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  • Entrepreneurs

    Letting Agents - Easy Peasy Money - Get Rich Quick

    Now before JP jumps in his car to practise his Cage fighting on me, I know the above couldn't be further from the truth.

     

    I looked into setting up a letting agency a couple of years back (had chance to take over small estate agents near me and add letting to it) and JP very kindly offered to let me spend a day with his company.  I also know other letting agents, and I decided against it as it seemed like too hard work for me.

     

    Anyway, my point (as I'm wafflling) is have the GRQ brigage with no funds decided since the death of NMD this is the next Golden Goose. 

     

    Every time I drive around there's a new letting agents board popped up.  They only have 1 or 2 properties and most of them disappear within a few months, especially the ones who open up small shops straight away. But there is a plague of new boards right now.

     

    Is it just my area, or does every area have a new Tom Dick and Jane thinking they can just do this only to find out the harsh realities of how hard it is to be successful in this field.

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    Yes they are everywhere.

     

    I read weekly tales of letting agents going bust. They are not ARLA / NALS members, hence no landlord money protection insurance.

     

    You need A LOT of properties under management to cover your fixed costs - circa 200 IMO for a small agent to have any chance. How many can achieve this.

     

    I see offers of 5% commission, or 6 months management free. We don't compete. We know that we will be here next year and they will be gone.

     

    This industry should require all agents to have audited financial compliance in place and insurance - landlords are losing millions through rogue agents.

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    Yes many have been trying to get in on the act - one estate agent I know couldnt sell any  houses so decided to set up a lettings arm as well.  Their `Head of Lettings` was a 22 yr old girl just out of Uni. She was the only operative they had.

    They tapped me up once and tried to get my portfolio. They wanted to take £1500 off me a month and hand it in effect to  someone who had zilch experience and didnt even  no what LHA stood for. I pointed this out to them and their response was.  ` well shes bright as a button and i`m sure she will pick  up the gist of it soon and maybe she could shadow you as you go round and that would help her learn!!!!    So I said - Let me get this right - you want me to train someone up for you , who will  slow me right down and in addition I  pay you £1500 a month for the privilege!!!!  

     Madness and Desperation were the two words that sprung to mind that day!

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    Jonathan Clarke. http://www.buytoletmk.com

    Hi.

     

    Yes one agent near me has just gone under https://www.thisisplymouth.co.uk/Concerns...story.html

     

    and i know of more that went under a few weeks but this just slipped under the radar of the local paper.

     

    Regards

     

    Stuart

     

     

     

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    I agree with Glenn, in order to make lettings work you need volume (any where above London) these people are thinking its easy and just popping up all over.

     

    We have 5 new agents that ive never heard of come to light in the last 2 months. only one is on rightmove, none advertise in the paper and non are NALS or ARLA

     

    Also most of them are offering 5% and £99 tenant find fee. One is actually free management for the first 6 months WTF

     

    If LL want to go to them thats fine by me. We are not in the game of buying business and im sure other letting agents will agree with me when i say they wont be there for much longer. These fees are not enough to sustain a businss.

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    John Paul MARLA
    Managing Director
    Sunday Times Letting Agent of the Year 2014
    Investors In People GOLD accreditation
    http://www.thecastledenegroup.com
    I wil agree on the hard work and the volumn required. It certainly isnt a way to get rich fast. It took us best part of 8 months to get accepted by ARLA. We only have two vacant propertys in our window at the moment but the 4 staff involved are still extremley busy as there are many things to carry out.
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    [Image: New-logo2.png] Manchester based investor. I buy, sell, renovate and rent investment property in East/North Manchester Wink email: mike@brentwoodinvestments.co.uk Call: 0161 681 3724

    im looking to buy a few smaller letting agents so you would think this would be a great time to pick them up. I wish!!

     

    Im speaking to agents who literally value their business 10 times more than what its worth and then some

     

    Now i know valuing a company is like valuing a house (everyone has their own way of doing it) but for a company to be losing money on a monthly basis, with no assets to speak of and yet they want £175k for the "book" with NO deferrement is crazy

     

    I spoke to another one who had a small letting agent (70 houses or so) made her a small living but similar to the example above (no assets) and they wanted 100k

     

    The only thing that see through my rose tinteed glasses is that if theirs are valued correctly i think mine should be worth 2 3 gazillion Smile

     

    The only reason i can come up with is that people who have jumped on the letting agents bandwagon are generally not that business savy and just pick a figure out of their head.

