For most landlords letting a property is an investment, intended to make money. Even for landlords who let their property for other reasons (unable to sell, moving away to work) it is usually important to them that they cover their expenses and make a money profit.
Using a professional, specialist letting agent is the single biggest step toward maximising profit. Agent’s fees are a tax deductible expense and if you pick the right agent, money well spent. They will help you make the most profit from your property, advise you about the inevitable issues that will arise and minimise the problems and hassle for you.
There are a number of things that can reduce a landlords profit ranging from rent arrears, through empty periods, to damages disputes with tenants. Here we want to concentrate on the two things that usually cause the biggest losses – rent arrears and / or empty periods (voids).
Rent Arrears – at Belvoir we offer a full rent and legal tenant default insurance to our landlords. Subject to passing our vigorous tenant vetting all tenancies can be insured. This provides cheap, effective insurance to the landlord which comes with none of the ‘7 months only’ type strings or other restrictions attached that are so common with off the shelf policies offered by some agents. A genuinely effective safety net cover available not just to our Managed landlords, but also our Tenant Find landlords & a tax deductible cost of the letting. It is perhaps folly not to have this type of cover now, particularly given the economic climate and the financial difficulties faced by tenants trying to pay their rent.
Voids – probably the single biggest adverse effect on landlord’s profits and surprisingly, one that many landlords don’t see coming. With advice from a professional agent property can be prepared and presented to maximise its potential to let quickly. After that it is the agent’s presence, marketing energy and practiced systems that will let the property quickly. Your agent must advertise in the most effective places for you and they must know what’s effective by continuously monitoring where tenant responses come from (for instance, did you know that the least effective place is usually the local press and the most effective is a certain leading website).
The agent must be available on the phone and on-line to actually receive those tenant enquiries, must handle them in a polite friendly manner and must arrange viewings to suit prospective tenants. They must carry out viewings with trained negotiators (and not just semi-retired ‘open the door and just let them in’ type persons that some agents employ to save money).
One agent may be 1% more or less than another and that’s maybe £4 to £7 per month difference. One month of unnecessary void could be £400 to £800 or more of lost rent – that’s where the real damage to the landlord’s profits lie. Voids and rent arrears will kill an investment faster than anything else.
Choose your agent carefully, check how/where they advertise their properties and get insured.
