Q What’s the value of property management to me?
The most valuable benefit of good property management is the relationship that develops between you as the agent and your landlord and their tenant. A property management service enables you to maintain regular contact and can open up opportunities for further business. You’ll be prepared, ready and waiting to offer additional services. Maybe they will want to re-let it or perhaps sell, if you’re on the ball, you can market your services before anyone else. The same goes for your tenants, you should be ready to help them rent again or buy, if/when the time is right for them.
Q Why outsource property management?
There are benefits to outsourcing for all agencies. Working in partnership with a regulated and experienced firm which specialises in management can bring huge benefits. You can concentrate on your core business – sales and lettings.
When a landlord has a problem he calls you. If you are working with a management agency then they sort the situation out, if not you are on your own and, if you don’t know exactly what you are doing, you run the risk of getting it wrong – and facing serious consequences. Aside from profit, the main concern for landlords is security. Outsourcing to a professional company means they have this; from the legalities to the peace of mind that their property is being looked after by an expert.
When you get to ten properties you enter a different world! You offer services you don’t understand and can quickly become that ‘rogue agent’!
As the lettings industry booms, more letting agents open and more sales agents have launch a lettings operation. If you are one of these companies, there is probably a massive skills gap where neither management and negotiators understand the red tape in the lettings market. This lack of knowledge might not be immediately apparent, when the first landlord requests property management you think that it is straightforward. When you get to ten properties you enter a different world! Ignorance is bliss and many agents have ploughed on with managing properties and offering services that they don’t fully understand – and they get into trouble – becoming the press reporter’s ‘rogue agents’.
Even for an agent who has been operating a lettings service for years there are still obvious benefits to outsourcing. In today’s economy, the main one has to be the savings on employment costs, closely followed by the problems staff holidays and sickness can cause. In addition, for any agent working in a franchise then outsourcing can be really effective as it centralises information.
Q At what point is it time to outsource?
The answer is simple. At the time you want to grow and need to employee someone else to deal with the workload it has created. It obviously depends on the individual agents skill set, but unless you have someone who really understands what is involved you will almost certainly get into trouble doing it yourself. If you are already undertaking property management services you should question whether all the right checks are being done to ensure that everything is done legally and in keeping with best practice. Ask yourself if, for example, you know how to deal with an overseas landlord? Every case is individual and it is vital to have a really thorough knowledge of a range of issues to avoid costly mistakes.
Q Should I white label the service?
There are pros and cons to choosing a white label service. Some may assume that white labeling is the answer. All works are done in your name without having to worry about staffing issues and the day to day running of a management department. Initially, this may seem desirable but there are downsides. If all the work is done under your name, any mistakes come straight back to your door as the white label company carrying all the responsibility. It may also not be terribly popular with your clients in this age of transparency, to some people, it could seem deceitful to pretend to offer a service which in reality you are outsourcing to someone else.
Q How do I sell this to my landlords?
Some negotiators find it difficult to sell property management to landlords, especially those who believe they can do it themselves. Really it comes down to professionalism. Many landlords are probably quite capable of dealing with the repairs and maintenance that become necessary in any property.
Where they are likely to fall down is understanding that everything they do and the time it takes them to do it may have legal ramifications. There is so much legislation in place protecting tenant’s rights it is very easy for a landlord to fall foul without even realising. In addition to that you have all the legal aspects of tenancy agreements, notices, deposit registration, prescribed information, making sure all documents are correct, collection of rent etc.
In a sense, you do need to politely scare a landlord into realising what can go wrong as unfortunately in many cases when they self manage it often does. What happens when the friendly co-operative relationship between the landlord and tenant breaks down because the landlord is a bit slow with maintenance works or the tenant is late with their rent? It can take moments for harmony to vanish and a landlord/tenant war breaks out.
A property management service provides the landlord with a third party to mediate and resolve problems or, ideally, to ensure that they don’t arise in the first place. Every landlord should take the view that the relationship with their tenant is a business one and should be handled in that way. If you can show your landlords that their life will be easier and the business more secure, you can build a property management business – without the stress!
Sarah Rushbrook is Managing DIrector, Rushbrook and Rathbone