How do I choose a good property management company and what do they do?
First of all, let’s clarify what that means because sometimes you will hear people refer to letting agents, and you will hear people referring to managing agents, and often the two are interchangeable and they do the same thing.
Most letting agents will manage the property, but some don’t. It is rare but you might find a company that only does letting and then they want you to pass the property onto somebody else to do the management.
Most managing agents will do lettings. Rarely you will find managing agents who will only do management, but most do both lettings and management.
How do you find a good one? One of the best ways to find a good one is to go by word of mouth recommendations. This is the power of networking, getting out and talking to other investors and landlords, getting onto the forums, going onto the Facebook groups and asking people who they can recommend.
And there is trial and error.
For example, with my portfolio in the north east up in Newcastle, at one stage I had four different managing agents. But overtime I realised that one managing agent was better than the other three and so I migrated my properties across.
That didn’t happen on day one so it may be that it may take you a little bit of time to work out who the best managing agent is for you when you start to build your portfolio.
What do they actually do? That is a great question. Initially I would be looking for an agent who can do lettings. They will all have their preferred ways of doing lettings. Ideally you would want an agent who can get your properties onto Zoopla and Rightmove, and maybe Gumtree, and for them to do the viewings.
You would want them to vet potential tenants, doing credit checks, taking references. Maybe producing an inventory which is basically a schedule of condition for the property and a schedule of condition if there is furniture, if you are letting it furnished.
Dealing with all the admin which is now around letting properties so they would have to do the checks on the tenant for immigration purposes. You would want them to take a deposit and protect the deposit for you. You would want them to prepare the tenancy agreement and you would want to make sure they would do it in a way, and they let the property in a way, that allows you to keep your rights; for example, they need to give the tenant the government booklet to renting, they need to have a copy of the EPC (energy performance certificate), and they need to test smoke alarms with the tenant present.
All of this needs to be given to the tenant and the tenant needs to acknowledge that they have had it so that you can protect your rights under Section 21, should you ever need to take possession of the property. Hopefully you won’t have to but if you did have to then that needs to be in place.
What else will they do?
At a very basic level they will collect the rent, they will hopefully do periodic inspections of the property to make sure that the tenants are maintaining the property as they should.
And they are going to organise repairs for you.
One of the great things about letting agents is that they should have a team in place who can do the repairs, and because they have client landlords who obviously want a good job done, the team they are using should be a good team which means you can ask them to undertake repairs for you, with confidence.
That might come at a cost, as they might want to add a bit on for their fees as a project management fee but that can be a useful service as well. Far better than you having to rush out and unblock the toilet at midnight, they’ve got a plumber they can call to do it for you.
So, the reason why I like managing agents a lot is because I don’t like dealing with tenants and I don’t like dealing with red tape and admin.
Property investment company RWinvest, believes that property management companies are vital if you have a full-time job, live away from your buy to let property, or are just too busy to handle being a landlord. These management companies can organise everything for you, from finding tenants to securing rent, and is worth paying the additional charge for their services for a completely hands-off investment.
I guess if you are buying properties near to where you live however, it makes it easier to manage your properties yourself. I tend to buy away from where I live, partly because it is cheaper and makes sense in terms of the strategy I undertake within property.
One of the benefits to me is that I don’t live next door to my tenants. If a tenant sees you in the street or in the pub they are probably going to come up to you and say ‘Can you come and sort this out for me?’. I don’t have to get involved in that.
But it’s horses for courses. Some people feel very comfortable about managing their own properties, and owning them locally.
Peter Jones B.Sc FRICS
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