The Property Voice

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Building on Solid Foundations: Lettings and Management | PVP S1E06


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The Property Voice Podcast - Series 1: Episode 606art

As we progress through this first series we are getting closer to some of the nitty gritty of property investing and today is right at the heart of that. We cover lettings and management, which is not without its controversy in the debate between self-managing and using an agent but also in the sometimes different views and interests of landlord, agents & tenants. We share best practices, common areas of conflict and the costliest mistakes of letting a property in this week’s episode to help cover your backs.

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Resources mentioned

Today’s must do’s

  1. Consider getting accredited as a landlord and / or use the services of a professional letting agent instead
  2. Subscribe to the show in iTunes…and while you are at it please help us to spread the word by telling all your friends too! If you enjoy the show, a review would be very much appreciated 🙂
  3. Send in your property stories, questions or moans to podcast@thepropertyvoice.net and we will try and feature YOU on the show too!
  4. If you would like to, grab yourself a copy of the book: Property Investor Toolkit (link in Resources above)

Get talking!

  • Join in the discussion, either here in the comments section below, or anywhere else on the Blog
  • Start a conversation on Twitter with us @PropertyVoiceUK or on our Facebook page

Transcription of the show

Hello and welcome to another edition of The Property Voice Podcast, my name is Richard Brown and as always it is a pleasure to have you join us. We have something a little different for you in today’s show, which I will let Casa explain in a second. Just before I do…I should point out that we will be recording this episode before the general election result and so it is possible that some of what is shared today will change. Whilst as a matter of detail this is possible, in many ways the principles will remain.

So, Casa, I hope you are well…why don’t you share with the listeners what they can expect from this week’s show?

Casa: Hi Richard, I am really well thank you. Although, I am just a little disappointed in one respect to be completely honest with you. I know that you had an interview with Damien Fogg for today’s show and I didn’t get to ask him any questions but I guess I will just have to get over it. It just unsettled by bits and bytes a little that’s all.

Anyway, coming up in today’s show we will be talking about property lettings and management in the Property Chatter segment. I know you have some good tips and best practice to share yourself Richard but you also have that interview with Damien as part of that too…and no I’m not jealous one little bit.

Your Voice this week will be an extract of something of a moan, or a rant even, from a fairly disgruntled investor who posted a comment on our website about surveyors…it’s probably a good job Damien didn’t get to hear about that when you two spoke, although I would have liked to have posed that question to him myself. Finally, we have the Shout Out and we have a resource that is right on topic to share this week.

So, less from me…I think I’m OK and recalibrated now, so let’s get on with the show now shall we?

Property Chatter

Today’s topic is: Lettings and Property Management

Thank you for the introduction Casa; I will see if I can get you involved in a future interview if that’s OK. Now, as Casa alluded to, we have a guest appearance from a ‘subject matter expert’ this week, as Damien Fogg is a self-managing landlord among other things and he shares his top tips with us in a quick-fire Q&A interview. This is to compliment my own position as an outsourced landlord investor.

So, onto the topic of lettings and management - this is both wide-ranging and at times can also be controversial.

There are literally hundreds of rules, responsibilities and areas of compliance for landlords and others involved in the private rented sector and there is no room for amateurism or complacency now.

Similarly, a rented property brings together landlords and tenants, who at times have differing views, needs and interests and at times this is fuelled by some partisan interest and lobby groups that sometimes put us at odds with each other, when really there is no need.

Just for the record, whilst there are some rogue agents and landlords operating in the private rented sector; there are also a very substantial majority that are decent, accommodating and compliant with the law. Similarly, there are both decent and not-so-decent tenants out there too. My aim today is to share some best practices that we can adopt, highlight some of the greatest areas of contention, point out the costliest mistakes and then direct you to additional resources for more information.

Now, if you happen to be following along in my book: Property Investor Toolkit, today’s episode is aligned to section 5. As always, I intend to make the content different and so valuable in its own right, whichever format you chose to use. I plan to run through the following headings here therefore:

  • My top 10 Lettings and Management Best Practice Tips
  • The top 5 areas of contention between landlords and tenants
  • The top 5 costliest mistakes of poor lettings and management practice

So, it is something of a chart show today if you like…

My top 10 Lettings & Management Best Practice Tips

  1. Accreditation or enlisting the support of a reputable agent

Option 1 – Use the services of a good, reputable letting agent (member of both an industry trade body and redress scheme)

And / or

Option 2 – Get accredited by one of the main landlord associations (NLA or RLA) if planning to self-manage

  1. Be legally aware & compliant

There are, according to some commentators, hundreds of different rules, regulations and other matters for a landlord to comply with and so we need to become familiar with our responsibilities here.

There is a distinction between responsibility and accountability that is important to note. We can retain responsibility or we can delegate this by giving authority for others to act on our behalf, such as letting agents say. However, we can never delegate our accountability legally and so we should always remember that.

