As the rental market evolves, those who invest in bricks and mortar need to feel comfortable that their assets are in good hands. Therefore, the need for excellent property managers and letting agents becomes even more of a necessity.
If you’re a large-scale asset owner with multiple units, your property manager will be more like an operations partner than a mere person who looks after your investments. It’s one requirement managing a few homes here and there, but doing so on a large scale requires a different mentality.
There are key metrics needed to properly evaluate your property professional, whether they are managing the day-to-day of the tenancy or a letting agent. And we’ve listed the actions high-level property professionals should take to ensure that you get the most out of your units.
How do they measure performance?
Most letting agent’s define their performance by the asking price set for the property when, in reality, they should track it by the price achieved. Coming up with an enticing asking price is easy, but how do they arrive at their figure?
Don’t be afraid to ask for the methodology behind an agent’s price estimation. Letting agents should use a combination of data and local knowledge while being able to show their expertise in your market. The result should be a rental price achieved that is in line with the initial asking price.
Think about occupancy rates
How long does it take to monetise your units? That’s a question your letting agent and property manager should know – or least a topic they should be confident handling. Start by looking at the KPIs they use to determine the time it takes to monetise a property.
There’s no one-size-fits-all solution, but smaller portfolios are fairly straight forward to predict and should at least be in line with the London average (if not below it). Larger developments vary, but you should employ property professionals who work with you from the outset to understand your envisioned occupancy rates.
Good-quality property professionals also track the average tenancy lengths to minimise void periods. They’re continuously analysing tenant behaviour and finding solutions, such as trialling longer-term tenancies for enterprise clients.
How efficient is your agent at securing renewals?
Finding tenants is one of the easier aspects of lettings, especially with the demand for rental homes increasing exponentially. In London alone, 30 per cent of the current property market consists of renters and is set to grow to 60 per cent by 2025.
An efficient agent who gets tenants in your units is, of course, important. But it’s the renewal side that requires a laser-sharp focus. Once tenancies begin, the goal should be to renew before they go onto a rolling contract, minimising void periods in the process. Yet, you would be surprised how many letting agents treat the subject with an element of casualness.
This is because most of them aren’t incentivised to renew. Agents are generally more interested in splitting their fee between lettings and property management, focusing on the high returns they can achieve from full management.
The lettings aspect is typically brushed to the side once a tenant is in the property. However, you’ll want to avoid rolling contracts where possible and should instruct an agent who understands the importance of tenancy renewals and the role it plays in keeping a consistent income stream.
How does your property manager navigate in-life tenancies?
A happy tenant equals a prolonged in-life tenancy, and it’s during the tenancy where your property manager can shine and show their worth. One of the most impactful issues in the rental market is that of poor property management. Tenants often become disillusioned with their property managers, citing problems like the length of repair times.
Choosing the right property manager for your units can be the difference between a long and happy tenancy or sustained void periods with no rental income. An efficient property manager is quick to place a significant emphasis on a happy in-life tenancy for renters.
You can evaluate your property manager by determining how much they care about tenants. Good managers find quick solutions for repair requests while also keeping tenants in the loop with compliance documents and checks, as well as generally ensuring renters enjoy their living experience.
How will they increase yields and monitor overall performance?
Another key attribute of a high-level agent is their ability to increase yields. Therefore, you should have a discussion with potential partners about annual rental growth and layout achievable metrics based on predicted forecasts.
Taking the overall size of the portfolio into account and using the rental price index, they should be able to give you an estimation on growth. There’s no doubt that some factors will depend on future market conditions, but there should be a clear strategy for achieving annual rental growth.
Aside from yields, your property partner should help you better understand the overall costs and year-on-year (YOY) performances of each unit. For example, they should clearly display the true cost of maintenance as a percentage of the rent, which will help to better understand YOY performances.
Which methods do they use to interact with tenants and portfolio owners?
The rental market is built on human interaction and is very much a people business. Property managers need to be affable and able to communicate equally well with tenants and portfolio owners to foster positive relationships.
Using the latest technology available is a smart way for a property manager to provide a watertight service. Offering more transparency to tenants and portfolio owners through apps and web-based applications means they can focus their attention on delivering high-level service.
Previously, tenants and portfolio owners required a hands-on update from managers for just about every aspect of the unit. By affording everyone involved a complete overview of the property – including repair statues for tenants and financial data for portfolio owners – through an app or desktop application, the process suddenly becomes more efficient.
The result is greater communication and understanding for all involved, and property managers can focus on the more pressing aspects of their role. When working with a property manager, make sure that you see their working process and how they use the latest technology to improve service.
Finding the right service
From yields to void periods, and tenancies to the day-to-day running of the units, there is plenty for portfolio owners to think about. Working with unprepared and ill-equipped property professionals can highlight issues further and create stressful scenarios that see you losing out financially. Finding the right professionals, however, will mitigate problems, remove stress and ensure that your units achieve the best yields with minimal tenant turnover.