Building your lettings business in 2014

Building your lettings business in 2014

It is a common mistake for lettings agencies to focus on doing deals for immediate income rather than increasing their number of managed properties to help build their business for long-term success. Regular income gained from an extensive portfolio of managed properties ought to be regarded as the bedrock of such operations.

A number of estate agents have established a lettings function to help support an ailing sales business, with many having opted for the let-only route for the simple fact that a management operation is beyond their capabilities or means. Others have simply required the quick fix to income streams that this route can provide.

Differentiation

Building a sound property management business takes time, though the adoption of best practice principles will accelerate the process.

It is crucial that you can differentiate your management service from your competitors’ offerings. This could include more frequent and higher quality routine property inspections, perhaps that include a detailed follow-up report with photographic evidence of the property’s on-going condition.

Providing landlords with online and real-time information about their portfolios has also proved popular, as has the assignment of a dedicated property management specialist to oversee all aspects relating to their property, a robust rent guarantee scheme, an organised accounting process that pays landlords swiftly and accurately and a smooth checkout process that minimises void periods.

Detailed record keeping to prove your successful track record, in terms of landlord and tenant retention and success stories relating to resolved disputes, carry considerable weight when pitching for an instruction, as do testimonials from existing clients.

Promotion

Having established your clear points of difference, the next stage is to assess how effectively these are being promoted.

The ability to sell management as a concept to potential landlords varies massively among the lettings firms for whom we are invited to carry out consultancy work and training. It is an area that we concentrate on very early in the business development process and, once the skills and principles are addressed, firms always see an increase in their number of managed properties. On average, we have succeeded in increasing some lettings agents’ managed deals to represent over 90% of their lettings clients business.

It is interesting to ask frontline lettings staff, who are usually the ones responsible for convincing landlords to opt for a fully-managed service, to list exactly what the benefits of this service are and what they mean to clients. There are several benefits that staff regularly fail to promote.

Benefits

The obvious benefit that a managed landlord will experience is the avoidance of hassle relating to issues such as utility provision, assuming the agent has a 24-hour helpline for tenants to call in the case of emergencies.

Any landlord hinting that they are intending to self-manage their property should be asked the best contact number on which their tenants can reach them at 2am, which tends to make them rethink their decision.

Data that some of my lettings agency clients have shared with me in recent years show that the average length of a tenancy is greater for managed properties compared to unmanaged. Furthermore void periods tend to be shorter, often because a proportion of tenants specifically request to view only managed properties for the likely ease of problem solving. This may also account for market evidence that suggests that rents achieved on managed units compared to unmanaged ones are higher.

It may also be helpful to remind clients about the fact that they will at some stage be faced with the deposit protection minefield, as well as taking the correct legal steps to deal with a defaulting tenant.

As a landlord myself, I genuinely believe that opting for a tenant-find service is a false economy. But it is the job of lettings agents to persuade landlord clients of this at the outset of their communication and for their property management departments to convince them that they have made the right choice.