There are way too many people within property investment thinking building a team around their portfolio is easy.
Some say, if you are able to show volumes of properties its only natural that letting agents or any power team member will be aligned to do business with you.
If only, it was that easy…
If you are really serious about having an effective team that will support you and enable you to focus on building your portfolio, then you have to build relationships with your team over a long period of time.
Otherwise, you are just building a team that pretty much will stick to rule book to engage with you in all honesty.
Well, today i am going to share the questions i have summarised into a 12 point checklist that i use in my due-diligence exploring letting agents and their business.
This pretty much will put you in a position to confidently approach letting agents, understand their business and analyse if they are the ones for you and vice versa within you property investment journey.
Table Of Contents
- Letting Agents With Systems:
- Their Lettings History:
- Ability To Find Tenants:
- Ability To Screen Tenants:
- Setting Up Rental Prices:
- Landlords Profiling:
- Letting Agents Appetite To Scale:
- Custom Documentation:
- Letting Agents Emergency Procedures:
- Tenant Eviction Procedures:
- Tradesmen Contacts and Costs:
- Those Handshake Meetings:
1Letting Agents With Systems:
Imagine how would it be for you as landlord to chase up your agent for rents, rental statements each month and on top of it pay a commission for each property you let out.
It just defeats the purpose of having a managing agent in the first place.
Simply put, if a business cant take care of their own processes and systems, its more likely that they will be unable to take care of their customers.
As a landlord you are regulated on tenants identity checks, right to remain in the country, delivery of right to rent guides, gas safety checks and many others. Your agent has to cover all such checks on your behalf as landlord.
Enquire what systems and automation is in place to help themselves and the landlords.
2Their Lettings History:
Check the stock that has been let out each month, 3 months, 6 months and yearly averages.
You should be able to assess if the agency is having enough business on the go and is capable of handling the portfolio you would want them to look after for you.
Find out what procedures are followed in case of a house not being tenanted for over 2/3 months despite usual marketing?
3Ability To Find Tenants:
Tenant finding procedure that is in practice and average lead times to rent a property since the day it is promoted in the local market.
Which online and offline platforms are the properties promoted to attract tenants.
What type of landlord engagement packages are in place. Is it full management or tenant find service or others.
What procedures are in place for tenant retention and if there are additional costs to extend or retain the same tenant once an existing contract expires.
4Ability To Screen Tenants:
Identify what tenant screening procedures and affordability checks are in place. What level of landlord involvement is required and entertained in such a process.
What guarantees are taken from tenants or from their guarantors in case of non working tenants.
5Setting Up Rental Prices:
Understand how the letting agent decides on how much rent to advertise a property for and yes what would be the total cost of tenancy to the landlord.
You need to do a bit of research yourself on streets within you investment area and mark average rents before you go and ask any questions.
This further needs to align with you understanding of nature of street and if the rents are higher/lower within those streets for any reason.
This will be a good marker to debate and understand the grasp of the agents on rental prices within the area.
One other thing that will be interesting to know is how they progress landlords into their preferential list should you continue on a longer term doing business with them.
I am not for one second saying someone should favour anyone, but as a landlord myself, i always look for those favours with a view to build my business beneficial to both parties.
You give some and you take some.
7Letting Agents Appetite To Scale:
Its natural that as a property investor you will be forced to expand your investment area within few mile radius into next nearest city/town.
It just becomes handy when you have same letting agent who can take care of your portfolio across multiple investment areas.
As a landlord, i would love to check the appetite of letting agent to expand should there be a viable business case along the way.
You push your network and then your network pushes you to grow.
It is totally understandable if agency does not want to expand for their own reasons. Expansion isn’t easy given the costs, infrastructure, staff that the agency has to recruit and much more.
Its just a check to understand where the agency business is at.
Verify sample rental statements/Assured Shorthold Tenancy (AST)/Inventory Report and their willingness to add/update them as per your needs.
One of the issue that often comes up is the inflexibility with few agencies to update the tenancy agreements.
As landlord you learn a lot over a period of time based on your experiences with tenants and would want to cover yourself against any losses.
Such inflexibility may not serve you for future. If you do get into such engagement, you at-least are getting into with awareness than ignorance.
9Letting Agents Emergency Procedures:
What kind of emergency response procedures are in place when tenant complains about issues. How are the weekend response to tenant issues taken care off.
Communication mechanism whilst an emergency scenario triggers and the mode of communication is all good to know for you as landlord.
10Tenant Eviction Procedures:
What kind of tenant eviction procedures are in place. Its essential for you as landlord to identify and understand the and the line of responsibilities between landlord and the agent should a scenario to evict tenant arise.
Serving Section 21 or Section 8 notices, would they serve those on your behalf and should you be taking handover at that point to engage your solicitor?
Understanding this process right at the start is essential whilst its a common practice to engage agents without knowing any of such procedures.
11Tradesmen Contacts and Costs:
Access to tradesmen they can help you with in case if your unable to source your team in time to fix any issues tenant reports.
Usually tradesmen serving via the agents will have higher charges so isn’t a bad idea to enquire tentative costs and if any agency admin charges apply on top.
Agencies willingness to contact your tradesmen directly should there be any issues. This saves you time and needing to get involved in every issue of your properties.
Setting up such seamless process where agency can work with your tradesmen simplifies life.