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Update:The Canterbury agent that went into voluntary liquidation after closing down appears to owe more than £400,000 to landlords and tenants.Joseph Newman Letting and Estate Agents, which does not seem to have belonged to any of the membership bodies or schemes, and claimed to be one of the largest agents in the area, has reportedly left over 300 tenants and landlords wondering whether they will see their money.
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I am currently researching & considering whether to start up a letting agency in West Yorkshire but what I'd like to know is what does the best letting service provider look like in your opinion? What do you need from them and what do they not currently offer?
I do have some experience albeit limited however I also have no interest in starting an agency that offers no additional value to the market or myself. I.e. I want to be profitable, sustainable, innovative and meet the customers expectations.
Would love to hear your thoughts.
Hi Rick,I am sure you how aware you are - and please forgive me if you are - but you are considering entering the lettings sector at one of the most challenging times in the history of the industry imho.Increasing legislation, banning of tenant fees, margins being squeezed by on-line agents in a race to the bottom on price, onerous new regulations ... the list goes on.There are now over 160 Government statutes and regulations in order to manage a property and tenancy compliantly. Are you aware of these?Many agents are downsizing, turning to sales, or struggling to find landlords at the moment.If you were going to enter this industry, I would suggest going the franchise route. All the training, compliance, systems, networks etc. are already in place.Put "franchise" into the search box and you will find several discussions on this topic including this one:Franchise company or go it alone?...To answer your question - I think lettings agents need to offer a much more "holistic" approach to landlords, offering support and inputs about tax and mortgages, perhaps running landlord evenings and events.Communication is a big issue for me. I expect to receive a response to my emails and phone calls on the same day and to be notified of progress, even if only to say "Tried to chase the rent arrears, could not get hold of tenant, so text sent. Will chase tomorrow".I have had a poor experience of some agents who are complacent when dealing with issues and do not communicate or respond in a timely manner.I hope that gives some food for thought?
Put yourself in the position of a LL who is being clobbered by S24 etc.
Such LL need to reduce costs wherever they can. Getting rid of the LA is the easiest way to do this
Most LL live within an hours drive of their rental property.
No LL needs a LA in such cases.
You would do far better working for a LA.
You will then see how business declines
Then decide whether you wish to risk investing in your own LA.
The days of just being a LA are over
You need to have multiple offers
The only way LA will survive is to amalgamate
The one man bands don't stand a chance.
LA will need hundreds of properties to survive not just a few hundred.
Now is not the time to start as a LA.
Insightful comments which I really appreciate. Suggests to me that I need to research further but the future looks unsettled to say the least. Appreciate your in depth feedback!
. Estate agency and lettngs. Failed 2008. ( This very sad period in my life involving blood, sweat and tears and great financial loss) so my experience may cloud my judgment.
Having personal experience with a well known franchise. They use projections that are unrealistic. They pick the best performing ones to base figures to entice you into believing it's achievable.
Standalone lettings agent will not stack unless high volume.
Lettings is normally a bolt on to provide cashflow for estate agency.
I would avoid for all the reasons outlined above by other posters and more.
lots of people unless far away from property will self manage in future. And with Rightmove, zoopla portals being opened up to advertising direct access.
Why choose a uphill struggle? A business with squeezed margins and no barriers to entry ( forthcoming changes will eliminate lots of lettings agent) no more double dipping, charging tenants fees.
What's your net real profit margin? And how do you create cashflow.?
Factor in business rates, offices, heating, lighting , Rightmove, zoopla portal fees, advertising fees and insurance, petrol, car. ( There is lots of other costs)
How many properties to manage just to break even.?
If your office FIXED costs £3000 to run a month, with 10% pcm full management.
average rent £800.Then 3000/80 = 37 properties before you even make any money.
Average rent £600 then 3000/60 = 50 properties before you even make any money.
You might say it's not going to cost that working from home...
Ring up Rightmove and ask how much fees are today!!
Expect not to draw any wages for awhile. If you like working for free there is plenty of volunteer work around.
All that effort for very little reward. Take a real look at why you want to do this?
I contend you will make more money working in an estate agent as a Lister.
Create and mind your own business ( high margins)
(as you will never really going to make yourself decent money minding someone's else for a small percentage.)
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Wisdom - an integration of knowledge, experience, and deep understanding that incorporates tolerance for the uncertainties of life as well as its ups and downs.