Managing Rental Properties: Letting Agent Vs Self-Management

So, you see yourself as a property manager, managing a portfolio of rental properties? It’s an excellent way to make a good living but at the same time there’s a lot to it, and it’s possible to make some awful mistakes. This article delves deep into the detail to help people like you research managing rental properties. Read on to find out all about the professional management of rental properties, a detailed and comprehensive landlord’s checklist you can trust to make your rental property management life easier and more profitable. 

house getting built

Self-Management of Rental Properties: What’s involved

The need to manage rent is only the tip of an exciting iceberg. So let’s explore the key aspects of what’s involved in the self-management of rental properties

What does let and managed mean in practical terms to the person or agency managing the tenancy? The first thing to do is make sure the property is rental-ready. This means it has to be safe for tenants to live in, complying with all the relevant health and safety requirements around appliances, smoke alarms, and carbon monoxide detectors. You’ll need to test them all to verify they’re in working order. If they’re absent, you’ll need to provide them. 

If you’re letting furnished, you’ll need to take photos and note down full details of all the fixtures and furnishings in managed rental properties so you’ll know if they’ve been kept in good condition by each tenant. Decor-wise, people will expect a neutral colour palette which will suit their own belongings and allow them to create their own decor style. Kerb appeal means making the outside of the property, including pathways, front garden and front door attractive, clean and fresh. When a tenant is paying upwards of £2000 a month in rent, which is common in London, they expect a place to look like it’s worth the money. 

Next, setting rental prices and expectations. We recommend you take a good look at the rental prices in the local area before deciding, so you can attract the right people. It’s about striking a balance between a fair rent for your tenants and a fair return for yourself. Ask too much and you’ll struggle to find tenants. Ask too little and you might find managing rental property isn’t as profitable as you’d hoped. You could even end up out of pocket.  

As a property manager for rental, it’s wise to ask yourself what kind of tenants you want. You’re in charge, so you can ask for tenants who’ll suit you. You might set a minimum income, insist on non-smokers, and either allow or refuse pets or children. You can ask for a minimum credit score and request details of a tenant’s previous rental history. You can even specify the number of references you want to see. A tenant questionnaire is an excellent way to make sure you get what you need and don’t leave anything crucial out, a document you’ll keep as a record for the term of their tenancy. 

When managing a property, advertising is a big deal. It reveals the property’s availability and all the relevant details a tenant wants to know. You’ll need to choose the right places to advertise the property to get the best exposure and attract a good number of suitable tenants to choose from. If you want to target a specific type of person, for example, students, retired people or professional couples, advertise in the places they tend to look for rentals. 

Viewings are an essential part of the letting process, a great way for a property rent manager to assess potential tenants before you decide who to let the place to. Make sure you’re available at times that are convenient to people, usually evenings and weekends for working tenants. 

A Tenancy Security Deposit is usually a month’s rent taken upfront. When the tenant leaves, you return the deposit to them, assuming all is well. If there’s damage, mess or redecoration to deal with you can keep the amount of money needed to fix it before you re-let, returning the rest to the departing tenant. If your property is in England or Wales and will be let on an Assured Shorthold Tenancy or AST, you’re legally bound to hold the deposit in a government-backed tenancy deposit scheme or TDS. 

Rental Visits and Inspections involve visiting the property once or twice a year to ensure the tenant is happy and the property is in good condition. This feeds into the need for regular maintenance to keep everything in the best order, which means you’ll need to build a good relationship with a reliable local contractor. Word of mouth is often the best way to find the right builders, plumbers, electricians and other building maintenance experts. 

Make sure your managed rental properties tenants know exactly which repairs you, as the landlord, are responsible for, and which are down to them. Bear in mind your repair responsibilities as a landlord, which include the electrical wiring, gas pipes, gas boilers, heating and hot water plus chimneys and ventilation. You are responsible for the sinks, baths, toilets, pipes and drains, and for any communal areas like entrance halls and stairs. 

It’s your job to look after the exterior and structure of the building itself, things like the walls, stairs, roof, external doors and windows. If there’s damp or mould, rats or mice, you’ll need to deal with it for your tenants. 

As the rental property manager you need to make the rent payment date clear to tenants, best done via a tenancy agreement in writing as well as verbally. You also need to stipulate exactly how rent should be paid, whether it’s the usual direct bank transfer or something else. Include what happens if they’re late paying their rent, and formalise everything in the tenancy agreement so there can be no misunderstanding. 

All this managing rental property activity is supported by accurate accounting and bookkeeping, so just like any other business, you’ll need to collect receipts and file digital evidence of spending. The tax side of things can get complicated so an accountant is your best bet unless you have the skills you need and are happy to take this level of financial responsibility. 

Finally, Tenant Eviction. It isn’t a nice task for a property rent manager but it’s something you need to prepare for just in case. Make sure you’re familiar with the process. You’ll need to follow a formal set of actions, first giving them official notice including the time you’re prepared to allow them to fix the problem, whatever it is. 

If your terms aren’t met you’ll have to file an eviction order with the court, at which point it’s too late for your tenants to pay. If you let them pay at this stage you can’t evict them. Make sure there are no local by-laws that you could break, and use a solicitor if things get too complex for you. Remember you can’t evict a tenant until the court has ruled you can. Most landlords hire a professional to carry out the eviction calmly and professionally. 

What Do Property Managers Do?

man in suit holding a model pink house

Next, a landlord’s checklist about what property managers do. You’re tasked with making sure the tenancy complies with all the right rules and regulations, both from your perspective as the landlord and theirs as tenants. 

