Managing rental properties – letting agent vs self management
So, you picture yourself as a portfolio rental property manager, right? It’s an excellent way to earn a solid livelihood, but there are many aspects to it and it’s possible to make some terrible mistakes. To help readers like you who are doing research on managing rental properties, this article goes into some detail. Discover all you need to know about managing rental properties professionally, including a thorough checklist for landlords that will make your job easier, and more profitable.
What’s Involved in Self-Management Rental Properties?
Having to deal with rent is just the tip of a very interesting iceberg. So, let’s look at some of the most important parts of self-managing rental properties.
What does “let and managed” mean for someone or an organisation in charge of the rental? First, make sure the house is ready to be rented. This means it has to be safe for tenants to live in and meet all the health and safety rules about appliances, smoke alarms, and carbon monoxide monitors. You’ll have to check each one to make sure it works. If they’re not already installed, you’ll have to get them.
If you’re renting out a furnished property, you’ll need to take photos and write down full details of all the fixtures and furniture so you can tell if each renter has kept them in good shape. People will expect a basic colour scheme for the decor, which will work with their own things and let them make their own style. When a renter in Glasgow pays their monthly rent, they expect the place to look like it’s worth the money.
Next, decide on rental prices and what to expect. Before making a decision, you should take a closer look at the rental prices in the area so you can attract the right people. It’s about finding a good mix between what’s fair for your tenants and what’s fair for you. If you ask for too much, it will be hard to find good tenants. If you don’t ask for enough, you may find that managing rental property isn’t as profitable as you had thought. You might even end up losing money.
As a landlord, it’s important to think about what kind of tenants you want. Since you’re in charge, you can ask for tenants who fit your needs. You could set a minimum income, only rent to people who don’t smoke, and allow or not allow pets or children. You can set a minimum credit score and ask for information about a tenant’s past rentals. You are able to indicate how many references you’d like. A tenant questionnaire is a great way to make sure you get everything you need and don’t miss anything important. You’ll keep this paper as a record for as long as they remain as tenants.
Advertising is vital when you are managing a property. It informs the tenant if the property is available and gives them all the information they need to know. You’ll need to choose the right places to advertise the property so that it gets the most attention and you can choose from a good number of good tenants. If you want to reach a certain type of person, like students, retirees, or professional couples, you should put ads in places where that type of person is likely to look for rental properties.
Viewings are an important part of the process of renting out a place. They are a great way for a property manager to get to know possible tenants before deciding who to rent to. Make sure you’re available when people need you, which is usually in the evenings and at weekends for tenants who work.
Most of the time, a month’s rent is taken up front as a security deposit. When the tenant moves out, you give them their deposit back if everything is fine. If there’s damage, mess, or redecorating to do, you can keep the money you need to fix it before you re-rent the place and give the rest back to the person who moved out. For properties in Scotland, you are required by law to put the deposit in a tenancy deposit scheme, or TDS, that is backed by the government.
Rental Visits and Inspections involve going to the property once or twice a year to make sure the tenant is happy, and the property is in good shape. This means that you’ll need to do regular maintenance to keep everything in good shape, so you’ll have to establish a relationship with a trusted local contractor. Most of the time, word of mouth is the best way to find the right builders, plumbers, electricians, and other people who take care of the property.
Make sure the people who live in your managed rental properties know which repairs you, as the landlord, are responsible for and which ones they are. As a landlord, you need to remember that you are responsible for fixing things like electrical wires, gas pipes, gas boilers, heating and hot water, chimneys and ventilation. You are in charge of the sinks, tubs, toilets, pipes, and drains. You are also in charge of any shared areas, such as hallways and stairs.
It’s your job to take care of the property’s outside and construction, like the walls, stairs, roof, external doors, and windows. If there is mould or dampness, or if there are rats or mice, you will have to take care of it for your tenants.
As the manager of a rental property, you need to let tenants know when they need to pay the rent. The best way to do this is through a written tenancy agreement, but you can also just tell them. You also need to say exactly how the rent will be paid, whether it’s the usual straight bank transfer or something else. Include what will happen if they don’t pay the rent on time, and put everything in writing in the rental agreement so that nothing can be misunderstood.
Proper budgeting and bookkeeping are key to managing rental properties, so just like with any other business, you’ll need to keep receipts and store digital proof of spending. Taxes can get difficult, so if you don’t have the skills and aren’t willing to take on this level of financial responsibility, you should hire an accountant.
Lastly, evicting a tenant. It’s not a fun job for a property manager, but you should be ready for it just in case. Make sure you know how the process works. You’ll need to follow a legal set of actions. First, you’ll need to give them a formal warning that explains the problem and how much time you’re willing to give them to fix it.
If your terms aren’t met, you’ll have to start the process of recovering vacant possession. In Scotland the first step is to serve a ‘notice to leave’.The notice period will vary depending on the situation. If your tenants don’t vacate by the expiry of the notice period, you’ll have to turn to the First Tier Tribunal service to seek an eviction order. Remember that you can’t kick someone out of your home until the court says you can. Most landlords hire someone to do the eviction in a calm and professional manner.
What Exactly Do Property Managers Do?
The next thing on the checklist is what property managers do for landlords. You have the responsibility of ensuring that the tenancy follows all applicable laws and standards, both from your position as the landlord and from their perspective as tenants.
You’ll need to act quickly and respond to any requests for property maintenance. You might discover that the property’s owners, who reside elsewhere, have chosen you as their local representative. If so, you’ll be responsible for displaying and leasing properties as well as screening potential tenants. During the tenancy, you will communicate with the tenants and collect the rent. And if something goes wrong, it’s your responsibility to fix it, including using the tenant eviction procedure we’ve explained.
