How to Choose a Letting Agent
Property investor and former Letting Agent Sarah Choy, shares her 4 steps on choosing the best Letting Agent to manage your Buy To Lets.
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So 4 steps to choosing a Letting Agent, a good Letting Agent.
So welcome to the Sarah and George Choy Property Podcast, the show that helps you to become financially free through property, so you can spend time with your family traveling and pursuing your passions. And if you like the sound of that please press Like and Subscribe.
So on to how to choosing a letting agent. Now this was one of the questions that came up in our Inner Circle mentoring last week. So it’s come up a few times, so we thought let’s let’s do a vlog on it. It’s obviously an interesting topic.
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So on on to the topic. So Sarah, Sarah’s gonna go through the four tips. So this is a great one for us to do
for a couple of reasons. One Sarah used to work for a letting and estate agent. That’s the first thing. She has
experience on that side, yeah. And from a Landlord perspective, you know we’ve we’ve been working with Letting Agents and estate agents for 18 years now, very closely on our whole portfolio.
So over to Sarah over to me the four steps. Well let’s say that’s four. Okay. So just quickly running through them, the first step will be to actually identify the top three Letting Agents to work with.
Two, meeting them. We always recommend doing.
Number three is how to negotiate the management fees and how much you’re likely to pay. And the last but not least is how to actually choose the Letting Agent you’re going to be working with.
1. Identify the top 3 Letting Agents
So starting with number one. Identify your top three Letting Agents. So say you’re working in area which you know generally you’ll be looking at a patch. The easiest way to find the Letting Agents actually is just to go on to Rightmove lettings, put in that area and then it’ll come up with all the listings that are available. And they will be generally the active people in your areas. It’s quite easy to start that way.
And what you’d want to do at that point then is to look at what agents have the kind of stock that you’re going to be letting. so stop means houses that you’re letting out so if you’re letting out two bedroom houses. Which one has all the two bedroom houses.
Or if for some reason you’re letting out a five bedroom house, say in the area, which agent deals with those. So you wanna be dealing with the right end of the market, because they’ll they’ll attract the correct customers for you. Basically there’s no point working with the top end one if you’re dealing with one bedroom flat. They just won’t want to talk to you, basically.
And the other thing you can do whilst you’re online, before you even start going into anybody, is to check
whether or not they’re accredited. Now the main ones are NALS, ARLA is a big one and RICS as well.
So they’re all different professional bodies that you can be a member of as a Letting Agent. And we would generally always recommend working with one who’s accredited, with one of those partly because they put them through professional training, but you’ve also got some level of recourse if there is any kind of issue with that as well. So start there, and then you know get your top agents in the area.
2. Meet them
So the next step we would say would be to actually meet these people. i know it depends on you yeah this is my cup of tea. I love going in meeting Letting Agents. it’s not a problem at all. In an ideal world you’d be meeting them in person. You can do it over the phone, or over zoom, but it’s it’s generally easier to actually go into the store if you can.
In an ideal world, again you’d be talking to the lettings manager — whoever’s in charge of lettings in that branch. Because you know there’ll be different levels. Obviously there’ll be more senior or more junior, and then quite often they’ll have somebody who literally just deals with maintenance. And obviously they’re a massively key part of the team, but they’re not really the person you want to be talking to, because they’ll know how to maintain it but they won’t be the person you want to talk to so make sure you’re talking to somebody who deals actually with sort of the management of the lettings.
If I can add to that then, it’s best to go during the week to meet with these people, because at the weekend you just get the weekend staff and they’re not necessarily the lettings manager. Yeah it depends on the size of the branch, but you want to make sure that they’ve got enough seniority that you can judge the branch.
Say so you go in, you know look reasonably smart. Yeah we just dress like this. You know you don’t want to be wearing your decorating clothes say. And tell them that you’re professional landlord and you’re looking to buy a number of properties in the area, assuming that’s what we’re going to be doing. And if you’ve got any credibility I you’ve got Buy To Let’s in a different area, give them that information. Because it gives you credibility and they’re more likely to sit down and actually have a conversation with you, and treat you like a professional person, which is what you’re going for.
So for example you know we we met with the lettings manager quite recently. We did it over zoom, which we don’t normally do normally, when meeting a person, but it was too far away. You know one of the things we outlined was the size of our portfolio, how many million it was, how long we’ve been investing, so 18 years and how many we were going to buy this year — a million pounds worth. So those things together give you a lot of credibility. Yeah and they they want to work with you now, they want your business.
Because you’ll have quite a few people coming in to letting agents go, “oh I want to a Buy To Let in the area” and they don’t know what they’re doing. So they’ll at least take you seriously, which is which is the idea. You’re not bragging, you’re just setting the scene.
You want to make sure that you’re dealing with a Letting Agent who has a level of professionality, you know. Again, they don’t need to be wearing a posh suit, or all of that, but they do need to sort of come across as a professional:
- Do they know the area? Very important.
- Can they give you idea of the type of rental price you’ll get on different types of houses in your area? It might not be an exact figure, but if you give them an example, say can they give you a guesstimate on the spot of how much it should go for? You’d want that level of competence.
- Can they tell you about the areas that people actually want to rent in the area, as well. Because that’s very
- important. Demand is hugely important. Because you don’t want to have an empty house. It’s the worst case.
- And again you want to be asking them about bad areas, in their area. So it’s quite often there’s an estate, or a set of roads, or something that is either not safe and they don’t want to send their letting staff there, and again you won’t necessarily want to be having housing stock in that area, or that there’s just no demand. You’ll want to know that as well because again, you don’t want to buy a house that nobody wants to rent. So you know, you’re working together on this, which is great.
