The Landlords Guide to Property Management
Investors venturing into property investment can often be blind sighted by the consistently generous monthly earnings and lucrative capital gains that are on offer.
In the anticipation of this, many investors neglect to consider the prospect of actually becoming a landlord and the responsibilities which this brings.
It is very common for landlords to have limited time available to cater to each and every property within their investment portfolio across numerous other locations. Add a full-time job onto this long list of duties and the outcome is one very stressed landlord!
What is Property Management?
Property management is the overseeing and management of real estate. This can include apartments, houses, condominium units or even shopping centres.
Property managers will takeover the huge responsibilities that landlords face, saving them precious time and giving them the peace of mind that their properties are in safe hands.
Many Buy-To-Let landlords will grow to depend on their property management company who will ensure their investments are being looked after, actively managed and are running as smoothy as possible. This means that the smaller day-to-day problems will never be of concern to the landlord. Instead, the property management firm will step in and deal with these issues and will only usually consult the landlord if there is a larger problem that needs to be addressed.
What does Property Management involve?
Property managers are hired to handle the operations, maintenance and administration of property rentals for an investor. Their exact responsibilities tend to vary based on the type of property being managed, the amount the landlord is wishing to pay, and the terms of the management contract.
The property manager will effectively act on behalf of the owner and carry the burden of a long list of tasks including marketing rentals, finding renters, ensuring rental rates are competitive while covering taxes and overhead, complying with rental laws, and most importantly, collecting rent! It is standard for the property manager to have in-depth familiarity of the region the property is based and national laws regarding the legal methods to screen tenants, handle security deposits, terminate leases, conduct evictions and always comply with property safety standards. The main responsibility underpinning all of these duties is to meet each and every target the investor hopes to achieve during their exciting venture into property.
Self-managing vs hiring a property manager
Making the decision to carry the responsibility of managing a property or relinquish the power onto a property manager will largely depend on personal circumstances and what best suits the needs of the landlord. Now of-course, the obvious advantage of a landlord choosing to take on the burden of these tasks is to reduce costs and maximise the potential returns from their investment. This initiative makes sense and as Elavace investors are all too aware, maximising ROI fuels our long-lasting client relationships.
However, managing a rental property requires many skill sets and arguably experience to best manage potential issues that arise. Many fresh-faced landlords will quickly learn that managing tenant demands is no piece of cake, especially combined with other duties like work, family, and/or other investments. Investors will often decide that the levels of stress involved significantly outweigh the cost of using a property manager.
Property investment is a long process from start to finish. First and foremost, finding the best possible tenants to inhabit a property. Speeding through finding a tenant can often create a recurring headache for landlords throughout the tenancy. A landlord needs to be on call at all times for any emergencies and repairs, thus choosing the right tenant will negate a whole lot of time and stress. Needless to say, finding the best tenant can be a long process in itself; from vigorously referencing each tenant to providing viewings of the property.
Once this hassle has been lifted and the tenant has been selected, next is the day-to-day management of collecting rents and constant communication with tenants. Have we mentioned the paperwork yet? That’s right-inspection reports, accounting and bookkeeping requirements, record keeping, legal document preparation, legislation, historical maintenance logs, and so on. Take it from us, failure to manage a property correctly has led thousands of landlords to retreat to the nearest property management agency with their tail between their legs!
What services do property managers provide?
As briefly mentioned before, the level of service required from a property manager will significantly depend on personal circumstances and what best suits the needs of the landlord. Property management firms can provide a whole array of services ranging from a fully managed letting service to a simple let-only service. Here are a list of some of the key roles that property management firms should provide to landlords:
- Collecting Rent
For almost every landlord, collecting rent should be one of the biggest perks of the job. Not only that, but in order to maintain a profitable investment and to pay off buy-to-let mortgages as soon as possible, landlords need to ensure a steady stream of rent is coming in regularly.Unfortunately, it’s not always this simple and on occasion, there may be late payments which is why, as we will explain next, finding the right tenant is nota quick and easy process.
This is where a full management service comes in handy, as the property manager will take full responsibility for collecting the rent, chase and professionally handle late payments by implementing late fees. This service is one of biggest selling points to landlords with the property management company taking on the brunt of this hassle and stress.
