How to be the last (Land)Lord standing ...

[Vanessa]

Here at 4 Walls, we have always been of the opinion that, as professional Landlords, we should offer a superior product and a superior service. As a Landlord, you are a "service provider" and therefore your success will be determined by the level of service you offer your clients. This has never been more true than in the challenging and competitive market conditions we are currently all experiencing.

Clients (tenants) have a great deal of choice, and they KNOW it.

We believe it will be the professional Landlords who survive and prosper in these challenging times.

Here are some of our tips to be a winner in the lettings game:

In areas of over-supply of rental stock, ensure your property stands out from the crowd. Give it a unique selling point. The days of identi-kit, "me too", magnolia boxes are over. Add a few upgrades and finishing touches to ensure your property is elevated above its competitors. An example of this is a friend of ours who has a lot of student lets. He fits all his houses with jacuzzi baths and students always pick his houses for obvious reasons! Look to see where you can create "lifestyle" touches i.e. garden furniture for the garden, plasma screen TV, etc.

Ensure "kerb appeal" from the outside, with a well kept garden and house name/no., with outside security light. We passed a property today where the Landlord hadn't bothered to put a house number on the door, and the developer's sign for the Plot Number was the only identification. There was also a large pile of old carpet in the front garden. This does not give the appearance of a "home" that the owner cares about.

Ensure your property is "staged" for marketing photographs and ensure that these are of high quality. Tenants "buy" from the photos far more than the marketing spiel, so ensure that the house is immaculately clean, the lights are on, there are some thoughtful finishing touches.

Make your property work on a practical level by putting in some finishing touches like mirrors, hooks on the back of doors, some nice handwash next to the basins, shelves, and storage solutions.

Ensure that the property is immaculately clean and maintained.

Offer incentives to get prospective tenants to commit. This could be anything from a crate of beer in the fridge, to six months free broadband, to six months gym membership included. (The Gym offers membership for £14.99 per month and is 24 hours per day. New gyms being added all the time. Have a look at www.thegymgroup.com for details).

It's worth paying a bit extra for decent mattresses. If your tenants can't get a good night's sleep, they will soon leave. Ensure that blinds/curtains block out all the light so tenants working on shifts can sleep during the day.

The days of "that I'll do 'em" are well and truly over. Treat a tenant like that, and you will turn your tenants over a lot faster and suffer more voids as a result.

If a maintenance problem arises, sort it within 24 hours. Use local trusted workmen or post your job on www.myhammer.co.uk to get a keen quote.

Keep an open and friendly dialogue with your tenants yourself (or through an approved agent) to ensure the continued enjoyment of their stay at your property. Treat even small problems or niggles seriously so that they feel valued as a tenant.

Tenants are increasingly worried that the Landlord may be planning on selling the property as soon as the market recovers, and they will then lose their home. Reassure your tenants that you are in this for the long-term and that the property will be available as long as they want it.

It is our advice not to rock the boat with an increase in rent at the moment. Tenants are worried about the economic down-turn and fearful about losing their jobs, so an increase in the rent might be enough to tip them over the edge to hand in their notice. This could lead to a void period, which should be avoided at all costs.

See where you can add value and give value at ever opportunity. A recent example from our portfolio: a tenant reported that the fridge had stopped working and that they had lost all their week's food supply. We got the fridge fixed straight away, but we also sent the tenant some vouchers towards replacing the lost food. This again makes the tenant feel valued.

Security is increasingly important to tenants. You should ensure that there is a security light outside and you could also consider a burglar alarm.

Budget for a face-lift for your property approx. every five years to keep it up to standard. Tenants respect a pleasant environment and are more likely to keep up standards if high standards have been set from the start of the tenancy.

In the current market conditions, be price sensitive with your rents. Remember: it is better to have 80% of something, rather than 100% of nothing! Even one month's void will eat into your profit, so endeavour to let your property out as quickly as possible, even if that means taking a hit on the rent.
You can offer an "introductory" special offer rent to be reviewed after six months.


Worth noting: With the new survery from the Halifax reporting massive outward migration from city centres, houses in the suburbs are less likely to suffer from over-saturation, and can be let on a single occupancy or multi-let basis.

