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?

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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


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Comments

Robert Mellors

11:16 AM, 15th February 2014
About 7 years ago

Hi Mick

When I first started out letting properties back in the 90s, I did try several letting agents in various parts of the country (I have properties down as far South as Oxfordshire and as far North as South Yorkshire), but on every occasion I found them to be very disappointing.

Agents were often unable to attract suitable tenants (the fees they charge tenants put tenants off).
Agents did not accept responsibility (if things went wrong).
Agents charges ate into my profits.
There were lots of "hidden" charges (e.g. a % or set fee added on to contractor's fees for repairs, thus bumping up the costs).
Costs if I wanted to ditch the agent (even if they were incompetent or had breached their agency agreement).
Costs if I found my own tenants.
Costs when tenancy renewed, etc, etc.
And of course VAT added to all the charges!

After the first few years of using letting agents I found I could do a much better job myself, for a fraction of the price, keep more control, and also attract a much larger range of potential tenants to choose from, AND obtain a higher rent than the agent was charging (even before all their costs and commissions are taken off).

The only way I would consider using a letting agent now, is if the property is over 100 miles away (i.e. I cannot realistically manage it myself), and there is a potentially huge gross profit (so that the agency fees do not make a small profit into a big loss).

Having said all that, many landlords do use letting agents and seem very happy to do so, (but maybe they've just been very lucky and had perfect tenants). - No offence to all the perfect letting agents out there, I can only give my opinion based on the 5 or 6 agents I've tried (as a landlord, the ones I've had when I've been a tenant, and the ones my family have had (as landlords and/or as tenants).

Gary Nock

11:32 AM, 15th February 2014
About 7 years ago

Robert I agree. I used to let through agents until some bloke called Mark Alexander did an article on how you could do it yourself. Since then I not only let my own but other landlords and throughly enjoy it. And my tenant quality is much better.

Jeremy Smith

12:03 PM, 15th February 2014
About 7 years ago

Let's balance the argument here!!

I have always managed my own up 'til recently.
I found that my adverts were attracting viewers with no thought of renting ! - just checking out the market.

Potential tenants seemed to want a cheaper property becuase I was a private landlord !

Since using agents, I have found that potential tenants are filtered to only serious ones due to the holding deposit and the referencing charges, when they walk into a high street office, they don't go in to mess about or haggle with the agent.

The potential tenants seem to expect to pay a higher rent, because it's going through an agent.
I have rents of £50-100 in excess of what I expected to rent privately.
With an agent fee of 7%, this extra rent goes along way to cover that, and they cover all the viewings, the referencing, credit checks, the deposit protection, the tenancy agreement, and signing, the inventory (one off charge), check-in, check-out, the comparison of inventory again (at tenants expense), collection of rents, sending me monthly statements.
They also give me the chance (if i want) to meet the prospective tenants, to give me the option to say yay or nay.

Conversely, the first agent I tried was hopeless !! - rip-off at every turn, tried to rip me off via third party tradesmen, rips off tenants - tried taking holding deposits from more than one couple for the same property
- Yes Mark, I think perhaps you do need to let us name and shame some of these villians sometimes !!

Shakeel Ahmad

12:16 PM, 15th February 2014
About 7 years ago

It will be very unwise to leave the management to the Estate Agents. Of course you will have to pay & in some cases an admin charge by the estate agents.

Not to mention that you may not get the best rate for the services as tradesman are aware that the landlord is not directly involved.

Letting an agent manage should only be in the event that the landlord is not in the UK.

Prudence tells me why should an agent concern him/herself if the owner of the property is not concerned.

Like any commercial transaction the investor has to take interest & should be fully focussed on its investments.

Mark Alexander

12:16 PM, 15th February 2014
About 7 years ago

Reply to the comment left by "Jeremy Smith" at "15/02/2014 - 12:03":

Hi Jeremy

By all means name and shame them, just not here please. Here's why >>> http://www.property118.com/what-property118-is-not/ ... and here's where you can >>> http://www.allagents.co.uk/

I also agree with the points that you are making about using agents. Frankly, I can't see why most landlords with average and above average properties which are let to working tenants would want the hassle and risks of doing it themselves. NOTE that I said "most landlords" because I do accept that for some, they enjoy it and they can squeeze a bit of extra profit if they have the right economies of scale and experience. The agents I recommend don't charge the landlord anything up-front and they only charge the tenants £200. The ongoing cost starts from just £14.99 pcm and this is what you get for your money:-

