Property Management

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Property Management

Over the last decade property investment in the United Kingdom brought with it a diverse range of service companies. They support not only the seasoned landlords, but a new breed of 'time-poor' property investors.

In a market where emphasis is often on buying and selling how do you manage a property you are holding while waiting for capital growth?property management

Ensuring that your property is managed and the rental yield consistent is the backbone of your investment play. The tenants you rent your property to are as important as the mortgage you choose or the property itself.

For between 5% - 10% of your monthly rental income a third party management company to manage letting your property; from advertising your property to dealing phone calls about the dripping tap or wobbly door handle.


 

If you own multiple properties and want to hold down a day job this type of support can be invaluable and can prevent tenants becoming unhappy (or more importantly, protect you from troublesome tenants).

Employing the right agency is crucial; experience and reputation is vital for you as a landlord. Dealing with tenants and rental property requires thorough checking and efficient management. Agencies that take time to report faults or carry out repair work could be increasing the severity of problem and costing you more money in the long run.

A busy and established agency is probably your best bet; with established operating procedures and relationships with reputable tradesmen.

It is essential that the agency is a member of ARLA (Association of Residential Letting Agents). This membership forces the agency to abide to their terms and conditions and is another way of trying to ensure your making the right choice; if they are managing your property they are also managing your investment.

When budgeting for your investment property we recommend you think about:

  • Periods the property may be vacant (when you first buy the property or between tenants)
  • Costs for re-decoration between tenants
  • Budgeting for management issues around plumbing, electrical or building work - this may be unexpected.
  • Ensuring you do not become liable for unpaid utility bills.
  • Budgeting for utility bills between tenants; these will still need to be paid.
  • Solicitor's fees / Bailiffs fees if tenants fail to pay or refuse to leave your property (Some Letting Agents will cover these costs; it's good to check your contract).

In short planning your rental yield on a full twelve month rental with no outlay on your property is probably un-realistic. To use industry jargon, it won't "stack up" i.e. your rental yield will not cover the cost of buying, owning and letting your property.

By being realistic at the start you can be far more prepared when incidents arise and more importantly confident that nothing is going to surprise you.

Potential extra costs can be limited by not only employing a good property management company, but by also investing in knowing as much about your property as possible.

A mortgage valuation is security for your mortgage broker that the house will cover the cost of your borrowing; not assurance that the property is in sound structural shape. We recommend investing in a full buildings survey from a member of the Royal Institute for Chartered Surveyors (RICS) and also in an engineers report form a qualified structural engineer. This will give you as much information and history on your property as possible and should allow you to budget and schedule work over the appropriate time period.

It is important to remember just because a property is new or recently renovated that it won't have structural or environmental defects; by investing between £350 and £2500 in comprehensive surveys it could save you thousands in the long term: especially if the roof needed replacing or damp was discovered (Only illustrative example).

In summary then, do your sums. Take a pessimistic view of costs associated with lettings and make sure that you have contingency plans (and funds) if the worst happens. Think seriously about taking on a lettings agent - especially if you don't want to become a full- or even part-time landlord with multiple properties. But manage that agent closely and drive the best deal you can on fees.

We work with partner property management companies to help our investors get the most out of their investment. Contact us for more details on how we can help you manage your property better. We also have our property buying service at: www.sellmyhousefast.biz. This service helps sellers to sell their property fast.