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Property Tribes is pleased to report that Advanced Rent Option has chosen Property Tribes as its landlord community partner to promote this enticing proposition to landlords.When you rent out a property, you traditionally receive your rent monthly. With ‘Advanced Rent Option’ (powered by Choices) you will be paid your rent up to one year in advance. There is no direct cost for the service and provided you pay Choices normal un-discounted management fees there’s nothing more to pay*. For an additional charge of 3% ARO offers a guarantee on the rent so even if the tenant doesn’t pay ARO, you won’t have to make a repayment. The only thing ARO doesn’t cover is void periods but even then you won’t need to pay them back if they keep managing your property because they will recoup any shortfall from future rents.In order to qualify for the Advanced Rent Option all you need to do is let Choices manage your property and agree to pay their normal fees and charges. They will even make you a special offer as a new customer and provide their full management service for an ultra low 5% for six months subject to an eighteen month minimum period.Getting all your rent upfront for a year has many potential benefits. There is the peace of mind of knowing you can pay your mortgage on time even if the tenant pays late. There is also the flexibility and freedom of being able to use the money now rather than having to wait.What you use the money for is up to you. It could be used to invest in another property, pay for a new boiler, up-grade another of your rental properties or pay your tax liability.Remember that the Advanced Rent Option is not a loan, therefore there is no complicated extra paperwork to complete, just a normal lettings agreement. As it’s not a loan the Advanced Rent Option doesn’t depend on your credit rating either, so there is no need to worry about credit searches or that your credit rating will be affected in any way.One natural question is: how can Choices make the Advanced Rent Option available to Landlords? The answer is that over the years they have built up some cash reserves which are used to offer this facility.As a company, Choices do not have unlimited reserves so the Advanced Rent Option is always subject to limited availability and is available at their discretion but generally it’s always available, and if not, you shouldn’t have to wait long to get it. The other reason that Choices can offer the Advanced Rent Option is their Primary Tenancy business model, which provides a host of additional benefits to landlords and tenants.As a company the word Choices encapsulates their ethos and their aim is to provide their clients with the maximum amount of freedom and peace of mind possible. They understand and recognise the importance of looking after their client’s greatest assets and they take the responsibility entrusted to them seriously, diligently and respectfully.The Advanced Rent Option is simply another way in which Choices can help their landlords enjoy the freedom and peace of mind which is after all, for most of us, the biggest reason for owning rental property in the first place.If you are interested in finding out more, call now on 0330 002 0500 or visit Choices website *All the terms and conditions of the Advanced Rent Option are available on request, in addition to information on other services offered by Choices to landlord and investors. This has been a sponsored announcement on behalf of Advanced Rent Option (powered by Choices), a new commercial partner of Property Tribes.
Hang on a moment. So they pay rent up front. If a tenant leaves and they re let at a higher rent who gets the money.( or the other way, they must claw back somehow) - It appears they do as they are now managing the property.Also the only way this works is that they pay you a discount to the total rent you would other wise get and/or they adjust their charging structure to reflect this.Over the years they have built up cash reserves- cash in the bank according to last accounts filed does not appear to be alot. unless i am missing something.They are basically an estate agent and we all know the pressure they are under currently, so if they go into bankruptcy can the courts claim back the money they have paid to you in advance as you would still receive rents from your property therefore being paid twice or would your current payments be claimed by the court has you have already been paid. -What a nightmare position should it happen.Their appears to be several questions that need to be answered before entering into this type of arrangement.
So what are the undiscounted management fees ?
Their standard fee structure is a bit complicated, but an example seems to go something like this:
Douglas - they can probably get "invoice finance" (e.g. factoring) or similar for the future cash flows (rents) at significantly less than 11%, so in effect it's free money for them.
The RGI at 3%+VAT is pretty expensive and - whilst not completely out of the ball-park - you can probably save a couple of hundred £ if you shop around with RGI providers not linked to agents.
Simon, yes indeed - that's why I said "they can probably get ...[finance]... at significantly less than 11%" (because your commission is around/just over 11%) - i.e. if you can get finance at 6% there is a 5% margin on the money you advance.I would imagine the main economic driver for Choices is the (lifetime) value of the extra properties under management (and related services eg selling etc)? Sorry if it seems like prying but I'm a bit of a business model geek.
Thanks for that.
It's not taken upfront from the tenant. In effect they pay as always but the agency "lends" you the full year's rent up-front.