- Visiting your property, taking particulars and floor plans.
- Setting up an online account to store your documentation so it can be accessed at any time
- Advertising your property on the major property portals
- Referencing tenants and guarantors
- Inventory and schedule of condition prepared by an AIIC quailified inventory professional
- Tenancy and Guarantor Agreements
- Taking meter readings on check in and check out and informing utility companies of tenancy change over
- Deposit registration (This is an additional cost of £25 + VAT annually)
- Gas Safety Certificate as required (additionally charged)
- Rent Collection with payment forwarded to your account by BACS and monthly rental statement
- Check Out at the end of the tenancy

If you want the letting agents to do viewings, periodic property checks and manage all maintenance issues the monthly fee is £24.99 + VAT. For an extra £10 a month you can also have rent guarantee insurance with legal protection insurance. The rental guarantee pays out if the tenants falls more than a month in arrears and thereafter for any further missed payments until vacant possession of the property is recovered. The legal protection insurance covers all costs associated with eviction.

Why would most landlords take the risks and deal with the hassle for such a small cost?

For more details please see >>> http://www.property118.com/?p=39892
.

Don Holmes

13:24 PM, 15th February 2014
About 7 years ago

Hi Mick
In the first place as "THE AGENT" I confirm the above you do not have to take the current agent it's a tactic of them to keep the business,best left though until you are in control of the property, if you get my drift, other consideration is how many deals have you had from them and how many might you get?
There is of course always an alternative salutation, why not take further advantage of the whole situation and become your own agent you can then pay yourself for managing them
if you would like to learn more on how I can help you exploit this much better, then give me a call http://www.godirect-franchise.com

Mick Roberts

15:54 PM, 17th February 2014
About 7 years ago

Yes, do have people cover for me when I’m away, but not full blown management yet-Waiting for the right property to come up to house that.

I shall learn about these expensive builders they use, as we go along. Free boilers here: http://www.vinshire.com/free-boiler.php

Blonde bimbo? Hmm yes would like one please ha ha. Ooh forget already got one, as have u-Oops, sorry if yours is reading, as she is intelligent blonde, isn’t she.
I’m not ruddy going into their offices.

Don’t know how to contact u through here Tony, would be nice to talk to experienced LHA Landlord who thinks he could take over some of mine in future.

Agents are telling me I have to keep them in place, although I have signed nothing with them, but they have signed with tenant.

Take the t-shirt off next time for sillier photo.

That’s the thing for me, I have tenants queuing for houses-Why haven’t agents?

Yes, something I have looked into, in the past, creating my own agent to pay myself, but my accountant has told me to do one.

tony tony

16:26 PM, 17th February 2014
About 7 years ago

Reply to the comment left by "Mick Roberts" at "17/02/2014 - 15:54":

mick you can contact me through eastmidlandsstructures@ntlworld.com and i will then give you my phone number or you can facebook me and ill do the same , ive been doing the l.h.a mkt for over ten years now and ive never had a problem yet with tenants ive never at to get rid of any due to rent/damage etc regards ts, get in touch Mick and ill meet you as we are booth from nottingham

Phil Ashford

18:07 PM, 17th February 2014
About 7 years ago

Mick - the agent's view that you must stay with them is at worst deceitful, and at best, well I'm not sure to be honest because it would appear they no nothing about what an 'agent' is!

You do not need to stay with the agent. If I remember the thread right, it was an Estate Agency who do Lettings? Quite a common problem in my view, in that the staff who have taken on Lettings in the last 5 or so years that large Estate Agency chains have been transitioning into Lettings in order to secure an income during low house sale volumes, do not know their AStS from their elbows.

The agent has signed nothing with the tenant whatsoever.... They have signed on behalf of the landlord.

Ask them what the contract between them as agent and the original landlord has anything to do with you? They are not contracted to a property or to a tenant. They are contracted to the old landlord and subsequently have no say on how you choose to manage your new house when you take control.

Point them in my direction if they disagree and I will go and give them some training.

Don Holmes

19:44 PM, 17th February 2014
About 7 years ago

Hi Mike nice to talk to you today mate, another alternative might be "Northwood" their model, although generally lettings, but some branches also do sales, or some other agent deviation from that, is that they guarantee the rent under a lease type option and so they become the lawful tenant themselves, in which case you will only get the lease agreed amount which will be less than the going rate, I think I read something earlier on that subject.
But in brief a LO gives the person or persons offering the guarantee some control over the property and the selling LL would need to agree a deal with that person which could of course be an agent as well offering the rent guarantee, such as Northwood complicated hey? Imagine you and me as a team? Good Luck Don

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