- And something else that you should be able to get off of them kind of on the spot, or either email to you, is
- a landlord pack, which will generally have all the information that they would give to a prospective landlord. They should have that set up, so it gives you an idea again that they know what they’re doing — they’ve done this before, they’re set up to work with landlords. So you know all of those things should fall into place when you meet them basically.
3. Management Fees
Okay, number three — fees. Because they don’t do this for free, and nor should they. We go fully managed, but they earn that money for us, they really do. Generally depending on the area, normally kind of between eight and ten percent plus VAT is relatively standard, apart from London. It’s probably higher if you’re dealing with HMOs which we don’t recommend — they will charge higher. So this is just vanilla Buy To Lets we’re talking about here. The fees are generally lower.
It will literally depend on what the other agents are doing in the area. You know, if everybody’s charging 10%, they’ll probably charge 10%. They talk to each other. They see what everybody else does. So they know what they can get away with.
Also it’s worth asking, can they help manage the work for you? So say you buy a property. It needs a little bit of painting and decorating. Van they help you with that? Can they help organise builders and things for you?
Use their power team. It’s so vital. It’s something we’ve done over the years, you know. We don’t know builders in the areas we have our properties, but our Letting Agents do. And they know the good ones. So we literally use their power team. We borrow from them. So they’ll know cleaners, they’ll know everybody that they work with before.
And one other thing to ask as well, is do they charge extra for that? Because some agents do, and some agents don’t. i’m not saying it’s a bad thing if they do. Sometimes they’ll charge a percentage. If you’re doing a big refurb say and they’re spending a lot of time, I think it’s reasonable that they charge you some money for that time.
But little jobs, you know just normal maintenance — say the the drains need unclogging or something, and they have to call out a plumber to do that. That should be included if you’re paying management. They shouldn’t be charging you percentage for that. But ask, because it’s good to know it might be in the small print. But you can ask that.
Okay, one thing that we’ve learned over the years, which I thought i’d stick in here, is we always tend to set a level of work that our Letting Agent can authorise without even talking to us. Because we try and set our portfolio up in a passive way. I don’t want to be getting emails or phone calls. We don’t do phone calls. I’ve trained everybody to email me. I like email — don’t phone me please.
They email me and tell me that something needs to be fixed, which happens periodically. We’ve got a big portfolio. Things happen. Anything under a couple of hundred quid — they don’t even contact me. Basically if it’s something that has to be done, say a tap’s fallen off, they send a plumber. They fix it. They just take it out the rent. I don’t want to know.
Bigger things, or optional things, I always get them to give me quotes. Two usually. If it’s a big job, we might go further than that but and then i’ll look at the quotes, and we’ll have a conversation about it, and we’ll go from there. But little things, if you just get them to do it, it makes life so much easier. You don’t want to be authorising like 50 quid things all the time. It’s just not worth your time. Okay, so that’s an aside. We always do that.
Now, if they don’t perform. So this is a little bit down the line. If they don’t do what they’re supposed to do, or they don’t answer your phone calls, or whatever, you’re not happy with them — you can change your mind. You can go with a different agent. But we try and avoid that if we possibly can, because it is generally complicated. You will have signed an agreement with them, and generally they’ll be a bit hoo-ha about
getting out of the contract. Particularly if you’ve got an ongoing contract with them to to manage it. So say you can get out of it, try not to if you possibly can, unless that’s the right one. Choose the right one first. That’s what we always try and do. Choose the right one.
3. Management Fees
Now pricing of their services. Generally we don’t haggle price. Purely because you know normally it is a relatively fixed rate amongst different agents. And if you do decide to drive them down on the price, obviously it will increase your ROI, however they might not like you very much, and they might not try so hard for you. And we want our Letting Agents to be really on our team. You know we don’t pay over the odds, but we pay a fair rate, because we want them to work with us going forward.
Basically, so if say there’s four agents that you’re looking at and they’re like 10%, 10%, you’ll struggle to kind of drive the guys down to 7%. Clearly the 10% is in the area. But if one of them is 12% and the rest are 10%, and you really like the them to price match for you, they may not — but they may. So that I would generally think about trying to do.
4. Choose your Letting Agent
Okay, so moving on number four. How to choose. You’re getting to the crunch point now. You’ve got to pick now. Just to say the Letting Agent is a key power team player for you. They are one of your on the ground team, you know. They’re almost an employee. So it’s really important and their competence will make a huge difference as to how passive your property investing journey will be. If they’re good, it can be very passive. If you’re having to manage them, it’s not basically. So it is an important decision for you to make.
We always choose one agent in an area to work with. We never go multi-agent. We always choose one and we work with them very closely, because they can help you. They want you to buy more property. They want you to invest in more property in their area, because they make money from you and you make money. You know, so it’s all a win-win arrangement with them, which is great. And again ideally you’re after a long-term relationship with these people. So you know, it’s great.
So the last thing we say on choosing, take all of those things into account. Work your way down the list, if you have to. But for me, i’m i’m a very much a gut feel person. We’ll make sure that all of the the boxes are ticked. We know that they’re confident. But quite often you’ll find that two or three tick all of those boxes. And then the last thing I would do is, who would I choose? You know, who do I get on with best?Because if you’re going to be working with these people for a long time. You want to get on with them. So that that’s how I would actually choose. Make sure they’re competent and then go on gut, basically, yeah.
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Okay. All right, well thanks for watching and we’ll see you for another video next week bye.
Sarah & George Choy