Please add your tips below so that we can build up a wiki on how to be a professional and successful Landlord. It might sound obvious, but you will only be successful if tenants want to rent from you, and want to stay in your properties as long as possible!.

Those that treat tenants with respect and give value and add value at every turn will be the last Landlord standing!

You can read our Investor Blueprint here.

[Adam Powell]

I couldn't agree more with this thread, and would like to add a few further pointers:

1. Think about the target market for your property, and try to put yourself in their shoes.
Young professionals/students/families?
What little touches can you add to the property that will appeal to that target?

2. Visit the property and try to imagine what it would be like to live there.
Is storage minimal? Add under-bed drawers/bathroom cabinets/small, tasteful shelving
Are rooms overlooked by other properties? Tasteful sheer curtains perhaps?
Small flat? Consider sofa-bed
Low ceilings? Swap pendant lights for spotlights/spot tracks

3. Don't overdo it!
You are looking to stand out from the crowd in order to ensure full occupancy through the use of small, thoughtful touches. Better to redecorate in three/five years than blow your maintenance budget on surround-sound speakers

And again: Sparkling clean kitchens & bathrooms rent property!

[Vanessa]

Thanks for that Adam.

I would just like to thank Adam for everything he has done for us on the lettings front. Adam is one of the most experienced, committed, and pro-active agents we have the privilege of working with. He looks after all our properties and tenants in London in the way we would do it ourselves. Your lettings agent is a reflection of you as a Landlord, and that is why it is important to work with someone who represents you in the way you would want to be represented. Adam is a most valued member of our team and has contributed greatly to the on-going success of our London portfolio.

Adam wrote an article for us entitled "How to vet a letting agent". You can read it here.

[SurreyLets (Sally Asling)]

.Vanessa - If only ALL Landlords would take this excellent advice on board at the moment, especially on being realistic about rental price and not increasing at renewal. It is frustrating when property is sitting empty because the Landlord is expecting to achieve the same rent as last or two years ago. The corporate tenant market dropped off early 2008 with relocation agents doing more outbound moves than inbound. The consequence was across the PRS there was a glut of property normally let by corporate companies that became available as well as new properties entering the market. As these prices - eg. 6K pcm plus began to reduce the rent to get them let, this pushed down rental in the 4K market and so on and so forth. I find myself frequently calculating the cost daily of an empty property and advising Landlords that a void of just 2 - 3 weeks could have cost them the difference between a lower offer and the asking price over the tenancy duration. I can only stress the Landlords that they need to be realistic about the price focusing on quality of the tenant and their stability to afford the rent in the current climate and in the marketing to ensure the property is presented to be the best in the given price bracket.

[Vanessa]

Thanks for that Sally.

Landlords can sometimes be a bit stubborn on the rentals front! It is better to have 80% of something than 100% of nothing EVERY TIME!

I have an empty property at the moment and I am offering a free weekend break at my holiday let at Camber Sands for the tenant who rents the property. I am bringing creativity to bear. Creativity changes the game, whatever game is being played. Hopefully, this will make my property the most attractive one to rent? If my holiday let is vacant, I might has well put it to use in some other way. The cost to me will be a matter of £40.00 for the cleaning afterwards. I'll report back on if this strategy works!

[Wasim]

Hi

Interesting thread.

In the past i have offered:

1. Free TV licence if the tenant signs up for 12months
2. A chance to "Win Your Rent Back For December"....A prize draw where 1 tenant will get their rent handed back to them in december in CASH...this is really powerful..imagine the look on your tenants face when you give them £500 back a few days before xmas.
3. 2 Weeks Cash Back, when the tenant finally decides to move out...good for props that are hard to shift.
4. If a prop has been slow to rent and i have not used option 3 then i will Offer an IPOD to the letting agent to get it shifted.
5. Ask the LA to advertise your prop as their "Property Of The Week" and if it rents during that week then negotiate an enhanced finder fee for that week.
6. Make friends with you LA so that he looks after you...i buy local so i know my LA's and treat them like friends.
I drop in take them for lunch/coffee and they look after you without you even asking them to.