     

    These one man bands dont phase me, they will be here today and gone tomorrow.You dont need fortunes to start up a good letting agent, just determination, work ethic, personality and a bit of luck thrown in

     

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    John Paul MARLA
    Managing Director
    Sunday Times Letting Agent of the Year 2014
    Investors In People GOLD accreditation
    http://www.thecastledenegroup.com
    Christ - I don't know how I managed to pull it off :-)
    John Paul said:

    You dont need fortunes to start up a good letting agent, just determination, work ethic, personality and a bit of luck thrown in

     

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    Hi JP

    This intrigues me.  When ever I have thought of offloading my portfolio onto a letting agent  I`ve always thought the rental income commission they would get would be equivalent to a small business and a living wage for one person and that some people might be prepared to pay a premium for the whole lot as it employs them in effect and gives them a good base on which to grow that business.

    In the case of the below example what would you say the ball park value should be for that business as 100K yes does seem rather high. 

    Is there a rule of thumb which is easy to apply when valuing a rental business eg looking at the gross rental income.

    That may be too simplistic but there must be a value range you work on  

    Cheers 

    Jonathan 

    John Paul said:

     

    I spoke to another one who had a small letting agent (70 houses or so) made her a small living but similar to the example above (no assets) and they wanted 100k

     

     

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    Jonathan Clarke. http://www.buytoletmk.com

    So it's not just my patch with a letting agent a day popping up. Every time I advertise in the paper, i get half a dozen texts with No Let No Fee just £xxx.

     

    What I love about discussions like this, is the funny stories it throws up.  Can't believe Jonathon didn't accept the offer of paying £1500 a month to train his staff.  And I bet he had a serious face on.  Why don't you take someone on yourself (my longer term plan when volume is at right level) and train them up, they can then do other things for you like paperwork etc etc.

     

    As for 100k+ for loss making companies, some people really do live in dreamland.  Is this the dot let bubble or something.  The agent who offered me his buisness, wanted around 17k for his book, but couldn't get his accounts off him.  Admitted it was loss making with his 40k salary, but wanted me to hand over money with no sight of books. Ermmm, No.

     

    Funnily enough, he closed down a week ago, and he was once a well established agent with 3 shops and alleged 200k pa profit. 

     

    JP, if you will take 70% BMV, i will buy your business.  About 1.4 gazillion I make it.  Will a cheque do :-)

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    Hi Jonanthon.

     

    Valuing a business is very different for different people. I will value in a way that you would think im mental Smile the way ive bought my agencies was to be very thorough in the DD. Make sure i know the business inside out, know where the money is going, what its being spent on and is any being wasted. ill ask questions and make statments that would make most people cringe, but they need to be asked. Also Is there any synergy with existing Castledene?, can we pool resources, pool staff, save money that way.

     

    Also owners that work in the business tend to pay themselves rather well (if the business allows) if i put a manager in there ill be paying them lower than the owner.

     

    Once i know the business has potential, i try and see what the seller wants. Do they want all the money in one go (i walk away immediatley if they say yes) or can i make the business pay for itself over a period of time. Much better if they will accept deferrment

     

    Other question is how quick can i get my money / deposit back out. i would like 3 years but will go as long as 5, especially as the time period is calulated on the current state of the business and not the state of play in the future

     

    JP

     

    PS Paul 1.4 gazillion and we have a deal, cash only up front

    Jonathan Clarke said:

    Hi JP

    This intrigues me.  When ever I have thought of offloading my portfolio onto a letting agent  I`ve always thought the rental income commission they would get would be equivalent to a small business and a living wage for one person and that some people might be prepared to pay a premium for the whole lot as it employs them in effect and gives them a good base on which to grow that business.

    In the case of the below example what would you say the ball park value should be for that business as 100K yes does seem rather high. 

    Is there a rule of thumb which is easy to apply when valuing a rental business eg looking at the gross rental income.

    That may be too simplistic but there must be a value range you work on  

    Cheers 

    Jonathan 

    John Paul said:

     

    I spoke to another one who had a small letting agent (70 houses or so) made her a small living but similar to the example above (no assets) and they wanted 100k

     

     

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    John Paul MARLA
    Managing Director
    Sunday Times Letting Agent of the Year 2014
    Investors In People GOLD accreditation
    http://www.thecastledenegroup.com