Best Offers Letting Strategy

by Mark Alexander

17:58 PM, 16th February 2017
About 2 years ago

Best Offers Letting Strategy

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Best Offers Letting Strategy

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

jack hammer

10:16 AM, 18th February 2017
About 2 years ago

With respect Mark, a little disappointing. We as Landlords should know the maximum achievable rent for our properties prior to any vacations.

Mark Alexander

10:21 AM, 18th February 2017
About 2 years ago

Reply to the comment left by "jack hammer" at "18/02/2017 - 10:16":

I'm happy doing things my way 🙂
.

Rob Crawford

10:47 AM, 18th February 2017
About 2 years ago

As long as the agent is happy to manage such a large response. I would add "for qualifying candidates" and a provide a list of desired tenant attributes to reduce the number and deter time wasters.

Mark Alexander

10:50 AM, 18th February 2017
About 2 years ago

Reply to the comment left by "Rob Crawford" at "18/02/2017 - 10:47":

The agent was delighted. He picked up a huge list of people wanting properties in the area and was able to pick up new landlord instructions off the back of this too.
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Adrian Jones

11:47 AM, 18th February 2017
About 2 years ago

Reply to the comment left by "Mark Alexander" at "18/02/2017 - 09:39":

No, just wondering whether your agent told you the property was under valued by £100 before they advertised it.

Mark Alexander

12:26 PM, 18th February 2017
About 2 years ago

Reply to the comment left by "Adrian Jones" at "18/02/2017 - 11:47":

As I said above, I don't recall whether they did or not at the time. It has never concerned me though because their standard practice has always been to invite best offers from tenants.
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Major John

17:14 PM, 18th February 2017
About 2 years ago

If you think it's purely about the headline rent you're pulling in you're either fairly new to this game or very lucky. Don't kid yourself: 'niceness' is in certain respects a commodity that we compete on as much as 'convenience' or 'efficiency'. It's part of what the tenant gets for their money (five star hotels don't cost more only because of furnishings and locations).
The 'market rent' is by definition what someone is willing to pay - and the responsibility for overbidding first and foremost the prospective tenant's. If they stretch beyond their means they won't be lastingly happy and will move on sooner.
It runs both ways: you could call me 'nasty' if I try to extract a better-than-average-rate but, in return for the tenant being nice enough to pay that premium, I for one would make sure to return the favour by being extra responsive to their needs, like being in less of a hurry to raise the rent.
We're 'auctioning' the right to occupy, but 'bidding' for an exemplary tenant - so we check them out and, consciously or not, estimate the risk they present. The highest bidder flashing the cash will often not be the best bet for total ROI.

Mark Alexander

18:39 PM, 18th February 2017
About 2 years ago

Reply to the comment left by "Major John" at "18/02/2017 - 17:14":

It's certainly not all about the headline rent. As I said in my original post, it's also subject to referencing.

Before I rent to anybody I make certain that I can obtain Rent Guarantee Insurance with legal fees protection. Assuming tenants pass this I like to know more about their circumstances than most landlords and I'm equally open to being asked questions as to answering them.

If tenants have children, pets etc. then I am very open minded. If they plan to stay for a long time I also take their reasons for that into account. Where appropriate I offer them a Deed of Assurance for their own peace of mind. If you don't know what a Deed of Assurance is then you will find details on this website.
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Major John

19:22 PM, 18th February 2017
About 2 years ago

Reply to the comment left by "Mark Alexander" at "18/02/2017 - 18:39":

Sorry, my comment understandably came across as though I was talking to you - but it was written as a rejoinder to the negative commentators. I should have made that clearer. I'm well aware that *you* know very well what you're doing!

Mark Alexander

19:48 PM, 18th February 2017
About 2 years ago

Reply to the comment left by "Major John" at "18/02/2017 - 19:22":

Not a problem at all.

The responses to this thread have been really interesting, especially since a lot of people hadn't realised it was me who created the thread.
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