You’ll need to spring into action and handle every property maintenance request. You might find you’re the local contact for the owners of the property, who live elsewhere. If so you’ll take on the showing and leasing responsibilities, and asses potential tenants. You will collect the rent and liaise with the tenants throughout the tenancy. And if things go wrong, it’s your job to put them right – including the tenant eviction process we’ve described.  

Is a Property Manager the same as a Landlord?

Is there a difference between a rental property manager and a landlord? Yes, there is, and it’s an important distinction. A landlord owns the property, and a property manager looks after it and the tenants on the landlord’s behalf. You can be both, of course, playing the landlord and management roles for your own portfolio of homes to let. 

How do Property Management Fees Work?

Next, rental agency fees. Most property management residential agents offer a choice of different management packages. A standard package usually involves things like rent collection, chasing rent arrears, handling queries from tenants, providing a 24/7 emergency response, arranging maintenance work, and inspecting the property. The charges for this service vary. 

A national property management agency charges an average of 19.32% of the rent but it can be as low as  14.4% and as high as 20.4%. Local agencies tend to charge a bit less, an average of 17.82% with potential lows of 15% and highs of 20.4%. 

Property Management Agreements in the UK

As we’ve mentioned, there are various agent property management packages on offer. ‘Tenant find only’ fees involve a simple one-off price to advertise the property to let. They often cover viewings too, and will sometimes give you advice on finding the best tenants. 

Tenant-find and rent collection fee deals expand on the basic tenant-finding service to include the rent collection itself. Likewise, full management fees are perfect for property owners who want to enjoy a completely hands-off letting experience, leaving all of the many day-to-day property management responsibilities to an agency. 

Your choice as a property manager for rental depends on the level of involvement you want. If you live far from the property, have a day job or don’t enjoy the many responsibilities you’re tasked with, hand it all over. If it’s going to be your day job you can choose to do it all yourself. 

You can start with one kind of deal and move to another once you know which suits you best. Maybe you’ve tried a tenant-find-only deal, but now you’re struggling to cope. Your agent will let you upgrade your package, maybe with a notice period,  perhaps instantly. 

What Makes a Good Property Manager

What personality is best for this kind of let and managed business? Experience helps, although it’s perfectly possible to kick off a first career as a property manager if you want to. If you’ve ever lived in a rental property yourself it’ll help you empathise with tenants and understand the various circumstances they might be faced with, but it isn’t essential.

Good customer service skills and excellent communication skills will prove really useful as you navigate your way through the problems and unexpected issues that can side-swipe you. Being calm, collected positive, determined and assertive will smooth your journey. 

You’ll need to take a step back and treat the rental property like a business, which can be trickier when you actually own it yourself rather than letting it on the owner’s behalf. This isn’t an emotional investment, it’s a straight business one. 

You might think you’re a great judge of character, but in reality, very few of us are. The ability to screen prospective tenants might be something you’re naturally good at – but it’s a risky business. Learn to rely on the facts and the numbers, then you’ll be better placed to spot when things don’t feel right. Whatever happens, you must always treat tenants professionally and with respect.

Benefits of Using a Letting Agent

computers and business people managing finance

A professional letting agent comes with significant benefits. They understand the ins and outs of the regulation and accreditation behind the business and know exactly what’s needed to comply with the code of practice for residential letting agents. Pick someone with the right qualifications and experience and you’ll be certain you’re dealing with a professional, an agent worth the rental agency fees. 

Then there’s Deposit Protection. A landlord must put tenant deposits in a government-approved tenancy deposit scheme if the property comes under an assured shorthold tenancy that began after 6th April 2007. Your letting agent can do this for you. And, of course, because it’s their job, a professional letting agency will be naturally efficient in every way. 

Professional management of rental properties partners means you know for sure all the relevant regulations are being met, and they’ll be really good at the property viewings side of things. Then there’s the good local knowledge they’ll have under their belt, able to answer tenants’ questions with confidence.  They’ll also be experienced in the all-important promotion and advertising, online and offline. They’ll handle all the communications in the right timescale, and even though they’re in charge, you can be as involved – or not – as you like.

Disadvantages of Using a Letting Agent

On the downside, the fees can be steep. At the top end you’re looking at 20% or so, basically a fifth of your rental income. And their service levels differ, along with the quality of service. You might not think the service you get is worth the money. 

How Can I Make Sure an Agency is Trustworthy?

It’s your job, as a property owner, to do the necessary due diligence when choosing a letting agency partner. One of the best ways to choose is to ask other property owners who use the agency and see what they say. You could also get feedback from the tenants who live in the properties the agency manages. 

A reputable agency should be happy to give you names and contact details for the property owners and tenants they look after. If they’ve been operating in the area for years, you can be reasonably sure that’s because they’re good at what they do. Lastly, online reviews are an excellent source of insight into whether an agency is worth the money. 

Should you Self-Manage or Use a Letting Agent: How to Decide

At the end of the day, the choice is yours. You can decide to hand it all over, give some of the responsibility to an agent, or do it all yourself. 

The trick is to know exactly what your management of rental property’s responsibilities are, and be realistic about what you can and can’t handle. This is best based on the things you’re good and bad at, enjoy and dislike. If you’re confident you can do it all with ease and confidence, and enjoy every bit of it, give it a go. You can always change your mind and hire an agent after all. 

The money side of things matters. If you’re still profitable after the agent has taken their cut, you’re on a roll. If the fees eat too far into your profits, think again. 

If you go the agency route, what size agency are you looking for? The answer is that size isn’t everything. Small, local agencies can be more focused and effective than big national agencies without a local slant – but that isn’t always the case. It’s best to pin down exactly what you want and find an agency that fits your needs best, whatever their size and focus.  

This is a relationship, and it’s an important one because it underpins your income and the business as a whole. Can you work with the people there, or will they drive you nuts?