For example, should an agent fail to issue prescribed information in time, it is us that has to face any penalties and consequences of them doing so. This means that we cannot abdicate our responsibility, we always retain ultimate authority for our properties and how tenants are treated.

  1. We should always undertake proper due diligence and checks

Following on from the point about responsibility & accountability, we therefore do need to know who we are dealing with and who could be acting on our behalf. This applies to letting agents and tradespeople primarily and we did address research and due diligence in an earlier episode, so no more on that here. However, we also need to know who we are letting into our properties and that means undertaking proper reference, affordability & potentially lifestyle checks on potential tenants too.

  1. We should keep proper records & document everything properly

HMRC want their tax, the courts will require evidence of tenancy agreements and rental receipts if necessary and tenants need to know where they stand and what is expected of them. This means documenting things clearly & properly in writing and being able to evidence income & expenditure if asked to do so.

  1. Ensure our properties are safe, decent & habitable

Do unto others as we would have done unto us…or, in other words; if we were renting a property ourselves - how would we feel if there was damp, no heating or hot water or an insect infestation? This is such an obvious point to make and yet some landlords try and get away with providing indecent accommodation or responding in a timely fashion to repairs and maintenance issues. Please don’t be one of those types…

  1. Be commercially minded

Budget for repairs, maintenance & updates. Take out adequate insurance. Stay on top of rents and arrears and keep voids to a minimum. 8% vs 95% rule.

  1. Get good at marketing

Letting and re-letting is a marketing exercise, so understand your market, your target tenant, pricing or rents, the competition and customer retention approaches as with any marketing plan.

  1. Treat tenants as people & property as assets

Tenants deserve to be treated with dignity and respect just as we would. Our properties could last for decades and be our pensions, so look after them.

  1. Communicate well

Simple, clear, polite, early & followed up (i.e. evidenced) in writing works best

  1. Run the property(s) as a business

This is a catch all really – if we adopt a professional & business-like approach we should find many of the former point fall into place easily. Understand the basics of running a business and apply these to our property investing therefore.

Top 5 areas of contention between landlords & tenants

  1. Rental arrears – can’t pay / won’t pay
  2. Return of deposit – usually results from incorrect written expectations at the start
  3. Damage versus fair wear & tear – failing to understand the difference
  4. Cleaning (carpets & ovens) – expectations & standards
  5. Pets – permission, damage & cleaning

Top 5 costliest mistakes we can make in lettings and management

  1. Inadequate insurance – all risks, public liability & damage
  2. Poor maintenance programme – it devalues our asset
  3. Inadequate reference checks & due diligence on agents – can lead to fraud or corruption and deeper issues
  4. Voids & arrears – can wipe out our cashflow and profits
  5. Incorrectly issued paperwork (e.g. Prescribed Info) – can cause fines and even eviction notices to be thrown out

Next, let’s have a listen to that interview with Damien Fogg.

 

RICHARD: Okay, so I’m very pleased to have Damien Fogg here with me today and he’s my first guest on what might catch on as a subject-matter expert and who’s kindly agreed to be my guinea pig for my quick-fire Q and A spot. As I mentioned previously, I don’t intend to make this an interview-based show but it just makes sense to get somebody else’s take on a subject at times. So, as an investor that likes to outsource, rather than self-manage my own properties, I decided to quiz Damien for his ideas as a self-managing landlord and investor. So, as we’re talking about lettings and management, Damien, thank you so much for joining me…

DAMIEN: Not a problem.

RICHARD: Great! Are you ready for some quick-fire questions, remembering that were looking for probably a rapid one or two sentences as a reply. Is that okay with you?

DAMIEN: I will do my best to be quick-fire but I promise nothing…

RICHARD: Let’s see how you get on… Okay, so first off, Damien, tell us about your experience as a self-managing landlord and your wider experience in property generally. Give us a sense of scale and time if you don’t mind.

DAMIEN: I’m a charted building-surveyor, landlord and developer, so I have invested in property for probably, over a decade now. And as part of that managing property for around 10 years, the number of properties probably varied along those lines but I think at the peak, it was around 800 properties at one point. I currently self-manage all of my own portfolios but still use agents for the tenant-find process.

RICHARD: Wow! Okay, so it sounds like I got the right guy to answer these questions. Thanks for that. So what would you say are your top 1 or 2 tips to a new or fairly new landlord investor, specifically relating to lettings and/or management?

