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Starting A Lettings Agency.

 

CONTENTS

  1. Introduction.
  2. Name Of Your Agency.
  3. Location Of The Agency.
  4. Office Looks.
  5. Advertising.
  6. Professionalism.
  7. Bank Accounts.
  8. Know What You Are Doing.
  9. Fees.
  10. Business Plan.
  11. Your Staff.
  12. Procedures.
  13. Know The Law.
  14. In Conclusion.

 

1. Introduction:

Over the past 10 years, I have gone from being a trainee lettings negotiator to lettings consultant, employed by companies wishing to expand their sales operation into the lettings industry as well as those people who have the money and wish to venture into a new line of business

The lettings industry has exploded since the early 80’s when people were keen to live in and around a major city but not wanting to purchase property. After many years of being looked down upon by Estate Agents, lettings personnel have now become a major force within the agency business. Why? Because they bring in a constant stream of cash whereas sales can take several months to produce results. Furthermore, lettings is quick and the money rolls in fast!

Owning my web site for landlords has been a fantastic experience and the feed back I get is tremendous – only 1 complaint in the last 8 months! However, many of my landlords and subscribers have told me that they are thinking about opening up their own lettings business and can I give them any advice. The answer is yes and the pages that follow are free for you to trawl through and see what I have to say. Please note however, that what I have written within these pages comes from my personal training, experiences and therefore it is up to you to take the advice as you wish but not to rely totally upon it. If you follow what I have to say to the letter and make a fortune, please do not forget about me. On the other hand if you follow what I say and it all goes horribly wrong, don’t blame me.

Although it is not hugely expensive to start a lettings agency, it takes time and commitment and you must be sure that you can deliver both. For the sake of this article I am presuming that you wish to operate from shop premises rather than out of your own home. The latter can be done, but the results are not as good and you will have a much smaller income.

If you have not got the time to dedicate yourself 100% to your agency, think twice about doing it.

If you would like more information on a particular subject then please feel free to e-mail me and I will see what I can do for you. If you would like to hire me as a consultant again e-mail me and I will see if I can help – must admit though, I am very busy, but I will try my best.

Enjoy the article and I hope it helps.

2. Name Of Your Agency:

Everyone likes to have their name above their premises, in bright lights sometimes. However, you must take into account the length of your name and its’ ability to remain in someone’s mind. The amount of times I have popped into an agency and then forgotten its’ name at a later date! Make sure the name you choose is short, to the point and will stick in someone’s mind. Recently I had to tell a new owner that the name he had chosen for his company was terrible – he listened and changed it – before printing off the stationary etc. Run names past members of your family and friends. They will want you to succeed in your venture and will therefore be honest with you. Many people put Property Services after their name, so you end up with companies called Mark Holloway Property Services Ltd or M.A.H Property Services Ltd. Not a good idea. Firstly you do not need Property Services as it is pretty obvious what you do, especially as you will be listed under Estate Agents in the Yellow Pages anyway. Many successful property companies use just one name. Winkworth, Haart, Townends, Foxtons, Chestertons all spring to mind and some use two names, Barnard Marcus, Knight Frank, Hamptons International etc. Personally I like the one name philosophy. It rolls off the tongue and it is very easy for people to remember you. Furthermore, it saves a lot of useful space on your letter headed paper etc.

So choose a name that is memorable and effective.

3. Location Of The Agency.

This will be one of the most important decisions that you make. It is vital that you choose the right location for your office. You need to bear the following factors in mind:

1. Walk in trade:

This is vital to your business. You need to be in a prominent position to ensure that you are visible to people walking past. It is the best form of advertising that you have. People must see you and when they do you must ensure that they want to come in (dealt with later).

2. Other agents:

Locating your agency near other agencies is in my view a very good idea. This way you are feeding off the other agents. If they have chosen that position and are still trading and you can see that they are busy then it is worth picking a spot near them. Remember though that you will need A2 permission on the unit! When someone comes out of one agency you want to make sure that they come straight into yours. In a way you have already let the other agencies do some of the work for you.

3. Positioning:

Make sure that people are going to be able to see you. I have recently closed down a branch for an Estate Agency because although they were located near to other agencies, they were around the corner and no-one could see them. Make sure you can be seen.

4. Know the area:

Always pick an area you know. This will make life a lot easier for you. People are far more likely to instruct someone who has lived in the area for a number of years because they will believe that you know what you are talking about and they will have loyalty to you as a local.

5. Which market are you tapping into?

This is a question you need to know the answer to right at the beginning. The location of your shop will determine what type of business you are likely to attract. For example if you are within a large student population then you are likely to attract students. However, do not locate in an area where you are depending on high worth properties. Although it is great when these deals come in they are few and far between and you need low worth properties to ensure that your bread and butter is paid for!

