What can be outsourced in property?
Whether you currently have one rental property or a growing portfolio, fulfilling your role as a landlord, managing tenancies, keeping on top of compliance issues, dealing with funders, partners, agents and the like can be quite overwhelming, particularly if you are running your portfolio whilst holding down a full time job.
Outsourcing some of the required roles can unlock significant time savings which should allow you to dedicate the necessary time to grow your business further.
Outsourcing has become more popular in recent years with a number of property folk engaging the services of virtual PA’s, dedicated property viewing services and using retainer agreements with property repair firms. This month we look at some of the roles for which you could consider outsourcing and some of those roles that I believe you should retain direct control of:
Property Management:
I believe that your property journey will be more enjoyable if you retain the services of a good quality managing agent for your properties. For a fee of approx. 10% of the rent you can have a third party dealing with your tenancies, ensuring compliance, undertaking periodic inspections, collecting rent and providing access to a team of trusted tradespeople who can undertake repairs. Indeed without a professional managing agent it is questionable whether you can expand your portfolio beyond your current geographical location. Not only will the agent collect the rents and chase any arrears but they can also prepare the various statements that your accountant will require at year end. In short I think the fee that they charge is hugely worthwhile.
Repairs & refurbishment:
A lot of investors, particularly when they are starting out, believe in the mantra of “sweat equity” and look to buy a property in need of refurbishment with a view to undertaking the repairs themselves and to then sell on at a profit. One advantage of this strategy is that it gives you a better understanding of construction methods and typical repair requirements but it is highly unlikely that you can complete the work in the timescale that a professional contractor would take or to the standard that a professional contractor would achieve. The net result being increased finance costs as the property is held longer and possibly a lower sale price if the standard of finish is lacking. In short this is almost always a false economy and I would urge you to engage contractors as early on as your finances will allow.
Property Viewings:
There has been significant growth in the number of firms who will undertake viewings on behalf of remote landlords. Introduced originally to assist with the online only estate agents they have become a go to for auction houses, agents and landlords nationwide. I agree they are a good idea. Provided the outsourced viewer has some knowledge of the property and the area, it is quite possible they can outperform the landlord in turning enquiries into deals. The costs are nominal, particularly considered against a long drive to the location of your investment properties.
Legal paperwork:
There are a few websites that will provide template tenancy documents and the like. I am always nervous of obtaining such documents online and would always prefer to use a local solicitor to prepare them for me. Not only will they likely be up to date, but they will be covered with indemnity insurance in the event of any issues. The alternative, if you have elected to have your properties managed by an agent, is to consider their template documents. Invariably these will have been prepared by a law firm and so should be far better than those free online templates that you may be otherwise tempted by.
One role that I have not heard of investors outsourcing is an annual surveyors visit. I personally think this is essential to highlight aspects which may not be problematic now but could lead to a huge expense if left unchecked. Examples include the establishment of invasive plants such as Japanese Knotweed, leaks, dampness and other property maintenance items. In addition such a visit could highlight any construction trespass by your neighbours , boundary issues, fire safety and the like. In addition to property issues, such a visit could identify issues with your tenants such as overcrowding and hoarding , just two examples of issues that can more easily be addressed if caught early. A couple of hundred pounds each year could save you thousands in the long term.
I encourage you to establish systems which allow for the outsourcing of roles. Just don’t outsource the very important tasks. After all it is your business and the buck stops with you. You need to retain control and have a clear understanding of what is happening in your business.
Back