DAMIEN: I think the top tips to someone new in self-managing, would probably be to go and get yourself educated on what your responsibilities are, what the law insists you do, etc. even for self-managing landlord, you can still outsource, so if you don’t want to be involved in say, viewings or finding tenants, you can go and find an agent to do that. If you don’t want to do inspections, get someone else to. If you don’t want to go through the eviction process yourself, you can use a specialist to manage that part for you. I have found personally, it works out cheaper to pay for these items when required, rather than paying an agent each month and potentially not doing any work. I would say probably, that my most important tip though, would be to communicate. And it’s an absolute most. I think if a tenant raises an issue of any kind, get back to them, whether it’s just a holding message to say “Hey, I’m going to get it sorted by this date”, just let them know. I think anybody feeling ignored or like they feel like they were forgotten about, it can just increase a problem that could have been easily resolved and it can just escalate then and it can just potentially cause bigger issues down the line. What can be a related tip for that one is, it’s very easy for texts or emails to be misread or misinterpreted, so I think if there’s any potential contentious issues, maybe just do it over the phone, but always follow that up in writing just to cover yourself.

Richard: Okay, brilliant! Quality tips really, mix and match, communicate and I think one of those that you mentioned is education, which brings me to my next question, really. What are your views on how a self-managing landlord can make sure they are aware of their responsibilities and stay within the law?

Damien: I think the easiest thing to do is join a trade body. The three big ones I think are the National Landlord Association, the Residential Landlord Association and the Guild of Residential Landlords. You can join them for around £5 to £10 a month, something like that and you can get loads of useful information and they have some sort of FAQs and contact number where you can get specific advice just for yourself. The other good place to go is the internet. Like Private Rented Sector Code of Practice, Shelter & the Government. I think if you search ‘private renting’ there (the Government site), its full of all the important basic facts, very useful and they give the links on to other sites that you can go to for a bit more detail. And then, a tip that served me quite well over the years, is “Go where the tenants are going be sent themselves”. So look at the information from the tenants’ perspective. So, if there ever is an issue, your tenants are likely to be directed to somewhere like say, Shelter. Make sure you know what information they are being given and make sure you are doing everything you’re supposed to be doing and not falling foul of any laws or best practices, and you’ll find a lot more information on Shelter.

Richard: It’s a really good idea. Putting yourselves in their shoes as it were and seeing things from their perspective. I like that tip. So, what would you say is the biggest potential pitfall or warning for a relatively inexperienced landlord or investor?

Damien: I think, probably the biggest pitfall is getting a bit too personally and emotionally involved in the whole process. So start, way back in the beginning like decorating the property for the wrong tenant type or according to your own standards. And then maybe, taking it personally when a tenant stops paying and you start being emotional. I think it’s important that you keep it professional and courteous. Your job, at the end of the day, is just to provide someone with a good home that they can call their own  and then just leave them alone. Their job, on the other hand, is to pay you for that service. So, as soon as one of you stops holding up your end of the bargain, that’s when it’s time to just end the arrangement. You don’t owe them any favors, they don’t owe you any, and in the vast majority of cases they won’t give you any favors. It may sound a bit of callous but at the end of the day, it’s just a business that we are involved in. There’s plenty of room to be nice to people and be professional but I think letting people break some rules of that contract, it just doesn’t good make business sense.

Richard: Yes, I agree. Less emotion, more professional, more business-like in summary. Good point. A little bit of a different question perhaps, but what is the strangest or funniest experience you have had with a tenant or a property?

Damien: The funniest one for me was doing an inspection on a property. I was on my own and finding that the tenant completely replaced the entire kitchen to a much higher standard, simply because they are going to stay there forever, and they wanted a better kitchen! So, that was a nice surprise for me. And I would say, probably the strangest one though, would be, being asked by a tenant to meet them in a location that wasn’t their flat and there was nothing dodgy going on. But she wanted to let me know that she vacated the property two and a half months early because of a poltergeist!

Richard:  A poltergeist?

Damien: A poltergeist. She was more than happy to keep paying the rent but she would want to meet me somewhere other than her flat to warn me about the poltergeist and tell me to not do any viewings there. I wasn’t exactly a hundred percent sure quite how to react to that one, so I think that was the strangest one.

Richard: I should ask; did you see it?

Damien: I never went to the property but no one else ever saw i or claimed to have seen anything. But it was quite nice that the tenant was thinking of me, or didn’t want me to get well, what does a poltergeist do to people?

Richard: Scare them?

Damien: Well, she didn’t want me to get scared then, so I thought that was very nice of her.

Richard: Very nice indeed. Okay, so let’s get back to reality a little bit and keeping ourselves on top of things like receipts, compliance issues and maintenance, that sort of thing. Do you have any systems that you use or landlords should use or have in place?

Damien: Yeah, outlook and excel.

Richard: Simple as that?

Damien: Yes, you wanted quick answers, these can’t get any quicker…

Richard: It does it all, one is a calendar and reminder system and the one is a log, I suppose. Yes?

