TonyW Posted June 27, 2009 Report Share Posted June 27, 2009 First let me introduce myself and say hello to all. The title to this topic sums up my experience and knowledge pretty well i.e. virtually none! I have recently inherited a modest terraced property in Manchester and was faced with what to do with it - sell or let. In either case the property needs quite a lot of work undertaking to bring it up to a decent standard e.g. Kitchen, Bathroom replacement complete rewire and redecorating throughout. As I am considering taking early retirement the thought occurred that letting may be a good option to take due to the potential to supplement my pension so this is what I have decided to do. While I am happy to undertake work associated with being a landlord (although I do need to understand what is involved in more depth!) at this stage I am proposing to put the property into the hands of a letting agent on a Full Management Service. As I am trying to budget for all costs I have my first agents guide to letting fees for a Full Mangement Standard Service and would be interested to know if this type of contract is standard fare or should I be looking for better? Fees for Full Management Standard Service shall be as follows: £395 plus vat for any letting to a new Tenant and a monthly commission of 10% +vat If tenancy renewed or extended to same tenant management fee continues at same rate with and admin charge of £30 Fee for the preparation of an inventory £125 plus vat for part furnished. Is there any reason I cannot do this myself and present to the agent thereby saving this cost? Fee for registering deposit scheme £20+ vat General terms and conditions: Purchase of the property by any party In the event that the tenant or anyone associated with the tenant or any person introduced by the agent purchases the property during or within the 6 months of the end of the Tenancy the landlord agrees to pay commission to the Agent at the rate of 1.5% While the intention is to hold the property for the long term I am not keen on this aspect of the contract - is this standard practice? Thanks Tony Link to comment Share on other sites More sharing options...
Chestnut Posted June 27, 2009 Report Share Posted June 27, 2009 As I have only ever occasionally used an agent to find a tenant I cannot comment on the details of a Full Management Service such as what you have been offered - I am sure that some agents are very good. On the basis that it is perfectly feasible to do everything yourself (e.g. deposit protection service is free) I suggest that you discuss with one or more prospective agents what you want them to do for you, negotiate terms, and make a choice that best suits your situation and requirements. But first read up (e.g. on this site) what it takes to be a Landlord...... Link to comment Share on other sites More sharing options...
TonyW Posted June 28, 2009 Author Report Share Posted June 28, 2009 Thanks Chestnut for your comments. I do understand that it is feasible to do everything yourself but at this stage due to distance and time and of course lack of experience I currently think that an agent may be the best (albeit costly!) solution - at least in the first instance. So I really do need to hunt around for an agent who will do what I want (assuming my request not unreasonable). For example I feel the following not acceptable a. Agent fees for sale of house to existing or previous tenant b. Contract renewal charges for existing tenants - should only be a nominal charge to cover paperwork etc. c. I understand that some agents apply 6 months fees at the start and subsequently take them out of first monthly payment. This will not help my cashflow. In the event of tenant default the agent is laughing and I am without funds. I believe that fees should be taken on a monthly basis by the agent - both of us then exposed to some risk. Maybe its just me being a little naive about the way this all works I am taking your advice and reading up on the subject including this site and the book Successful Property Letting by David Lawrenson - which seems to be quite detailed. Link to comment Share on other sites More sharing options...
Gee Posted June 29, 2009 Report Share Posted June 29, 2009 Tony Your instinct is quite right, don't agree to anything you are not happy with. You have asked an agent to let and manage a property, he gets his fee, why should you pay another fee if you decide to sell it to the tenant? After all you didn't ask the agent to find a purchaser! Don't forget you may wish to sell the house sooner than you think if letting doesn't suit you or is too far away from your home to effectively manage. Ask the agent to strike out the clauses that you don't like. If he won't, go elsewhere. You will find that franchises and large firms will have little leeway in varying the agreement. Do make sure that the agents are part of a recognised body such as Arla or Rics. Do beware cowboys! As a virgin, you may have little choice but put yourself in the hands of an agent to learn the ropes etc, but make sure you keep control of the agent, don't just think he can be left to his own devices - they tend to do nothing until something goes wrong or are pushed into action. Cynical but true! Since you are considering early retirement, this an ideal time to put some effort in and study the business. Good luck! Gee Link to comment Share on other sites More sharing options...
Melboy Posted June 29, 2009 Report Share Posted June 29, 2009 Deposit protection service is FREE. LA's who change a large sum of money to renew the 6 month tenancy fee are a rip-off... avoid at all costs. You are a Landlord to make money (in most cases) not to provide a lifestyle to an LA. Plenty of registered LA's are happy to conduct a Tenant finding only service for a one off fee and no renewals. In a recent landmark ruling Court case re the LA charging a 2% fee to the Landlord for selling a tenanted property to the Tenant and not telling the LA.....the LA lost his case. Read up on this website and digest as much as you can about the trials and tribulations of being a Landlord. It can be hard work or it can be straightforward with minimum hassle. I see no reason why you can't conduct your own management as a retired person.....I do. Mel. Link to comment Share on other sites More sharing options...
