Private landlords have a very busy life, taking control of their property, the tenants inside, rent, and maintenance, to name a few of their responsibilities. Buy-to-let is no laughing matter; it requires time and effort to reap the benefits.
Some landlords turn to their local lettings agents, praying that these professionals will relieve some of their stress. And they do… for a price.
But, now the Tenant Fees Ban has come into force, many landlords will be looking to self-manage as they can’t afford the inevitable price increase for property management through letting agents.
This seems like a good way to avoid the ban. Many landlords may not be well enough equipped to manage their properties independently. Managing your own property requires time, effort, and know-how.
As much as landlords wish they could do it all, the reality is that one in five find it ‘impossible’ to keep up with constant regulation changes and overall property management. They struggle to keep up with the various requirements of a private landlord, especially when many have a full-time job to work.
Property management companies seem to be the best route. A middle man if you like, the best of both worlds.
But before you rush off and hire the next property manager you see, here are a few handy tips to help you choose the best company for you.
If the price is right…
Every landlord needs to budget; otherwise, they may compromise their rental yield. When searching for a property manager, it is important to have a figure in mind that you would like to spend, and try to find something within your budget. Alternatively, it can be handy to have an additional figure in mind, which is the maximum you are willing to spend before you start to compromise your profit too much.
Monthly charges can either be a fixed fee, regardless of your rental income, or a percentage of your rental yield. This can cost anywhere between 8% and 12% of your total monthly revenue.
But this price is rarely the final figure.
The fantastic thing about most property management companies is that they can be tailored to your specifications. You can add and remove certain factors of property management to ensure that you get the right package.
Because of this, prices can change from one landlord to another, meaning that the price you see initially is rarely the price you end up paying.
Not only are additional services associated with additional price tags, but many companies also have hidden fees that may be buried in the small print.
- Property vacancy fees
- Tenant finder fees
- Maintenance mark-ups
- Emergency call outs
- Evictions
- Court cases
- Viewings
- etc.
It is essential to be aware of these fees and the possibility of others, make sure that your property manager explains all of the options to you, so you aren’t hit with a surprise charge at the end of the month.
Get the most out of your money.
What do you want out of your property management company? Property management companies can often be flexible with their services, and with numerous add-ons, you can tailor your package to suit you.
Learn about all the services they offer and the prices they charge. It is worth comparing different companies to ensure that you are getting the most for your money.
Reviews are another great way to ensure you are spending well; paying slightly more for a reputable and highly praised company may be a good investment for your property.
Remember: The higher the price doesn’t always mean the higher the quality, and the cheaper the price doesn’t always mean the lower the quality.
Tenant care
One of the largest parts of property management is taking care of tenants, and every company has a different method for doing so.
Think about what is important to you as a landlord. How much control do you want over your tenants, and how much should the property manager have? How do they find tenants?
It is vital to know this, as bad tenant management can lead to a loss of tenants and, subsequently, a loss of profit. Make sure that everyone is on the same page and that they are aware of what you want from them and what they will do for you.
Let’s talk profit
Rent collection is another vital part of property management. If this part isn’t stable, there will be no money to pay the property manager, so it should be fairly high on everyone’s priority list.
Property managers will value your property as part of their basic package and help you to determine how much rent you should be charging per month. With their professional knowledge of the current housing market, they should be able to do an accurate analysis and ensure that you are not underselling your property or charging a ridiculously high price that may deter potential tenants.
Once the rental price has been set, you must ensure that their rent collection suits your situation. How long after rent has been collected, will the money be in your account?
Find out how they plan on collecting the rent, what method they will be using and what their success rate is. Ensuring that their methods are tried and tested is crucial; rent collection is not something you want to mess about with.
Enquire about the procedure and if there are any arrears, missed payments, or late payments. A property management company will likely charge more to take tenants to court and chase for late payments. Will they go as far as eviction? It is a good idea to ask how often they find themselves doing this, if it is often then their rent collection service is not working for them, and by the sounds of it, maybe it won’t work for you…
Read the small print
Make sure that you are fully aware of all of the T&Cs that your new property manager comes with. Admit it—you have, on multiple occasions, scrolled to the bottom of the T&Cs and clicked ‘I accept’ without actually reading what you are accepting. Don’t feel ashamed—we’ve all done it.
But when it comes to property management, this time read the small print. Your property isn’t something to be taken lightly, it is a huge investment and blindly handing it over to someone else isn’t the most intelligent move.
Do you want to hand over complete control to the property manager? Or are you looking for a more hands-on approach? Check that the small print doesn’t coerce you into agreeing to things you cannot provide or do not wish to do. Just ensure you are happy with all the conditions that come with the property management company; you don’t want any nasty surprises.
Some property management companies offer an inescapable contract, one that binds you to them for a set amount of time, offering no escape unless a large fee is paid or an agreement is made. This is a worrying thing to see, if a company won’t let you leave on your own accord then this should be flagging some warning signs. A company shouldn’t feel the need to trap its customers; it should feel confident that consumers will stay with it for the long haul and may even renew its contract when the time comes.
In addition, some property managers may trap landlords into using only their services.
If a landlord wishes to sell their property, they may find themselves restricted to only listing with their property management company. Many landlords are unaware of this trap, which will definitely be written in that pesky small print.
If the company has impressed and gained the landlord’s confidence, then they very well may decide to list with them, but this should be a conscious decision and not something that they are contractually obliged to do. If you have been less than impressed with your property manager, then the last thing that you will want to do is entrust them with the task of selling your house. Don’t be caught by this sneaky trick!
Have a shop around, find out the different deals available and what services they offer and think about whether or not this is a good fit for you.
Once you have found a property management company that has taken your interest, why not organise a meeting and ask them these 15 questions to ensure that you are hiring the right person for the job.
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