And I always have a welcome gift for the tenant:

Women only moving in...Flowers, Small Jar of Coffee, Mugs, Sugar, Milk and a Budget Kettle from Tesco...so they can have their first drink on me in their new home

Men only moving in....as above without the flowers.

Young Couple moving in...as above and 2 cinema tickets (vouchers)

It helps build the relationship.

Regards

Wasim

[Michelle McDines]

Hi Vanessa

These are all fantastic ideas.

At the moment, I am experiencing the rental market from the other side, in that as well as being a landlord, I am also looking to become a tenant. I'm looking for a nice two bed fully furnished apartment that can be my new base in the UK while I spend more time in Cyprus.

What an eye opener! Both in terms of the quality of product being offered by the landlords and the service the letting agents are providing.

I thought I'd had an early success when I saw a gorgeous apartment on Rightmove. Beautifully furnished in a feminine style, river views, top floor, good location. I enquired through Rightmove, no reply, I phoned, got an answering machine, left a message, no reply, called again, no reply etc etc. Finally a week later I got to speak to the agent who had just let it to a man (!) who had contacted them three days after my initial contact.

Since then I have seen a succession of apartments and these are the highlights:-

1. They all have a lingering odour of stale chip pan
2. Bathrooms with mold or soap scum or other people's hair or all three (yuck I don't want to be reminded that someone else has lived here)
3. Windows with only vertical blinds - perhaps OK for the lounge but I like my bedroom blacked out at night
4. Cheap, nasty furniture including sofas that just don't look at all comfortable to sit on, beds with mattresses that have dubious stains on them, little or no storage or clothes hanging space
5. Outstanding maintenance - kitchen drawer fronts, stained carpets, lights/plugs damaged and even a front door handle that came off in the agent's hand
6. Igloos - none of the apartments had the heating on so they all felt damp and cold - not very welcoming
7. Completely disinterested letting agents who turn up late, look thoroughly bored, don't bring information they'd promised, don't know much about the property, the landlord or the area.

I've tried a few ads placed by landlords and the vast majority haven't replied to my email. Of the ones that did, one landlord was insistent that the only time he could show me (a lone female) the property was a 8.30pm - I don't think so!

It certainly seems as though the attitude of most landlords (and their agents) is completely out of whack. They see tenants as a necessary evil, someone to screw as much money out of and give as little in return as they can, rather than taking the view that they are clients who deserve to be treated well.

I believe you tend to get back what you put out so if you don't take a pride in your property and respect your tenant, you will end up with tenants who don't look after the place and don't respect you.

[Vanessa]

Thanks Michelle! That is an interesting, and somewhat shocking insight from the "other side of the fence"! Good luck with finding a new place to live.

[Richard Greenland]

Wow, the very best and worst! Well I have had to change tack post credit crunch and turn my present BTS development (conversion of large Victorian semi into 3 flats) into a BTL. Everyone I spoke to urged me to swap my plans for granite kitchen worktops with an undermounted sink for Formica, and the thermostatic shower with travertine stone tiles for something cheaper, because ‘I wasn’t going to live there myself’. I think I was right to ignore this advice to create an ‘identikit me-too magnolia box’, as Vanessa puts it, and continue to make a stylish and pleasant environment for my tenants. For one thing, the difference to the overall budget for a few nice finishing touches would be just a few percent of the nearly £180 - £190K total cost of the conversion, for a huge difference in the impression of quality I could give. This I hoped would attract tenants, and give me a CHOICE of tenants, enabling me to pick people who I felt would look after the prop. best. Third, I would have the satisfaction of having produced something of value, which in some very small way improves the living environment. This has nothing to do with making money, but everything to do with doing something worthwhile. This I feel is in itself beneficial to our happiness as humans and our overall mental health. But enough of the new-age soap-boxing. The first tenants are delighted, even tho there is still a building site beneath them, which says it all, I guess.

Rich

[Vanessa]

Relevant to this thread - From the enormo property blog:

Gerald Ronson speaking at the Heron Annual Lunch 2009

Gerald Ronson who is worth an estimated £250 million holds a business lunch every year where the good and the great turn up and listen to what the great man has to say about the state of the economy and more to the point the property sector.