Trenners Posted July 2, 2009 Report Share Posted July 2, 2009 Deposit protection service is FREE. LA's who change a large sum of money to renew the 6 month tenancy fee are a rip-off... avoid at all costs. You are a Landlord to make money (in most cases) not to provide a lifestyle to an LA. Plenty of registered LA's are happy to conduct a Tenant finding only service for a one off fee and no renewals. In a recent landmark ruling Court case re the LA charging a 2% fee to the Landlord for selling a tenanted property to the Tenant and not telling the LA.....the LA lost his case. Read up on this website and digest as much as you can about the trials and tribulations of being a Landlord. It can be hard work or it can be straightforward with minimum hassle. I see no reason why you can't conduct your own management as a retired person.....I do. Mel. Melboy gives good advice ..... and all virgins would be well advised to follow it <big grin> Mark Link to comment Share on other sites More sharing options...
clarenash Posted July 6, 2009 Report Share Posted July 6, 2009 I think the best thing to do is do it the other way round and secure a tenant, before you secure your property. This way you have a guaranteed income before it becomes a cost. I learnt a lot from a property course which helps you learn how to buy a property and know its potential Link to comment Share on other sites More sharing options...
Melboy Posted July 6, 2009 Report Share Posted July 6, 2009 Call me an old cynic but in the property game I have never known anyone to undertake this sort of enterprise and do it for free. No one but no one works for nothing do they? Mel. Link to comment Share on other sites More sharing options...
Gee Posted July 6, 2009 Report Share Posted July 6, 2009 Welcome to the Forum Clare Your advice doesn't help Tony. He has inherited his property and it needs modernising. He can't let it in its present condition so there is no point finding a tenant until a few weeks before it is ready. Mel is right (as always). Don't get to fired up because you have been on a 2 hr course. Its a jungle out there and they are waiting just for you. There is no such thing as a free lunch. Of course they sound good, they are salesmen, but believe me you will pay them one way or another. My advice to you is take a couple of steps back, don't get caught up in the excitement and take some independant advice before committing yourself. You could do alot worse than read some of the posts over the last few months. Good Luck Gee Link to comment Share on other sites More sharing options...
Chestnut Posted July 6, 2009 Report Share Posted July 6, 2009 Sorry Clare, "Secure a tenant before you secure your property"........?? I don't follow! Would you explain? On a separate thread, I suggest. My hands-on 'property course' has taken about 10 years so far. Have I missed something? Link to comment Share on other sites More sharing options...
TonyW Posted July 7, 2009 Author Report Share Posted July 7, 2009 Claire, thanks for your thoughts and trying to help. Please do not take this the wrong way but I see that you have done a 'property course' which may lead you to believe that all is 'easy peasy' and you are well on the way to becoming a property millionaire or at least a very comfortably off property investor. I know that you were not looking for advice when answering this topic but reading your comments rang a little alarm bell for me - so FWIW just a few comments: I share the cynicism of others here ... 'no such thing as a free lunch' , 'who gives valuable advice for free' and would urge you to consider carefully before taking steps to implement what you have learned - at least take some independent advice from your Financial advisors. Over many years I have come across many 'get rich quick' schemes the vast majority of which are just hot air or some kind of a scam to make money by the authors. Please be aware that I am not suggesting for one minute that this is the case with your particular course - I have no knowledge of it therefore cannot comment on how effective it is or will be. What I would suggest it that you approach what is taught with a degree of cynicism and scepticism until you are sure that this is a method that you are happy with and convinced that you will make it successful. For instance consider the following: No Money Down Deals - Sounds very attractive but, do you fully understand the financial risks and legality issues? Can you really get a bargain property for little or no money - Somehow I doubt it at least without a large risk element. Property could be overvalued to give you the impression that deal is good - does your own research confirm the true value of the property? Are rental projections a true indicator of the potential achievable rent? I am sure that there are genuine discounts and probably 'bargains' to be had but believe that huge discounts are a tell tale sign of overinflated prices. I believe that some companies actually suggest what effectively constitutes mortgage fraud on your application to purchase - check the legal position with your independent advisor/accountant first. There is sage advice being given on this site by people with real and long term experience of being landlords. IMO it pays to take note of what is being said (although what is said should still be researched and confirmed before action taken ). Link to comment Share on other sites More sharing options...
Selkirk Posted July 7, 2009 Report Share Posted July 7, 2009 Listen to everyone and do the homework, then do your own thing. cheers Selkirk Link to comment Share on other sites More sharing options...
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