- Interviewing, referencing, vetting and liaising with tenants
This has already been covered to an extent so we will only briefly explain what referencing entails. A professional property management company will carry out tenant referencing and Right-to-rent checks on each and every tenant during their application to move into the property. Unfortunately, phoning a previous employer of the tenant will never guarantee on-time rental payments therefore tenant referencing is a MUST!
Normally, if the tenant should fail the referencing process the agent will be responsible for notifying them that they have failed and will provide information about how they could pass, such as finding a guarantor. The management company will then forward the results of the background search to the landlord for them to make the final decision granting them permission to move in. Fortunately for landlords using our sister company, Elavace Estates’ services, this process is over before it's even begun with our team comprising a long queue of vetted tenants ready and waiting to move into their new home.
Property management companies will also manage and liaise with the landlord’s tenants from the beginning all the way to the very end of the tenancy. On top of this, the property manager is responsible for ensuring that the property is occupied as frequently as possible. In order to minimise the risk of prolonged void periods, tenants with Elavace Estates must give 14days’ notice before leaving the property, which leaves the team a cooling off period to choose the next lucky tenant.
- Marketing the property to tenants
Property management companies will usually market or advertise the landlord’s property in a way that will reach the best band often ants in search of their dream home. This service will start right from preparing the property for market, then taking professional photographs and finally posting the advertisements across multiple platforms both online and offline. Choosing Elavace Estates, within 2 hours of the agreement being signed, our team will have the property advertised on all of the major portals like Zoopla, Rightmove, social media and our own website! Once the marketing strategy has paid off and the tenant applications start flooding in, the management company will then manage and book viewings while choosing the best of the bunch.
These key services are just a small part of what can be an incredibly extensive service that property management firms will provide to landlords. Another service is managing the tenant move in process, this involves drafting a tenancy agreement to be signed by both the landlord and tenant. Then once this has been signed and sealed, the agency then has to check the inventory and ensure the tenants deposit is kept in a government approved tenancy deposit scheme. Other services should include overseeing the eviction process, undertaking property inspections/managing repairs, financial administrative services, and providing legal advice.
How much does property management cost?
There are certain criteria which will deter the fees that are charged to the landlord. It’s worth noting that property management agencies will normally operate on a “no let, no fee” basis. The most affordable of these fees is the ‘tenant-find only’ fees, which will either be charged as a flat fee equal to around one month’s rent or as a percentage of the entire tenancy contract. For example: if the landlord has agreed to a six-month contract with their tenant then the property managers would typically ask for around 6-8% of the period’s rent as their fees. This is often higher in London.
The next type of fee to pay is ‘tenant find and rent collection’ fees which typically cost landlords around 8-12% of the monthly rent. Once again, this can be higher in London. The final and most common service is ‘full property management’ fees which will typically cost landlords up to 15% of the monthly rent collected. You guessed it- even higher in London!This can prove to be expensive for longer tenancy contracts where the landlord is getting guaranteed rent for an extended period of time. In cases such as this, landlords who choose Elavace Estates to manage their property from just8% pcm (almost half the competitive rate) can save themselves fortunes!
If you are a landlord who is set to begin your journey into property investment or add to your property portfolio, then hopefully this article has been helpful to you. You will know by now that the most important attributes that you will need to do this effectively is an abundance of time and of-course, high tolerance to stress! This is why we strongly advice anyone in this position to get in touch with a property management company who will thoroughly take care of these responsibilities while always remaining compliant with the law.
At Elavace, we meet all UK regulations and utilise our65+ years of management experience in the property industry to make owning a property as simple and as safe as possible. We provide our clients with comprehensive support and information to make the most informed decisions. If you are worried you may make mistakes and incur vast legal fees onto yourself, then we are here to help! One of the many services we provide is professional property portfolio management covering the ins and outs of your property running and management. Other services that we offer include market leading research on the performance and security of the UK market while also conducting extensive due diligence on your behalf. As you can see, our services span so far that partnering with us will alleviate much of the stress, we’ll even assist with the littlest of tenant problems like the change of a faulty lightbulb.
Get in touch with Elavace Estates today at: 0151 808 0697