Listen to this episode below:
In this episode, I join three successful investors in a discussion about the lettings industry.
For years, landlords and agents have had a questionable relationship. The investors we talk to today are all self-starters who enjoy the personal touch when it comes to their tenants. We discuss what makes a good landlord and a good agent, and why it can make sense for an investor to act as their own letting agency.
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Introducing…
Sarah Smith – Sarah bought her first property in 2004 and quickly added a handful of single lets and HMOs. In 2015, she finally met a letting agent she got along with and decided to change the way she managed her properties. Together they built a letting agency from the ground up that started off managing her portfolio of 40 rooms and has quickly grown into one of Southampton’s best independent agencies.
Francisco Diaz – Francisco began his portfolio in 2006 with single lets and HMOs. He managed all his properties himself along with a full-time job. In 2015, he quit his job and decided to manage his property portfolio full time. At the same time, regulatory taxes for landlords were being introduced, making it the perfect time to focus on management over acquiring new properties. Francisco is considering setting up his own letting agency with another investor, allowing them to systemize their process and cut down on wasted time.
Chris Brown – Chris got started in property investing in 2011 and focuses predominantly on single lets. From the beginning, he’s always done the letting side himself, but now he sees a letting agency as another asset. Determined to still maintain a personal touch, he works full time in property and has set up systems that allow him to operate a large portion of his business remotely.
Is using a letting agency the right decision for you?
Sarah: When Sarah was still in the corporate world, she spent excessive amounts of time responding to tenant issues. Because the tenants knew her personally, they were more likely to pay rent late or ask for favours. She needed to put a barrier between her and her tenants, and a letting agency was the ‘bad cop’ face she’d been looking for.
Francisco: Francisco hasn’t had much luck with letting agencies finding him tenants – he has always been more successful doing it himself. However, with all the paperwork and changing laws, a letting agent can help cut down on the technicalities and potential issues – even if you maintain control over the people side of things.
Chris: Chris noticed that by sitting down with a tenant shortly after they move in, he can negate problems before they arise. If he doesn’t get to know his the people living in his houses, he risks becoming another faceless landlord that tenants don’t care about. Despite this, he still wants to reduce the burden of time that managing his portfolio places on him. By having an agency dealing with the background work, he can focus on the human connection side of property investing.
What’s the best way to find a good agent?
Sarah: Go to the local network events in your area. By chatting with other investors and listening to speakers, you can often find a good agent who knows what they are talking about. A personal recommendation is the best indication that a letting agent is good at their job.
Chris: Play the tenant and play the landlord. Go to the office and ask questions that show you know what you are talking about. Agents that give thoughtful, factually correct answers are the ones you want to go with.
How do you keep up to date with changes to legislation?
“As landlords, we have a responsibility to become professionals in our industry.”
Chris: The requirements on landlords are constantly changing, you need to keep up with them even if your letting agent doesn’t. By law, it’s ultimately your responsibility. Facebook groups, internet forums, and property magazines are all great ways to stay informed.
Francisco: The NLA (National Landlords Association) is a valuable source of information and accreditation. It’s your job to be a great landlord and keeping your knowledge base up to date is a big part of that.
Parting Advice
Sarah: There needs to be a barrier between you and the client. Sarah wanted to cut down on the time she spent managing her properties and creating a letting agency was a great way to do that. Running a lettings agency and being an investor tie in nicely together and make a profitable and sustainable business model.
Francisco: It’s about developing a system that you like that everyone can use. Single let’s are a lot less work, so it depends on the situation. Employing someone to take care of his lettings in-house is how Francisco intends to minimize the time he spends on property management.
Chris: Chris’s main reason behind setting up a letting agency is to give his tenants professional management, with someone else doing the legwork so he can focus on other areas of his property portfolio. He isn’t interested in making a profit for the first 2 years, so long as his letting agency breaks even and frees up his time – that’s a win! Chris prefers single lets because they can be managed remotely and there is less hands-on management involved.
“Our time as an investor can be better spent growing our portfolio.”
Get in Touch
Sarah Smith – Home Hub Southampton
Sarah covers Southampton and the South Coast. She provides property management, sales and tenant find services.
Chris Brown – Horizon Lets
Chris is currently expanding his own portfolio in Sheffield and Nottingham, but offers property management throughout England.
Francisco Diaz
Get in touch with Francisco on Facebook