Buy a property with tenants and agents in place?

by Mick Roberts

8:46 AM, 15th February 2014
About 7 years ago

Buy a property with tenants and agents in place?

Make Text Bigger
Buy a property with tenants and agents in place?

I own flats, bungalows and houses in Nottingham and specialise in renting to tenants in the benefits sector. It can be very management intensive at times though so I’m looking to go a bit upmarket and buy some posher properties to attract posher tenants for a lower yield and hopefully far less hassle.

I’m just buying a 3 bed semin a decent area off Estate Agent who are also letting agents. Long story, but I have tenants who look for houses for me to buy for them. Saves me a LOT of time and we sometimes get a bargain come up so they are the ones I buy. This one is worth £115k, I’m paying 98k. Should have been 90k, but that’s another long story. Mick Roberts

£137pw was deal I agreed with the tenant who found me the house. However, the letting agent (for vendor) has just signed up a new tenant which will return me a paltry £440pm (£500 to them).

So do I leave things with agent & I not get involved at all?

I’m not bothered about a tenant in place, it’s the ‘agent in place’ I’m bothered about.

Bottom line is that I’ve never used a letting agent in my life! I’ve never even looked into it so I don’t really have a clue what they are responsible for.

This one is a big agent, Your Move, so my worries are not so much about whether they will go bust and do a runner with my rent or the tenants deposit so much as what if they screw up on other things?

Questions then:-

Who is responsible for boiler service etc. if things go wrong?

Do I have to keep a diary for when things need to be done, Gas Checks etc. is that the agents responsibility?

Does buck rest with Landlord if the agent screws up?

It’s a typical house for letting agent , lovely decoration, lovely carpets, crap kitchen, crap boiler, crap bathroom. Sorry to offend some agents here, I mean it in terms of some of my tenants when asking me to do carpets, because their mate is letting from an agent with nice carpets, they don’t see the new £1,400 boiler, the £2,000 kitchen and the £700 bathroom I have in mine.

So with it having a crap boiler, I’d ideally like to have a tenant in there who gets Child Tax Credits, that way I can get a new boiler fitted for free. Or do I leave that for Agents to do, because if the tenant has my number, will she then start bugging me?

I was going to test the water with this one to see if it’s really nice leaving a house with an agent and to see if it’s worth if for the lower income. Will I have a lot more free time?

I’d appreciate your thoughts.

Thanks Mick


Share this article

Twitter Facebook LinkedIn

Comments

Mark Alexander

8:55 AM, 15th February 2014
About 7 years ago

Hi Mick

Based on what you've said I think you are going to be very disappointed.

It is highly unlikely that a national letting chain such as Your Move is going to sort out free boilers for you. They should help your sort out ongoing maintenance, for example, organising contractors to fix a fence that's blown down or a leak but that's about it and you still pay.

Yes they should organise things likes Gas Checks for you in a timely manner but you still pay for the Gas Check and if they forget you remain accountable. In other words, you get the fines etc. if they screw up in any way. However, there is some comfort in dealing with a National chain because if they are negligent you can sue them if you are out of pocket if they do screw up and you know there's a decent chance they will have the funds to pay up if you win.

It seems to me Mick that you are having some difficulty in getting your head around the difference between getting somebody to manage your property and to do what you do to add value. Obviously there is a line that has to be drawn. You wouldn't expect to buy a run down wreck and for the letting agent to organise the fitting of new electrics, plumbing, bathroom, kitchen, decorating, roof, doors and windows for 10% of the rent would you? Of course not, but they will deal with ongoing maintenance issues, well they will if you are lucky enough to pick a decent agent anyway!

Mick Roberts

9:10 AM, 15th February 2014
About 7 years ago

Yes, I'm already on the case with the free boiler. It appears they've not done the paperwork for any Landlord before, so that shows as u say, they don't normally sort out free boilers for Landlords.

Right, so buck still lies with me then on the timing of the boiler service etc.? Hmm., so still got to keep my own diaries then.......

Yes, it seems I'm adding a lot of value at moment. This one alone if I managed myself would be approx. £1800pa more for maybe 10 hours at outset. And maybe 5 hours throughout the year.

My mate keeps telling me I won't be happy with Agent-He has approx. 10 with agents-as some of his houses are empty 4 weeks between tenants. Not great rents. AAhh what do I do? Got to test the water I suppose, see if there turns out to be not many phones calls.
See if there turns out to be just one little admin each month with monthly rent & repairs statement.

Jerry Jones

9:35 AM, 15th February 2014
About 7 years ago

My own feeling is that, if you already have the systems in place to self-manage, choosing a "better" property might give you the lower hassle that you are looking for. I'd agree with Mark that the lettings branch of a sales agent is less likely to be good at what they do than a specialist.

