The way to efficiently manage property
People often confuse passive income with admin work when it comes to being a landlord. Think about the properties you’ve bought over the years. You spend ages looking for the right property at the right price and in the right location, then you buy it.
Maybe you do some refurb work or convert it into a different layout, like turning a house into an HMO, for example. That’s the hard work done.
Then you make sure it’s making money, and if it does, you keep it forever. I mean, why would you sell it? If you need more funds, just wait for inflation to do its thing, then re-finance it.
So now you’ve got your property, and it’s making money. You’re feeling good about your investment, and you’re starting to dream about financial independence and telling your boss what he can do with his 9-5!
But any seasoned landlord will tell you that there is much more to it than that!
The next thing is when the admin work begins; getting safety certs in place, renewing insurance, advertising for tenants, arranging a replacement oven, keeping on top of rents, paying tradespeople and our old favourite …. doing tax returns!
So, what are your choices? Well, you could hand the whole thing over to a letting agent.
Managing & letting a property yourself
There are some good ones around, but the odds are that for a fully managed service you’ll be paying around 10%-16% (plus VAT) of the monthly rent, plus astronomical setup fees, inventory reports, credit checks and more, especially now since the tenant fee ban came into place, all these fees are now on you, the landlord.
Option two is that you use an agent just to find the tenants, then you self-manage, which will cost you about 8%-10% (plus VAT) of the monthly rent.
Or, if it’s doable, you could use a system like OpenRent to find your tenants, but you’ll have to do all the viewings yourself. Not so bad if you already have a tenant in place who is moving out, and they can show the new ones around for you, but a pain if you’re busy or not close enough to do this yourself.
However, if you can, this last option will cost you about £50, including credit checks and tenancy agreements. Yes, £50. No ongoing monthly fees either.
Those who are members of the British Landlords Association can obtain a credit & reference report for little as £19.95, which includes “Right to rent” checks too. Tenancy agreements are free, so there are options for landlords to cut costs and achieve efficiency.
What do landlords say about self-managing?
Khurem Farooq, a long-time landlord and has had first-hand experience of this, says ‘” I have tried all three. I wouldn’t use a fully managed service again, but that’s just my personal experience.”
“Some agents charged me a small fortune. Any small thing such as a dripping tap and they immediately sent someone round (at my expense and with no discussion) and if any work needs doing, they will add their margin on top of the price.”
“If they can’t fix it, I still get charged the call-out fee too. Sometimes the tenant had broken something, and I found myself footing that bill too, even though it was the tenant’s responsibility”. He continues,
“My solution to this is to manage it myself and take out a monthly insurance policy with someone like British Gas, that covers heating, electrical, plumbing and drains for about £20 per month. It even includes the gas safety cert, and I give the details to the tenant directly, in case they can’t get hold of me, and it’s an emergency”. Say Khurem
OK, the policy may not cover every small item, but if something isn’t covered, it’s just as easy for me to call my tradesperson in or find someone online; it’s really not that difficult. The emergency stuff is all covered in the policy.
I even find that it’s still costly with agents that just do rent collection and tenant find because of the hidden costs. Examples of this could be incorrect inventory reports, so deductions are not made from the tenant’s deposit or tenants who are not suitable and can’t afford the rent, which ends up in rent arrears.
So the point of all this is that things have moved on. There is now more compliance, tax changes, and legislation than ever before, which is turning us into glorified admin people. But the good news is, technology has moved on too.
Alphaletz App making life easy for landlords
One recent addition is Alphaletz, a cloud-based desktop and mobile app designed to help landlords stay organised and save time.
Many landlords also don’t know that keeping digital records will be a legal requirement in 2024 when making tax digital comes into play, so it’s now more important than ever to keep your records straight and stay organised.
Not only will it integrate with users own bank accounts to pull in income and expenses, but it also has a complete task management system built in to keep track of everything from safety renewals to tenant expiry dates. It will even automate emails to remind tenants that their rent is due or that their tenancy agreement is ending.
There are lots of landlords now moving to technology solutions like Joe Fogel from House Group Developments. Joe is a developer and landlord with over 100 properties and relies on the rent tracking feature in Alphaletz to keep on top of his properties. He says that a good app will save him over 50% of his time.
Dr William Masih one of the Directors of the British Landlord Association said: “Alphaletz App is very useful for landlords it takes the worry out of the things you need to do that we can in some cases forget to do. Somethings things can cost landlords hefty penalties.”.
Author: Lindsey Moore
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