Damien: Yes, so I use outlook for the diary settings and as reminder systems for things like CP12, and the gas safety and any inspection or anything like that. But I also use it as a document store for any communications like what I talked about earlier, I keep it saved in an outlook folder. And then for Excel, I just use that to keep on top of all the rents and any deductions. So for each property, I have each own file, and a master file that is updated by them all. So that means, once a month or every couple of weeks, you go into the banking, make sure everything’s paid. It’s a nice, simple way to keep on top of it. I’d probably say, that combination is good if you manage anywhere up to a 100 or 200 properties. After that, you probably would see some benefits of paying for a completely bespoke system where it’s all just in one place. But I’ve never found it, even with 800 properties under management, we probably could have done it with Excel and Outlook without too much of hardship to be honest.

Richard: Keep it simple. You’re using everyday systems that you are familiar with.

Damien: Exactly, I do know how to use them so…

Richard: So last question. I don’t mean to put you on the spot. But a just a few more questions in a quick fire way. Tell us a little bit more about how we can find more about you or connect with you in some ways. Again, quick-fire answer…

Damien: Ok. So, I’ve got my own podcast over at the property investor podcast. It’s basically my random musings, as well as my co-host Anna Harper and we get other investors on, so people can get tips and lessons learned from experienced investors, hopefully avoiding some of the mistakes themselves. Or, if your prefer reading, I’ve got my own blog. Head over to buytoletstrategy.com. So people can reach out and get in touch with me through there, if they want.

Richard: Fantastic! Well, Damien, thank you so much and we really appreciate you for being my guinea pig in this first but what might be a repeatable segment in the show. But I really appreciate your insights, they are very valuable to me.

Damien. No problem. Love what we’re doing, Richard!

Richard: Thanks a lot!

*******************************INTERVIW END*************************************

Hopefully that will have given some additional insights and it was noticeable how similar some of our advice was, despite having a different approach to managing our properties. I guess it boils down to running our investments as businesses and accepting that we have responsibilities to adhere to. Damien did mention afterwards that he always recommends that a brand new landlord investor uses an agent first-time around – so for the first property and first tenancy. After that I think you can guess where his preferences lie.

Personally, I have a different take as I value my time and want a more hands-off or passive approach to my own investing. For example, I was chasing crocodiles in the Amazon a couple of weeks ago with no communications – that would have been more difficult if I were self-managing, despite the fact nothing actually happened when I was away.

It will always divide opinion and I really don’t mind which route you choose to take; what is important is to take it seriously and follow the best practices mentioned in this episode.

That said – it would be great to get your views on the subject; so let’s hear them. Right now though let’s move on with Casa and Your Voice.

Your Voice

Casa: We have another 5 star listener review to share now Richard, this time from long_____john, who says:

“Another quality resource from Richard Brown.

I love the format of the podcast and really look forward to every episode. This podcast is slightly different from all the other property related podcasts and its all the better for it. Keep up the good work.”

Hey Long____John, you have probably just made Richard’s day with that name check, so I am sure he will be pleased to hear that! Please do keep those reviews coming in, we love to see your enjoyment of the show and get feedback.

I also wanted to share with you a sad tale from one of our blog readers, Keith Parsons. To say he was unhappy with the experience he had with several surveyors is possibly an understatement but at least he contained his rage sufficiently to get through the moderator!

In a nutshell, he sold his proper£725k only to have a lender valuation of £625k to collapse the sale. He then sold for £670k and again the valuation came in at £550k this time! It wouldn’t be so bad had 2 local agents and even the BBC’s Escape to The Country programme not valued it between £725k and £750k between them.

Keith is under offer again at £655k…so let’s see how the valuation comes out this time.

It is worth taking a look at Keith’s comment and so we will link to the post in the show notes but Keith, if it’s any consolation, we feel for you. Good luck in persuading the surveyor this time around…keep us posted.

Thanks to Long___John and Keith Parsons for contributing to this week’s show – who will it be next time I wonder?

Shout Out

Today’s Shout Out resource has to be the recently introduced released Private Rented Sector Code of Practice, which is a cross-stakeholder collaboration of both mandatory (must have) and ideal (nice to have) practices for us to adhere to. Check it out to see what is expected of us.

OK, so we have had an action packed week this week and although we cannot possibly cover all of the ground we need to in such a vast topic, I hope you have a good insight into the headlines and where to go for more information.

I would be particularly keen to hear your property stories…have you had a poltergeist like Damien, a bad survey as with Keith, or half the sink gone missing as I have experienced? Do get involved and share your stories, we would love to hear them.

As usual, the show notes will be on our website with all the links and references included, so check them out and drop us a comment perhaps. Thank you very much for listening and getting behind the show, we appreciate it very much.

But for now and until next time on The Property Voice Podcast…ciao-ciao

 

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  4. Musings: Diary of a Property Investor Part 2

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