4. Office Looks:

Much of this will depend on your finances. However, always ensure that your office looks good and clean. People will come into an uncluttered office – it is far more inviting. Do not cram desks in as people get claustrophobic and can not wait to get out. I opened up a new office about a year ago and the refurbishment cost the company £7500. For this we converted an old shabby environment into a bright, modern and inviting space. Coffee tables and sofas work a treat. The décor should be neutral, but warm and the furniture modern. Heating is a necessity and ensure that the working environment for the staff is excellent – this keeps them motivated and they will enjoy coming to work. The old format of cramming desks into a small area so that you can have plenty of negotiators is a big no no. Staff hate it and the customers are far more likely to go to the agency next door that looks good. Make sure your window display is modern and effective. A good window display will attract customers into your shop. However, somewhat amusingly I recently came across a new agency in London and stopped in awe at their television screens in the windows which were advertising their properties. It did not take long though before I realised I could not make out anything on the screens as the sun was shining straight a them. Always ensure that whatever you do you check it and double check it. If you are going to do it, do it properly

5. Advertising.

This is essential to your business and you will need to advertise at least once a week. However, make sure that you advertise properties that are going to attract a response. You will need to advertise in advance of your shop opening so as to ensure that you are going to be able to display properties in your window. All advertising should be neat and easy to read. Do not give too much information away as you want to encourage people to call you. If they see a property they like the sound of, they will call you and then if they do not like the facts that you give them, at least you can register their interest and when the right opportunity crops up, you can contact them. Advertising should be in the local paper which will carry a property section and normally comes out once a week. People who are serious about property will want a copy of the paper to scan for their ideal opportunity.

Leaflet dropping is another good way of getting your name out and about. It is the most tedious form of advertising, but if you can afford it, employ a leaflet distribution company. Supply them with a map so they know exactly where you want the leaflets dropped.

6. Professionalism.

As a respectable letting agency you must ensure that you are professional at all times. Letting agencies often have bad press and people are getting more and more wary of cowboy agencies. You do not want to fall into this category. Everything you do should be above board and problems should be dealt with in a honest and fair way. Never sweep anything under the carpet – it never goes away.

7. Bank Accounts.

As a professional company you will need to have bank accounts for your agency. I always have three accounts. These consist of: a current account, a clients account and a deposit account. The current account is obviously for the day to day running of the business, the clients account is solely for rent deposits and the deposit account is for when you hold deposits on behalf of a landlord. This account can earn you more in interest than the other two put together. Always have a client account so that you can ensure that you can always pay a landlord.

8. Know What You Are Doing.

Opening up a lettings operation is easy and there are very few regulations to guide you – hence the number of rogue agencies. However, research the lettings industry and the regulations that are in force. Many of these regulations can be found on the internet. If you have worked in the industry then you should have a good idea of how to go about the day to day business.

9. Fees.

You need to know what services you are going to offer a landlord. Almost all the agencies I have come across offer three services. These are: Tenant finding, rent collection and property management. Base you fees on these three categories. For example in London we tend to charge 10% for finding a tenant plus another 2% for rent collection, plus another 4% for managing the property. Therefore if a landlord wants you to manage their property then you will charge him 16%. Always be flexible though especially in the beginning as you need the business. Be warned also that if you become known for charging small fees you are far more likely to attract rogue landlords and get very little reward doing for a lot of work. Make sure that your fees are competitive with other agencies in the area. If they are all charging 7.5% then you will need to as well to begin with.

10. Business Plan.

Whatever business you are planning to go into with or without financing from another party, you must draw up a business plan. This is the only way that you can monitor how your business is progressing. Ensure that you take everything into account from shop rental and premium to the cost of washing up liquid. As you progress with your business you will be able to see where you can expand and where you need to make savings. A decent business plan should be scrutinised time and again with tweaks here and there. Do not be over optimistic. It is very easy to see yourself getting rich on paper but when it comes down to the nitty gritty you can fall a long way when things start to go wrong.

11. Your Staff.

Your staff are important to you and you must decide exactly how many you need and more importantly why you need them. Personally I believe that it mainly depends on what you can afford. It is an absolute pleasure to have loads of staff to cover your every need but are they making you money. If you are short on funds then by far the best way is to start with yourself and an administrator. This way you can do all the viewings and valuations whilst ensuring that there is still cover in the office whilst you are out. A friend of mine started out this way and actually employed his Mother In Law as his administrator. Cost very little and as she was retired anyway she was happy to get out of the house and have something to do. His business has grown through his shear hard work and he now has a team of six staff and the Mother in Law is still there. Let your company grow naturally – do not force the issue. The more work you put into the company, the more you will get out of it.

If you begin by employing staff, make sure that they know what they are doing and preferably ensure that they know the area. This can be of a great advantage to you and whilst they may cost you a little more, it is well worth your while. However, always keep an eye on your staff and ensure that they are following the procedures that you have set down.

12. Procedures.

As a professional company, regardless of the amount of staff that you have working for you, you must set out guidelines and procedures for yourself and your staff. Everything must work like clock work. You will need everything from a staff handbook to a superb filing system. Every piece of paper that relates to a property should be filed and kept on file for at least two years. You need an endless amount of forms from property valuation forms to holding deposit forms, banking forms, landlord conversation forms, standard letters, rent collection forms, receipts, the list goes on and on. Make sure the forms are easy to fill out and ensure that you have procedures in place that are not time wasting i.e. filling out two forms for the same thing for different departments etc.

13. Know The Law.

As a letting agent you and your staff must know the law. Health and Safety is of the utmost importance. Remember that although you work for the landlord and he is your client, you still have a duty of care to the tenants. Ensure you treat everyone with the same respect and above all never discriminate or put yourself in a position whereby you can be sued. Judges notoriously loathe Estate Agents!

14. In Conclusion.

The above is a guide and I hope you find it useful. I could go on and on and on but it really would get boring. Never be afraid to ask. Never let anyone waste your time. Seek professional advice and adhere to it. Never try and do dodgy deals as they always have a habit of raising their ugly head. Be committed and through perseverance you will see your business go from strength to strength. It takes up to a year to start having a small profitable lettings agency and ideally you should expect to start making a serious profit by the end of your third year. The above information might help and if you have other ideas about what should be included then please let us know at: admin@do-it.org.uk and we will do our best.

Your comments are very much appreciated – good or bad!

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