We believe there are two types of buy-to-let owners and these are “Landlords” and “Investors”.
First off, you need to decide what role you want to have, do you want to be a “Landlord” or would you prefer to be an “Investor”?
We see the role of a Landlord as someone that is happy to do everything such as carry out regular property inspections, collect the rent, take a call from their tenant at 10pm who has a maintenance issue.
If you see yourself as a Landlord, then self-managing is for you.
However, there are many buy-to-let owners who just want to be an Investor.
They either do not want to be a Landlord or they do not have the time to be one. They do not want the hassle of having to arrange for a contractor to deal with a dripping tap, make sure their tenant has paid the rent, or visit the property regularly to inspect it.
They would rather the money just keeps coming in and they can carry on enjoying their time hassle free.
In which case using a letting agent is the way to go – but this will obviously come at a cost.
Let’s dig deeper and compare the two in more detail.
SHOULD YOU SELF-MANAGE?
Obviously with a buy-to-let property the aim is to generate as much profit as possible.
Profit will normally be seen as the monetary value; however, it can also be seen as your time, lifestyle or ability.
How much is your time worth?
Let’s say you value your time at £100 per hour and a letting agent charges you £500 for their Find Tenant Only service.
To be able to break even, you have the equivalent of five hours to find new tenants and move them into your investment property.
You need to take into account the time it takes for all correspondence (phone calls/emails), time to travel to and from the property for viewings, time conducting the viewings, time taken to reference the tenants, time for the paperwork to be drafted and completed, time for the Inventory to be compiled and typed up and time to check the tenants into the property on the day they move in.
Added up, I believe it would most certainly take longer than 5 hours.
Let’s also compare your time against the other service letting agents offer – Full Management.
As an easy to understand example, let us say your property is achieving a rent of £500 per month and the letting agent is typically charging 10% per month – £50. If again we value your time at £100 per hour, then you would need to spend no more than 30 minutes a month managing your tenancy for it to make sense not to use a letting agent.
However, what you also need to factor in, is your lifestyle.
I know a lot of people that love being a landlord, they enjoy keeping their tenants happy, they get a buzz when they receive a call and have to deal with a maintenance issue. For them to use a letting agent would take away something they enjoy doing.
I also know a lot more people that really want the property to be an investment and really do not want to have anything to do with their tenants.
They value their lifestyle and do not want to have to drop everything because they have to drive to the property to let their tenant in because they have locked themselves out or have to start phoning around for contractors to deal with a maintenance issue.
The main aim of investing in buy-to-let property is to be able to enjoy a better lifestyle in the future, but let us also consider your current lifestyle – if you enjoy and want to be a landlord then be one and self-manage your buy-to-let property yourself, however, there is no sense in making sacrifices just to be able to say you have saved a few pounds. In which case employ a letting agent and enjoy your lifestyle.
Do you have the ability to successfully carry out your duty of being a landlord?
There can be some very serious consequences – not only financially but legally should you get something wrong.
There is page after page of legislation that you need to comply and keep up to date with.
Managing your buy-to-let investment requires a wide range of skills, you need to be able to work out how confident you are that you can do it.
Lack of knowledge could leave you exposed, do you know that you could be sued for up to three times the value of the deposit if you do not register it correctly?
SHOULD YOU USE A LETTING AGENT?
Using a letting agent is the right choice for a lot of buy-to-let owners but then again there are also a large number of landlords who prefer to self-manage.
It really comes down to you and knowing how much you value your time, how you want your lifestyle to be and how confident you have in your ability.
Remember you can change your role at any time.
If you are interested in becoming an Investor or are currently a landlord but would prefer to be an Investor, then our full management service would be perfect for you.
Call a member of our team on 01243 252984 or pop into our office in West Street, Chichester for a no obligation chat.