Best Offers Letting Strategy

Best Offers Letting Strategy

17:58 PM, 16th February 2017, About 5 years ago 32

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I discovered the Best Offers Letting Strategy about a year ago completely by accident and it blew my mind … here’s the story … Best Offers Letting Strategy

I had owned a property in Thetford, Norfolk for about 10 years and had kept the same tenant from day one without ever having increased the rent. When he vacated, and most unlike me, I asked my letting agents to advertise it at the same price without checking what current market rent were.

The property went on the market just a few days after my outgoing tenant had served notice. A few days after that I called my agent to see how things were going.

“OMG” he said, “we’ve had 79 viewing requests already!”

This got me thinking….  had I advertised it too cheap?

My agent ran some comparables and found that similar properties in the area had recently been let for about £100 more than I had advertised mine for.

Don’t worry I said, please add the following to the text in the adverts on Rightmove and Zoopla …. “best offers over £450 considered”. I also asked him to talk to the outgoing tenant about doing a block viewings the following Saturday. To give my existing tenant an incentive to cooperate and to make the place look nice I offered him an extra £100 on top of his deposit refund if we managed to find a new tenant off the back of the block viewings.

Well …. to cut a long story short over 100 people turned up!

Both the agent and the outgoing tenant were there. The tenant was the best salesman I could ever have recruited. Apparently, he raved the whole time about what an amazing landlord I am 😀

The agents job was easy too. All he had to say was; “well you can see what the demand is. The best offer so far is £X so if you want to get this property you will have to offer a bit more”.

In the end I was offered £180 more than the closest comparable. The referencing checked out and my new tenant moved in on the same day as the old tenant moved out.

I’ve been desperately wanting to try this again but whenever I’ve had tenants serve notice since then it’s been on a property I have subsequently sold.

Possibly the crappiest property in my portfolio (in terms of the property itself) will be vacated in one month as my tenant of seven years gave notice today. The return on equity in this property is so good though, based on the mega-cheap tracker mortgage I have and minimal equity tied up in the property, so this one is a keeper. The property is at Queensway, Halifax.

I plan to advertise it at a ludicrously low rent and see whether the “Best Offers Letting Strategy” works again.

As soon as the agent has taken pictures and put the property on the market I will post a link in the comments section and keep reporting on what happens next.

I won’t necessarily go for the best monetary offer, but I will report on it. I will also consider the quality of the tenant.

Wish me luck!



Comments

by Dylan Morris

14:23 PM, 17th February 2017, About 5 years ago

Reply to the comment left by "michael fickling" at "17/02/2017 - 13:22":

Not sure the original poster is affected by Clause 24, I am sure it would have been mentioned if this was the case. But you make a very valid argument here and I can't disagree with anything you have said Michael. I'm not massively affected by Cause 24 myself though it has prevented me buying any further rental properties and I have also been discouraged from expanding my small portfolio due to the stamp duty increase. Four of my properties are fully furnished and the removal of the "wear and tear" allowance is hitting me with more tax. Some landlords are having their business (and lives) completely destroyed by Clause 24 and I can see an auction scenario could be the only way they can try and survive. Good points made.

by Dylan Morris

14:35 PM, 17th February 2017, About 5 years ago

Ahhh ..... silly me .....just noticed the original poster is Mark (I must book that appointment with Specsavers) ) who of course was so affected by Clause 24 he had to leave the country to stay afloat. So I fully understand why an auction scenario can be the way to go for some landlords.

by Mark Alexander

14:47 PM, 17th February 2017, About 5 years ago

What Clause 24 taught me is to "man up" and become the type of landlord our beloved Goverment want more of, i.e. Corporate and to make decisions for the benefit of shareholder. In my case that's now a Maltese Holding company which pays 0% dividend tax on distribution of profits from its U.K. Company to Maltese residents.

I have always been a good landlord and I still am. However, I am no longer as generous as I had been for the last three decades.
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by Monty Bodkin

15:39 PM, 17th February 2017, About 5 years ago

I agree with landlords toughening up Mark, man up or go under. Nothing at all morally wrong with using best offer/auction scenario as long as that is clearly stated in the advert. (Suckering people in with a low rent and then inflating it upwards isn't on.)

