6 reasons why landlords should consider using property managers
There’s an oft-quoted citation from Franklin D. Roosevelt about the security and wisdom of investing in real estate which will underpin many people’s decisions to invest in the buy-to-let market in the first place.
“Real estate cannot be lost or stolen, nor can it be carried away. Purchased with common sense, paid for in full, and managed with reasonable care, it is about the safest investment in the world.” Franklin D. Roosevelt
As with any investment there are no guarantees about returns, but once the property has been acquired a question which often presents very quickly is whether to manage the property oneself or to employ the services of a reputable letting agent or property management professional. Below we have considered a number of the main reasons why buy-to-let investors should consider using a letting agent for day-to-day management of their rental property.
1. Finding suitable tenants
Where to start? For the individual landlord it can seem like a daunting task to start sourcing suitable tenants for your precious property, and indeed this is one of the primary advantages of leveraging the existing pools of prospective tenants which lettings agencies will have access to. Although some tenants will certainly look through private adverts, many of them will register with the local agents who have a larger selection of rental properties on their books and provide some level of security and protection to them rather than the perception of “unscrupulous landlords”. Professional property managers will have all the necessary resources and systems in place to perform the full tenant-find process from matching tenants with suitable properties and conducting viewings, to carrying out the credit checks and drawing up the necessary legal tenancy agreements. Be it a website or portal listing, a local newspaper ad or to-let board, or simply a window card in the high street agency, there’s little doubt that an agent will source a tenant much more quickly and easier than an individual landlord. You just need to trust that they’re a suitable one.
2. Dealing with tenants directly
Many people, not just landlords, have an aversion to or inherent discomfort in conducting business with complete strangers. For property managers this is their job and they will know all the tricks of the trade, not just to sell your property to prospective tenants but to collect rent, fend off excuses and enforce late payment fees, and to engage with all manner of queries and complaints at all hours of the day and night. The agent is the first and perhaps only point of contact for the tenant, and this level of insulation is definitely attractive to landlords, but remember that this is all built upon the trust that the agent has located an appropriate tenant in the first place. When self-managing their property a landlord will have to be at their tenant’s beck and call 24×7, taking phone calls about maintenance issues at night and on weekends and although this service comes at a cost, it’s one that many landlords are quite willing to pay.
3. Rent collection
Although it is typically not that troublesome, collecting rent from tenants on a regular basis is often perceived as one of the potential problem areas when dealing directly with tenants. Of course, if time is taken to identify appropriate tenants in the first place, and to set up formal recurring payment arrangements such as direct debits, then this should be relatively hassle-free. Whether a landlord opts for a let-only or a fully managed property management package the agent will typically collect the first month’s rent and security deposit up front. After that it’s a matter of dealing only with rent arrears although this can escalate quickly if not managed properly. Agents will have loads of experience in rent collection and arrears management, and if they only get paid the management fee when rent is actually collected then it is firmly in their interest to collect rent on time every time.
4. Don’t have much spare time
Property investors and buy-to-let landlords are by their nature busy people, and often simply don’t have time for the day-to-day management involved in keeping a rental property. In particular the early stages of sourcing tenants, advertising a property and conducting viewings can be very time-intensive and disruptive to an individual whereas an agent will carry these tasks out with ease. When a tenant is established in the property issues and queries will still arise and require often urgent attention, which is sometimes impractical for busy individuals. The involvement of an agent naturally comes at a cost, but fielding a call about a broken window or leaking pipe on a Saturday night is a hassle that many landlords are quite happy to pay to avoid.
5. Property is not situated locally
Quite often landlords have purchased investment properties outside their local area, maybe some distance from their home, and travelling to the property is both time-consuming and a hassle. Working with an agent in that local area has multiple obvious advantages. Agents will know the local rental rates and will have an existing pool of interested tenants ready to view and hopefully move into the property. Managing enquiries or maintenance issues also presents problems if a property is not within a short drive of the landlord’s base. Maintenance work in particular may require quick attention, but landlords who aren’t from that area may struggle to identify dependable tradesmen to deal with such issues. Local property managers will have an established network of trusted suppliers and tradesmen who they can call on out of hours to quickly sort any problems.
6. Keeping up with regulations
Perhaps the most daunting aspect of self-managing rental properties is being aware (and staying abreast) of the necessary laws and regulations, from drawing up the necessary tenancy agreements (ASTs) to dealing with arrears and ultimately eviction if all else fails. The tenancy agreement is the most important part of this jigsaw and landlords will often try to save time by using generic agreements which they find online. When disagreements occur the agreement simply may not be up to the job leaving the landlord wishing they had made the initial outlay of getting it done properly by an expert in a letting agency. Another consideration with disputes between landlords and tenants relates to tenancy security deposits. Deposit protection is now fully regulated and while agents will know exactly what to do, the legal obligations are often unknown to landlords who could inadvertently act outside of the law. If in doubt, it is probably best to get expert advice on legal issues.
Of course, it will be quite easy to make equally valid counter-arguments for not having to use a letting agent and instead going it alone, and we’ll consider that perspective in a future post. Whether self-managing or using an established letting agency, keeping records of rental income versus expenditure, as well as tracking maintenance issues and correspondence with tenants, it makes sense to use a dedicated property management solution such as RentPro. With the Solo version of the product tailored to landlords managing their own buy-to-let properties, or Business and Max catering for professional letting agencies, RentPro is the ideal property management software package for everyone’s needs.