With the existing size and strength of your portfolio, might you be better building your own management team than farming it out to a whole new business?

Adrian Jones

9:37 AM, 15th February 2014
About 7 years ago

Morning Mick,

I've been in this game for nearly 30 years. Like any other profession you get good ones and bad ones - about 50/50 in my experience.

My advice is to keep in touch with the agents and definitely keep a diary for gas certificates.

Just because you're paying them commission don't assume you can rely on them. In particular keep an eye on any work they say needs doing. I have had experience of very dubious quotes eg £400 to retile a bathroom when all that was required was a clean down with mould remover.

I'm interested in the free boiler replacement for tenants with Child Tac Credits. Grateful for any advice.

Mark Alexander

9:37 AM, 15th February 2014
About 7 years ago

Reply to the comment left by "Mick Roberts" at "15/02/2014 - 09:10":

That maybe so Mick but from what you have said, if you use an agent to manage this particular property you are doomed to failure before you start and you will never really understand the benefits of using an agent.

When you have a nice property which is newly refurbished that the time to think about using an agent. Before you just jump in though, think long and hard about which agent you are going to use. Compare their charges and the service they offer. Check they belong to ARLA, NALS, RICS etc. and then check out the staff who are going to be dealing with your tenants. Do you really want a blonde bimbo straight out of college to be dealing with your tenants and your investments? Yes they might look lovely when you pop into their swanky offices and they make you a lovely cappuccino with chocolate sprinkles on the top, or when they rock up in their Mini Cooper S with corporate stickers all over it but you have to see beyond that. You also have to realise that you are paying for that, AND, so are your tenants!

The other difference between the market you are in now vs buying lower yield properties is that you SHOULD be able to recover and rent arrears and damages. You shouldn't get many either so that's where your costs should plummett along with the hassle factor. Bear in mind that tenants who get nicer houses expect to have to pay for referencing. If your agents charges too much for that your prospective tenants might look elsewhere and that's a main cause of void periods in nicer properties. Also, does your agent do viewings in the evenings and weekends. bear in mind that nicer properties rent to working people so it's difficult for them to do the viewings during normal working hours.

I can see this is going to be a massive learning curve for you, as much as if I decided to do what you do.

I'm here to help when you need me so please keep the questions flowing.
.

tony tony

9:41 AM, 15th February 2014
About 7 years ago

Reply to the comment left by "Mick Roberts" at "15/02/2014 - 09:10":

mick ill manage it for you give me a message, im also in the L.HA Market and live in nottingham and ill manage everything for you boiler fitted maintenace gas certs etc i have a portfolio of 25 house myself nowhere near as big as you but i do understand the benefits mkt , and i do keep upto date with legislation regards ts

Romain Garcin

9:42 AM, 15th February 2014
About 7 years ago

Mick, note that there is no such thing as "agent in place".
The current agent works for the current landlord. If you were to buy the property you would automatically inherit the tenant but not the agent.
If you wish the current agent, or any other one, to manage the property on your behalf you will have to explicitly hire them.

Gary Nock

10:04 AM, 15th February 2014
About 7 years ago

Mick,

Be careful with the agreements etc. If the tenancy agreement is in the ex vendors name then get it changed into yours. Likewise serve a Section 48 Notice informing the new tenant of your ownership. Without it you are not entitled to ask for rent. If find that when I take over a property that is already rented, either for myself or others, I change all the paperwork over. New tenancy agreement, new deposit protection, new inventory.I convince the tenant to give up the old tenancy in exchange for a new one. If you had to evict the tenant and the tenancy agreement is in the old vendors name then this can cause problems with the Judges. likewise if you have not served a Section 48 Notice. If they are behind with the rent and you are not lawfully allowed to request it then they cannot be in arrears.

Mark Alexander

10:21 AM, 15th February 2014
About 7 years ago

PS You no longer have the monopoly on silly pictures Mick LOL

118
.

Phil Ashford

10:21 AM, 15th February 2014
About 7 years ago

Hi

I'm also in Nottingham and own a local letting agency.

You do not need to stay with the agent that is in place. They are the current owner's agent, not yours if you buy it.

The vendor may need to settle with the agent, but that is not your consideration.

Where our landlords have sold, we've continued with management. But, that is because we've struck up a new relationship with the purchaser and become their agent. The agency's T&Cs should detail exactly what they will be responsible for.

1 2 4

Leave Comments

Please Log-In OR Become a member to reply to comments or subscribe to new comment notifications.

Forgotten your password?

OR

BECOME A MEMBER

Golden Visa Opportunities in the Top 10 Tax Havens

The Landlords Union

Become a Member, it's FREE

Our mission is to facilitate the sharing of best practice amongst UK landlords, tenants and letting agents

Learn More