Wouldn't work for me personally though as I spend around half an hour initially assessing each applicant.
100 applicants = 50 hours. That's a weeks work before I've even started digging into detail on the short list.

As a direct result of clause 24, I've also increased rents. I've been lucky with voids since it was announced in that they have only come along singly (normally they are like London buses, none for ages then three at once). So I've been able to drive rents up, well over 10% with hardly any void periods. And I've noticed in my areas that the 'lazy' letting agents have followed suit and pushed their rents up too. More of that to come if the letting fee ban comes in.

Osborne must have realised this would happen, perverted genius to stealth tax the poor under the banner of landlord bashing and then get cheered on by the likes of Shelter and the Lefties!

by Mark Alexander

16:29 PM, 17th February 2017, About 5 years ago

Reply to the comment left by "Monty Bodkin" at "17/02/2017 - 15:39":

Two points:-

1) Nobody was "suckered in", they were told in advance it was an open house, best offer scenario (not solely monetary but status of applicant too).

2) the open house arrangement ensured we had a variety of offers to consider and the agent only having to attend once, several who made offers would have been the "perfect tenant"

It's been interesting to read the comments, many of which are polar opposites.
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by S Somerset

17:20 PM, 17th February 2017, About 5 years ago

In my experience prospective tenants sometimes offer higher or lower anyway... so I don't see the problem - especially if you're up front about it.
I agree with the other poster about not putting it on 'ridiculously low' - but possibly at your minimum acceptable rent.
In the end it's a game of supply and demand, and assuming there's sufficient demand, tenants will always be disappointed - so that's hardly a legitimate reason not to do it.

(BTW, your agent sounds rubbish!)...

by Mark Alexander

20:47 PM, 17th February 2017, About 5 years ago

Reply to the comment left by "Sunny Somerset" at "17/02/2017 - 17:20":

I can assure you my letting agents are absolutely amazing. Can you imagine having me as a client?
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by S Somerset

8:01 AM, 18th February 2017, About 5 years ago

Reply to the comment left by "Mark Alexander" at "17/02/2017 - 20:47":

True! ha ha

by Adrian Jones

9:06 AM, 18th February 2017, About 5 years ago

Reply to the comment left by "Mark Alexander" at "17/02/2017 - 20:47":

When you asked them to re-let did they tell you the rent was well under the market price?

by Mark Alexander

9:39 AM, 18th February 2017, About 5 years ago

Reply to the comment left by "Adrian Jones" at "18/02/2017 - 09:06":

Hi Adrian

My agents constantly update me on what the market rents are but I've always said, "just leave it as it is .... I prefer to keep good tenants sweet as opposed to risking voids and a not so good tenant"

My views on the above have hardened since the 2015 Summer Budget. As I said in a comment above, I now run our property rental business with a far more corporate mentality. The tax changes caused my wife and I massive upheaval in terms of bringing our life plans forward by 6 years and restructuring our business. Having dealt with that we have since been playing by a different set of rules, for example, no CGT on disposals in relation to gains made prior to April 2015 and more recently no Dividend Tax on distributions from our Maltese Holding Company. We are now in a position to risk voids on the basis that selling is now a far more viable option. On that basis we have also been increasing the rents of long term tenants to market value on the properties we wouldn't mind selling. If they pay then great, if they leave we sell.

Returning to your question, the staff at my letting agents simply follow my instructions. My instructions were to re-let the property in Thetford at the same price. I cannot recall whether they suggested a higher rent at the time or not. I think some of the staff are slightly intimidated by the fact that I've been in the business for 30 years. Also, it may well have something to do with the fact that I helped their business to grow into a National brand. Along with my co-directors in Property118 we own a 26% stake in the business and I sit on the board as a non-exec Director to keep an eye on our investment and provide guidance and business insight as necessary.

Does that answer your question?
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