredibly competitive market.
- Missing the season - the student market is constantly changing, properties are letting earlier and earlier each year. The most diligent tenants are out of the blocks fast. These individuals are attentive and organised - and in our experience will take the best care of your properties and pay rents on time. If you don't make a serious impression in November and early December, then you're going to be faced with a competitive marketplace in January/February.
- Void periods - the worst case scenario is that you miss the season entirely, there are numerous properties each academic year which stand empty for exactly this reason. What would the cost of this be to you? How exposed are you to this risk? A letting agent is a great source of information as they will know the current lettings market better than anyone. It is in their interest to have your property rented out quickly with minimum voids to good tenants and they will inform you of the best way to achieve this.
- Application checks - Letting Agents perform application checks on a daily basis and as a result are more than savvy to the tricks some less desirable tenants try in order to get their foot through the door. Approving tenants with a poor credit history, or history of disgruntled landlords could end up being the least of your worries. The admin associated with being truly diligent is astounding and short cuts may come back to bite you.
- Legislation & Regulations - Whether it's Right to Rent immigration checks, the correct serving of a Section 21, or new smoke alarm and carbon monoxide regulations - the legislation around lettings has never been more complex and ever changing. If you're not getting this stuff right, then you could be exposing yourself to massive fines, or more importantly putting your tenants at risk. It is a letting agents duty not only to offer a landlord important advice but to ensure they are at the forefront of the most recent legislative changes in the property market.
- Robust tenancy documents - in the thirteen years that we have operated as a lettings agent, we've seen it all. Our tenancy document protects both the landlord and tenants, from a protracted and expensive dispute. By clearly managing the expectations of both parties in the agreement, we act as a mediator and have diffused many difficult situations. The key to this is a robust tenancy document covering every eventuality. It just doesn't compare to an off-the-shelf tenancy agreement that's potentially full of holes.
- Not achieving your rental potential - perhaps that most significant cost to consider when going it alone, is the opportunity cost of not realising the true rental potential for your property or portfolio. This is not simply a case of selecting the correct rent, but ensuring that the marketing of the property is as effective as possible - such as taking great photography, hitting the market early and getting your property in front of as many potential tenants as possible.
If you total up the costs in terms of time, resources and missed opportunity; then I think you'll see the true cost of going it alone. Now I will admit, that it may be more cost effective for you to market your properties yourself if you get everything right - but you need to take all these factors into consideration when looking at the rates charged by an agent and make a decision with properly weighted risk factors to have a true picture and maximise your return on investment.
That said, it's my personal opinion that you'll have a tough time successfully doing it yourself compared to an agent that is focused on the challenges of marketing, application checks, legislation and has a proven air-tight tenancy agreement based on the experience working with thousands of properties. But the decision of course rests with you.