Are Property Managers and Landlords the same?
Is there a difference between a landlord and a Rental Property Manager? Yes, and it’s a significant difference. The building is owned by a landlord, and a property manager takes care of it and the tenants for the landlord. You can, of course, be both the owner and the manager of your own rental properties.
What Are the Property Management Fees?
Then, there are agency fees. Most residential property management agents offer different management packages. A standard package usually includes things like collecting rent, chasing down rent that hasn’t been paid, answering questions from tenants, being available 24/7 for emergencies, setting up repairs, and inspecting the property. Prices vary for this service.
Typical full management commission rates in Scotland are 10% of rent plus VAT. Most agents will have some additional fees, such as advertising and re-letting fees. Many have a schedule of fees which extends to deposit handling, tenant referencing, serving of notices, out of scope work, evictions etc.
UK Property Management Agreements
As we have already discussed, depending on the level of service you require, there are many different property agent management packages available, . “Tenant find only” fees consist of a one-time fee to advertise the rental property. They frequently cover viewings as well, and occasionally they’ll offer suggestions on how to find the best tenants.
Rent collection is now included in tenant-find and rent collection fee agreements in addition to the basic tenant-finding service. Full management fees are ideal for owners who want to enjoy a completely hands-off letting experience and delegate all of the numerous day-to-day property management duties to an agency.
Depending on how involved you want to become, you might choose to manage rental properties. Or alternatively, you might arrange to give it all to someone else if you live far away from the property, have a demanding job, or don’t like the numerous duties you have. You can decide to be a self-managing landlord and handle everything on your own if it will be your day job.
Once you know which type of agreement best suits you, you can put this in place, but you can also switch to or from different services of a letting agent if the situation changes. Maybe you’ve attempted a tenant-find-only arrangement, but now you’re finding it difficult to manage. You can increase your package with your agent’s permission, possibly with a notice period or possibly immediately. Building a good relationship is the key.
What Qualities Does a Good Property Manager have?
What qualities of a person would be best for a business like this? It helps to have experience, but you can start your first job as a property manager if you want to. If you’ve ever lived in a rental home, you’ll have more empathy for tenants and a better idea of what they might be going through, but it’s not a necessary requirement.
You will discover that having good customer service skills and great communication skills will help you get through situations that come up out of the blue. Your journey will go more smoothly if you stay cool, positive, determined, and strong.
You’ll need to take a step back and run the rental property like a business. This is harder to do if you have an emotional attachment to the property. This is a business investment, not a personal one.
You might think you can tell a lot about a person’s character, but in fact, almost no one can. You might be good at screening potential tenants because it comes easily to you, but it’s a risky business. If you learn to trust facts and numbers, you’ll be able to tell when something doesn’t feel right. No matter what, you should always be professional and respectful to your tenants.
Advantages of using a Letting Agents
Using a skilled Letting Agency has a lot of advantages. They know everything there is to know about the rules and certifications that govern the business and what needs to be done to follow the code of practice for letting agents. If you choose someone with the right credentials and experience, you’ll know you’re working with a professional and that the rental agency fees are worth it.
Then there is Deposit Protection. All tenancy deposits in Scotland must be protected, regardless of when the tenancy started. This can be done for you by your letting agent. Since this is what they do for a living, a professional letting service will, of course, be efficient in every way.
When you work with professional management agencies, you can be sure that all the rules are being followed, and they will be great at showcasing the properties. Then there’s the fact that they’ll know a lot about the area and be able to confidently answer renters’ questions. They will also have experience with advertising and promoting, which are very important, both online and offline. They’ll make sure all the communication happens on time, and even though they’re in charge, you can be as active as you want to be.
Disadvantages of using a Letting Agent
On the downside, the fees can be high. At the high end, you’re looking at around 15+VAT%, which is almost a fifth of your rental income. Their service levels are also different, as is the quality of service. You might not think that the service you get is worth the money.
How do I know if a Letting Agency can be trusted?
As a property owner, it’s up to you to do the right research before choosing a letting agency to work with. One of the best ways to choose is to talk to other property owners who have used the service and see what they have to say. You could also ask the people who live in the properties that the agency handles.
A trustworthy agency should be happy to give you the names and contact information of the owners and renters they work with. If they’ve been in the area for a long time, it’s probably because they’re good at what they do. Last but not least, online reviews are a great way to find out if an agency is worth the money.
How to decide whether to self-manage or hire a letting Agent?
In the end, it’s up to you to decide what to do. You can decide to give it all to somebody else, give an agent some of the work, or do it all yourself.
The key is to know exactly what your tasks are as a property manager and to be honest about what you can and can’t do. This works best based on what you’re good at, what you’re bad at, and what you like and don’t like. If you’re sure you can do everything with ease and confidence and enjoy it all, go for it. You can always decide to hire a Letting Agency in the end.
Things matter when it comes to money. You’re on a roll if you’re still making money after the agent takes their cut. If the fees eat up too much of your earnings, you might want to reconsider.
If you go with a Letting Agency, what size of agency do you want? Small, local agencies can be more focused and successful than big national agencies that don’t have a local focus, but this isn’t always the case. It’s best to know exactly what you want and find an agency that meets those needs, no matter how big or small they are.
This is a relationship, and it’s important because it supports your income and the business as a whole. Can you work together with them for ongoing joint success? If so then the right move for you could be hiring quality residential letting agents like Western Lettings Glasgow