Most of you are probably blissfully unaware, but last week I released my very first eBook. It’s called “Death of The Agent“; it’s a detailed guide on how to find tenants without a letting agent. It’s aimed at novice landlords, but suitable for anyone that wants to give me money (It costs £3.99).
I didn’t promote or make a big deal about my eBook because:
1) I didn’t want to “push” anything onto my readers
2) I don’t particularly care if it sells or not
The reason I’m mentioning it now is because I got a message earlier from an extremely successful BTL landlord (way more successful and experienced than me. Probably not as sexy or smart, though). This is what he sent me:
I own about 70 properties, about 20 where I live. Most are managed for me. Is there benefit in doing myself, in your opinion?
Are there benefits of fully managing a large property portfolio?
Hell yeah. There are potentially several benefits, but whether you’ll appreciate those benefits will depend on what type of person you are.
- The obvious benefit is the thousands and thousands of pounds that will be saved annually.
- If you’re one of those people that enjoy depriving letting agents from your cash for doing very little work, then the reward is priceless
- Managing your own properties will give you more control. If you’re a control freak, perfect!
- If you like hardwork and being bang in the centre of the operation of your business, also perfect!
However, if I was in his position, I’d ask myself the following questions to get the best answer…
1] Can I afford to have some other chump(s) to manage my properties?
If i’m living life like a bonafide pimp, consequently able to employ someone to wipe the shit out of my arse, then why not? If I don’t need the extra cash that I’d save from employing an agency to manage my properties, then I wouldn’t take on the extra stress for the sake of gaining money I don’t particularly need.
However, if my portfolio and income has taken a real battering since the recent economic downturn, like it has with many high-flying landlords, then I’d calculate how much money i’d save and then make an informed decision. I’d definitely do the maths first before making any decisions.
After doing the math, do the extra rewards look rewarding enough?
2] Do I have time to manage my properties?
Managing a large portfolio is time consuming, so i’d need to assess whether a) I have the time to manage the properties and b) i’m prepared to spend less time on the other things I do in life.
Furthermore, I’d consider my location in comparison to my properties. If my properties were scattered all over the country, I’d assess whether I could realistically drop everything and get to a property in case of an emergency. In this case, I may make a compromise by only managing the properties realistically possible, based on location.
3] How will managing my properties affect my quality of life?
I’m only going to live once, and I plan on making the most of it. I refuse to be one of those people that dedicate their entire life to work. Fuck that bullshit. I like to balance my life between work, friends, family and sex with strippers (actually, strippers can be classed as “friends”). Regardless, operative word being “balance”
If taking on such a large task will massively reduce my quality of life, I wouldn’t even bother thinking about it. However, if taking on the work would increase my quality of life (e.g. being able to spend more money on higher class strippers), then I’d do it!
It’s all about life enrichment!
4] Do I want to work harder than I already do?
Whether I work hard or not isn’t really the issue here. The real issue is whether I want to work harder than I already do.
I’m not one of those people that thrive off hard work. I’m one of those people that like to earn as much as possible by doing as little as possible. So this really is a question based on your ethics.
For me, if I didn’t need/want the extra money, then I wouldn’t work harder to make the extra money. On the other hand, if I was one of those people that relish in seeing the reward for hard work, I’d work harder to make more money.
5] Would my long term future be better?
As mentioned, I’m against working hard ALL my life. However, i’m all for working hard for a small portion of my life to enhance my future. If managing my properties for the next 5- 10 years would massively improve my furture, then fuck it… I’d roll up my sleeves and slog away!
6] Do I know enough?
Letting agents generally know the rules and regulations of the industry, so they’re well prepared. However, not all landlords are aware if the regulations.
If someone owns 70+ BTL properties, it’s more than likely they know the relevant laws. However, if I wasn’t confident about my knowledge, I’d be hesitating to take over full-management for so many properties.
7] How much are the management companies actually doing for me?
I’d assess how much the existing management companies are actually doing for me. From my experience, if anything goes wrong regarding the property(s)/tenant(s), the agent contacts the landlord anyway, to get further instructions.
If the agent is simply relaying messages to get a response from the landlord, then they’re not really doing anything besides from slowing down the process of resolving a situation, right? When something serious happens (e.g. tenant falls in arrears) the responsibility typically falls back onto the landlord anyways.
8] Am I a people’s person?
Any landlord that manages a large number of tenants will need to be a people’s person. The landlord will need to be patient, confident, understanding and should always be willing to be contactable, otherwise shits going to hit the fan!
Moreover, if I knew confidence and assertiveness wasn’t in my nature, then I wouldn’t bother managing the properties/tenants because angry tenants screaming down the phone can be frightening and intimidating.
A landlord needs to be able to stand strong and make good decisions, as opposed to decisions that he/she was bullied into.
If I were to manage so many properties…
I wouldn’t even tackle the issue by setting the target of managing all my properties. I’d simply enter the situation by trying to manage what my capacity would allow me to. If it turns out I can comfortably manage all my properties, then so be it.
If I was seriously going to take on the responsibility, I’d do it slowly, a few properties at a time. It’s the only reasonable option as far as I’m concerned.
This approach would allow me to gain responsibility slowly, and allow me to assess whether I can accept more responsibility in small stages. If I hit my limit at 50 properties, and I know I can’t or don’t want to take on more responsibility, then I can stop the process of migrating the properties under my own management at that stage.
At least this way I would have reduced the costs of employing a letting agent as much I possibly could have. Even if I managed to take on the responsibility of 20 properties, I would have potentially saved thousands per year.
The other option
An alternative solution is to actually employ someone local to manage all the properties. It could be cheaper than employing multiple agents over the country. Additionally, working with one “in-house agent” would allow for a much more controlled and streamlined operation. Once again, it’s about weighing up the costs and being able to find the right person for the job.
What are your thoughts?
How about you? Any thoughts? What would you do? What questions would you ask yourself? What would you take into consideration?
I’ve rambled on, haven’t I? Apologies.