The recipe for success in property investment may vary depending on who you ask. Ultimately, many of the ingredients are the same, but enhanced by the determination of a landlord and the quality of their investment. For many investors who look for a hands-off approach, investing and building a relationship with the right property management agency is critical; otherwise, the costs speak for themselves.
Public perception of the rental sector as a whole typically doesn’t tend to be favourable. Whilst there are vast quantities of landlords offering exceptional homes to meet the persistent growing demand for this way of living, it is the unlawful and unethical actions of the few that contaminate the industry.
The government have long sought to introduce methods and tactics to put a halt to the unscrupulous individuals who manipulate and take advantage of our sector; on many occasions negatively impacting those of us who stick by the book.
As a landlord, not only is it ethical and morally correct to ensure your standards of operating in this sector are as high as possible, but they also prevent you from generating a collection of fines or from facing potential time behind bars.
For investors looking for a hands-off approach to property investment, the hidden costs of selecting a poor property management agent speak for themselves. Whilst letting agents are frequently assumed to be “all the same” in a competitive battle to underpin one another with cheap fees, this notion couldn’t be further from the truth.
Typically, the cheaper the fees that you pay to maximise your hands-off investment is reflected in the levels or quality of service you receive. The lower the service quality, the greater the risk of running up additional or hidden costs through void periods, poor tenants refusing to pay their rent, refurbishment costs from damages, or fines from failing to cover simple legal requirements.
In order to attract the right tenants, your property needs to look and feel the part. Alongside using local knowledge of a reputable agent to invest in the right areas (something Abode are all to happy to do for Tameside and the rest of Greater Manchester), picking an agent with no concept of active and efficient marketing will drive void period costs higher and higher.
The first component tenants see of your property from a digital perspective is the marketing photos. Images speak volumes and entice prospective leads into viewing a property in the first place. mages captured on a poor quality camera or phone, blurry, or shot with poor lighting simply aren’t going to showcase your property in the spotlight it deserves.
Another detrimental aspect is the presentation of the properties condition. Glaring issues highlighted in your marketing photography are almost certainly going to be off-putting factors to prospective tenants, whilst large quantities of clutter and poor staging will also prohibit them from being able to envision their new life in your property.
By liaising with a professional management agent, staging considerations are made along with photography that reflects your property in the light it deserves.
Poor property management agents will more often than not make no effort in staging or photography, presenting it in a less than desirable manner and making it difficult to minimise the void periods.
An additional aspect to consider is how active your property management agency is when it comes to marketing. As the rental market continues to grow, so does the competition against other rental properties. A poor agent will simply list your property on the typical portals, before sitting and waiting for leads (even if the leads don’t emerge for months on end). The cost of an inactive management company is all too apparent in void periods. A great agent on the other hand specialises in proactive marketing. Not only featuring your property on the portals, but ensuring it is covered as a premium listing where possible and active marketing on social media platforms; reaching out through local community groups
Relationship with Tenants
Tenants are ultimately the primary source of your income through their rent, so finding an agent who isn’t proactive at nurturing long-lasting relationships with them is the very definition of counterproductive. Long-lasting void periods have the potential to generate one-third of missed rental income per year; escalating dependant on how inactive your management agent is.
The key to minimising the void periods (aside from all the marketing components as mentioned) is by building a positive relationship with prospective tenants from the very first inquiry they make. Having an agent that is flexible with viewings and works around the traditional Monday-Friday 9-5 is crucial in order to ensure the right tenants are able to see your property.
One of the most serious risks with instructing a poor management agency can be found during the referencing stage. There are some agents who will rush through the bare minimum of the process (or not even carry it out at all in some instances), and this can lead to glaring issues going undetected until the tenancy has begun. Poor credit, lying about employment or current living situations, through to unpaid rent are all red flags when it comes to providing you the best tenant possible; yet some agents prefer the risk of minimising your void periods over generating long-lasting, healthy tenants.
Your property portfolio, no matter the size, is likely to be one of the most expensive and precious assets you own. A poor managing agent will have little care for this prospect, are more than happy just to move anyone in, and will not take into consideration the implications of unpaid rent and any damage caused. Rushing an unreferenced tenant into a property with a questionable background can lead to any of the following:
– Unpaid /withheld rent.
– Anti-social behaviour.
– Complaints from neighbours.
– Damage to your property.
The costs speak for themselves. Unpaid rent eliminates your income stream. Unreported maintenance issues from poor communication can escalate, and lead to unplanned and costly repairs. Damage from anti-social tenants, be it to any furniture you supply or the property itself, can spiral costs to the point it becomes more viable to sell the property over repairing it.
Doing your research and partnering with an effective management agent cannot be overlooked at any cost. By proactively marketing your property beyond the typical property portals, a thorough agent can widen the number of prospective leads who see and take interest in your property. Flexible viewings allow tenants in the frequent 9-5 pattern to view outside this, whilst weekend viewings broaden the options further.
By crafting a healthy and transparent relationship with your tenants from the first communication, not only will it raise their interest further in moving into your investment, but also treating it with the care and respect as if it were their own. A dedicated maintenance department can aid in shock of hidden maintenance costs by communicating with tenants and thorough contractors alike. Communication, inspections and generally treating your tenants with respect are the proven components to sustaining a long-term tenancy that minimises void periods and ensures you the consistent stream of income that you deserve.
For more information on avoiding the hidden costs of poor property management by partnering with an effective agency, give us a call on 0161 883 2525.