The current housing slump and continued difficulty facing first-time buyers in trying to convince the banks that they are worthy of being awarded a life changing lump of debt to help them get onto the property ladder. Means that landlord numbers are growing, 2013 according to a number of national newspapers is the year of the landlord, as relatively wealthy individuals with good credit ratings continue to buy up property at a discount with a view to taking advantage of the dynamics in the market .
One property investor I spoke with recently likened the UK property market to the Klondike gold rush. Many of the miners will make it, but even more will fail – ill equipped and poorly educated in the ways of profitable mining. As with mining, making money from Property investment requires the correct tools. If you choose to take a short cut beware you could end up losing the lot.
Letting Agents provide a valuable service in the process of monetizing property, which could be viewed as the go to guys in the mining community. Letting agents can guide Landlords through the letting process, they:
· Outline the successful letting process
· Can source reliable suppliers of landlord services ie painters & decorators, builders, plumbers and so on.
· They can market your property to the widest possible number of tenants
· Putting up a for let sign.
· They often have tenants on their books who are actively looking for property
· They will vet prospective tenants
· They will arrange the contracts
· They will conduct Inventories
· They will manage the property and do bi-annual checks
· Collect rents
· They can provide advice on the right insurances
In the past a good letting agent has been an integral part of the property investment process. All this sounds great I hear you say, what's the problem. The fundamental problem most landlords have with letting agents are the fees they pay and the total lack of customer service they receive in return. Although if truth be told a properly sourced investment property can easily accommodate these fees.
Often the tenant sourcing element of the service will cost up to 50% of the first month's rent, there may be additional charges for contracting, tenant reference checks and so on and so forth. If you end up getting them to change any doors or carry out any work they may put as much 25% on top of the contractor fee just for arranging the work. I suppose Advocats would say that you are paying for the agents network and expertise, although this holds little water with many landlords.
In this day and age there are lots of other options available at the other end of the spectrum is the DIY landlord, as the name suggests DIY landlord will do the whole process themselves. There are lots of pitfalls which can trip up the inexperienced landlord choosing to DIY it themselves.
There are rare providers that Landlords can use who will do elements of the process and at the same time provide the landlord with helpful advice. This is the middle ground and one which I think more and more landlords will opt for. Landlords can do as much or as little as they wish. There are tenant sourcers who can help landlords get their properties markeded across the internet, they will also arrange the views and conduct initial vetting all for a flat fee which is nowhere near 50% of the first months' rent.
As long as landlords are happy to do viewings they can save them a lot of money and still get the same type of advice as they would if they opt for a full letting service. The internet and the development of new business models to satisfy niche elements is enabling this to happen. I will give you one example of how the internet and proliferation of the smart phone is helping to save landlords money if they choose to educate themselves as to what is out there. Letting agents can charge up to £ 100 to do a full inventory, there are some app's that will run you through the whole inventory process, enabling you to take photo's and create an in-depth report for only £ 5.00. The report is emailed to you within seconds of it being uploaded to the app owners website. Funnily enough the smart agents are also using the same app to do their inventories and guess what they are charging for it, suffice it to say they are making a minimum 1000% market up, great work if you can get it. And not to dissimilar to the type of profits that were made by a few way back in the Klondike gold rush of old.