‘You need to look at investors too; investors who have been demanding double digit returns without questioning how they are made. A cocktail of greed, coupled with inexperience has fuelled our problems. Money became too easy to be made rather than as a result of hard work.

‘The same applies to property – I could never understand how people could buy a property without ever seeing it. I visit all ours regularly and yet certain investors don’t ever go out and about. If you own an asset, to maximise its value you have to nurture it, manage it, think about it, not just wait for the quarterly rent to arrive because the danger is, it won’t. The result of this chronic lack of experience and expertise is an epidemic of insolvencies.’

Following the changes in how mortgages are processed this situation should be a thing of the past, yet you just know that there is some scheming going on somewhere.

He spoke of a ‘fog of negativity’ which had descended, and warned that ‘unless we think positively, we will be unable to rebuild the economy’.

“Businesses need to be run by people who understand and know their industry,” he said. “The result of this chronic lack of experience and expertise is an epidemic of insolvencies.”

There was a rise in people who were too quick to borrow money using the equity in their homes to start businesses that they had no experience in, only to find that business is hard and no prisoners are taken.

Ronson called for ‘a return to basics and good, old fashioned property investment values where proper equity is put in; back to deals showing positive cash flow and conservative leverage’.

‘You can’t push a bus up a hill if the brake is on,’ he said. ‘I have always said the property is a long term business and that has never been more true than it is today. For even the simple squirrel knows that there will be bleak periods ahead and that, if it is to survive, it has to have reserves for the winter. We will look back at the short term traders and see too many amateurs.’

The problem with this opinion is that the current situation was caused by amateurs who were trying to make out that they were professionals. This worked out find for a while but as the banks began to get a bit edgy; their house of cards began to topple down, until we see a situation like now.

[Richard Greenland]

I totally agree with this. I went to look at a prop for a friend of mine last week. The owners had failed to sell it at auction, and were getting desperate. They’d done a lot of work to secure planning perm to turn it into 3 flats, but had given up on making any money and now just wanted to get their money out. They already had another prop needing further work and were running out of credit. Worse than that, they had already internally trashed the prop I saw themselves ‘to stop squatters’. This they did on the assumption that they would get PP to demolish it and build a complex of 6 apartments. Well, if it had been Bristol City Council they would probably have got the PP, but it was just outside, in South Gloucestershire, so absolutely predictably they did not. They can’t have read the council’s Local Plan, or looked at their track record on similar planning apps. And even then, you should never be sure you will get a PP till you have got it! That’s the difference between a pro and an amateur.

I had guy from the planning dept over at my own proj. this afternoon, we had a chat about a few issues. He asked me conversationally how I felt about the project now. “Fine”, I said, “we’ll get there in the end, it’s just going to take a while longer because of the finance”. He seemed a little surprised, “Most people are saying they had thought it was going to be fun, but it’s turned into a nightmare”, he said. “That’s because they are amateurs”, I said, “They watched too much TV and didn’t do their research properly”.

Rich

[Vanessa]

Well said Rich! A new Gerald Ronson in the making! I will watch your progress with interest.

[Vanessa]

I found this blog about "Being Pro-active" by Seth Godin, and felt it was relevant to this thread. I hope it inspires you to think laterally in your property business!

On becoming proactive

Tom points us to a provocative idea for home builders. If you want to sell a new house, why not offer prospective buyers help in selling their old houses? Send your idle crews to their house to paint it or do other important cosmetic fixes. Fill the old house with the furniture you use in your models, etc.

Take it a step further. If your home building service is totally slack, why not get to work upgrading and selling older homes or even foreclosed ones?

Consider what a solo entrepreneur could do using eBay: instead of waiting for people to hold garage sales, why not distribute flyers offering to run a virtual garage sale for anyone who will open their home to you? Go in with a digital camera, catalog and photograph the top 20 most valuable items in the house and sell them on eBay... and split the money. Your proactive effort overcomes the seller's inertia and you both profit.

There are huge opportunities for this in the business to business space as well. Most companies would welcome a post-tax-day accountant who offered (on spec) to review bills or expenses in exchange for half the money saved. If they had time, they'd do it themselves, but of course they don't.

In my experience, much of marketing is a game of waiting for the other guy to go first. Well, if nothing is happening, you go first.