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The amount of work associated with managing a property is easy to underestimate. Many landlords who try to go it alone, often end up turning to a letting agent to take the mundane work off their shoulders. Whilst using an agent is not for everyone, for many it is a necessity.
The more difficult decision to make is which agent to use. With charges typically between 10-17% of monthly rent (and often various administration charges as well) it is often easy to wipe out any profit, so you need to choose carefully.
What you get for your Money
Whilst the following list is not exhaustive, it gives an indication of what services you can expect from a letting agent:
- Advertising – Agents should have an access to a large number of potential tenants. They will prepare the particulars and place ads on websites such as this, newspapers and their own websites.
- Viewings - An agent will arrange viewings and accompany the potential tenants when they view the property.
- Inventory - A full list of condition and contents will be drawn up and the agent will get the tenant to sign up their agreement at the beginning and end of the tenancy.
- Dispute & Emergency Management - Whilst you will be responsible for costs if the boiler blows up, the agent will arrange for repairs to be made on your behalf.
- Leases - An agent will organise a legally current lease agreement to be signed by landlord and tenant.
- Tenant Vetting - Credit checks and references will be taken up.
How Agents Make Money
When weighing up agents, you need to be aware how they may actually make money from you. The management fee is rarely their only form of income so ask about the following:
- Fees associated with new tenants – there will often be a charge every time someone moves into your flat.
- Interest – Some agents will hold your rent for up to two months before they pay it to you. Clearly this can add up to a substantial amount of income for them and considerably less income for you.
- Maintenance – Agents often have their own maintenance teams and you may be surprised how often some agents think maintenance is required. Even those that bring in outside tradesman will probably make a cut. Make sure that you are consulted before maintenance is carried out. This can be the biggest profit-eater if you don't keep a careful eye on it. You might want to consider asking to speak to soem of their landlords about this issue.
- Tenancy Fees – Agents may charge a “move-in” fee to tenants. This can be a disincentive for tenants.
- Advertising – The rate you pay to the agent, may bear no relation to the actual costs. There is nothing inherently evil with this but you do need to ask about it and factor it into your budgets.
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